Oil prices now mean toll roads are no longer financially viable!

Link to article here.

According to Vollmer Associates in a toll feasibility study for two tollways in Austin, once oil hits the price equivalent to the crisis of 1980, the toll roads are no longer financially viable. Yesterday, oil closed at over $96 a barrel which this article says is on par with the crisis of 1980. TOLL ROADS ARE NO LONGER FINANCIALLY DO-ABLE! So let’s start the clarion call…PULL THE PLUG ON TOLL ROADS, people can no longer afford them! They’re financial LOSERS!
Oil Above $96 on Drop in US Supplies
Nov 1, 2007
Associated Press Writer

SINGAPORE (AP) – The price of oil rose to a new record above $96 a barrel Thursday after a surprise drop in U.S. crude stockpiles raised concerns about supplies for coming winter demand. Other energy futures also gained.The U.S. Federal Reserve’s move to cut interest rates by a quarter percentage point also supported prices.

It was the second week in a row the U.S. Energy Information Administration reported a sharp and unexpected drop in oil inventories.

“The decline in U.S. crude oil inventories has been a key driver of oil prices,” said David Moore, commodity strategist at the Commonwealth Bank of Australia in Sydney.

Light, sweet crude for December delivery rose as high as $96.24 a barrel in electronic trading on the New York Mercantile Exchange by late morning in Singapore. Prices later receded to $96.05 a barrel.

Crude prices have reached inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, $38 a barrel then would be worth $96 to more than $101 today.

“We are stepping into an unknown area. Nobody wants to sell (given the fear of a) further rise,” broker Ken Hasegawa of Fimat Japan told Dow Jones Newswires.

The December Nymex crude contract rose $4.15 Wednesday to a record settlement price of $94.53 a barrel.

December Brent crude futures also surged to a new trading record of $91.63 a barrel Thursday on the ICE futures exchange in London, up $1 from the previous session.

In its weekly inventory report, the U.S. Energy Department’s Energy Information Administration said oil supplies fell by 3.9 million barrels last week. Analysts surveyed by Dow Jones Newswires, on average, had expected an increase of 100,000 barrels.

“The report acted to solidify concerns about the possibility of tightening market conditions ahead of the northern winter,” Moore said.

Much of that decline was due to a big drop in crude supplies at a closely watched oil terminal in Cushing, Okla.

Cushing supplies have been under pressure in recent months due to differences in the price between front-month oil contracts and those for delivery in future months. This price difference, or spread, has given storage tank owners a financial incentive to sell their oil, rather than hold it in inventory. Analysts have also blamed falling Cushing supplies, in part, for the rally in which oil prices have jumped 35 percent since August.

The EIA also reported that refinery activity fell by 0.9 percentage point last week to 86.2 percent of capacity. Analysts had expected an increase of 0.5 percentage point.

Supplies of gasoline rose last week by 1.3 million barrels. Analysts expected a 400,000-barrel decrease.

And inventories of distillates, which include heating oil and diesel fuel, rose by 800,000 barrels. Analysts had expected a 1 million barrel decrease.

Also supporting oil futures was the U.S. central bank’s move to cut interest rates.

Interest rate cuts generally support oil prices because they tend to send the U.S. dollar downward; the dollar is already at multiple- decade lows against major currencies.

Oil futures have been driven to record levels in recent months partly because they offer a hedge against a weak dollar.

Other energy futures followed oil’s lead. Nymex December heating oil rose 2.65 cents to $2.558 a gallon, while December gasoline futures added 2.64 cents to $2.5697 a gallon.

Natural gas futures advanced 7.6 cents to $8.406 per 1,000 cubic feet.

One Reply to “Oil prices now mean toll roads are no longer financially viable!”

  1. David Ramos

    What is incredible is that the “toll-roads” solution doesn’t take market-forces into consideration.

    If/when oil prices continue to climb and “toll-road” usage is less than projected (which typically happens), the rates never decrease and the public won’t get the chance to dismantle them. In fact (according to TXDOT plans), TXDOT will try and artificially create a market for toll-roads by
    a) deliberately neglecting the free-roads
    b) “slowing” the traffic on free-roads (via stop-lights, etc).

    Since bond-holders of these projects are going to demand a minimum return, you can expect the State to do whatever it takes to promote the usage of toll-roads.

    Let’s hope the citizens wake up before more toll-roads in this State are permanently erected.

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