(…) The federal gas tax was last raised in 1993 and 1990, each time as part of a deficit-reduction plan. After failing for years to overcome public opposition, supporters of another increase see the current talks as a once-in-a-generation chance to raise the tax, which finances highway and transit construction.
The U.S. government spends roughly $52 billion a year on highway and transit projects, but the gasoline tax is generating only about $37 billion annually. (…)
The 2010 Simpson-Bowles deficit-reduction commission proposed raising the gas tax as part of a broad deficit-reduction plan.(…)
U.S. motorists are now driving 3.0% fewer miles than in 2007. Travel on all roads and streets changed by -1.5% YoY in September 2012. Trailing 12-month is +0.3% YoY. (DOT)
The number of new unemployment claims remained above 400,000 last week as the lingering effects of Sandy continued to cause workers in the Northeast to seek jobless benefits.
Jobless claims decreased by 41,000 to a seasonally adjusted 410,000 in the week ended Nov. 17. For the week ended Nov. 10—when Sandy’s effects were most pronounced—new jobless claims rose by 90,000 to 451,000, according to upwardly revised figures.
(Chart from Bespoke Investment)
U.S. CONSTRUCTION ACTIVITY IMPROVING
The Nov. 12 New$ & View$ charted the gradual recovery in U.S. construction employment. The charts showed that residential construction spending was accelerating but that private non-resid. had stalled in 2012. Here’s some hope on that sector from CalculatedRisk:
Billings at architecture firms accelerated to their strongest pace of growth since December 2010. As a leading economic indicator of construction activity, the Architecture Billings Index (ABI) reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 52.8, up from the mark of 51.6 in September. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.4, compared to a mark of 57.3 the previous month.
“With three straight monthly gains – and the past two being quite strong – it’s beginning to look like demand for design services has turned the corner,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.
(Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.)
The headline confidence measure from the Ifo institute’s monthly survey of German businesses rose after six straight months of decline, as companies in industry and trade became more satisfied with current conditions. (…)
A similar survey of French businesses conducted by Insee also recorded a pickup in confidence, although from a very weak October. In Italy, the euro zone’s third-largest member, there was another positive surprise, with figures for September recording the first rise in retail sales in three months. (…) Food sales rose 0.2% in September and 0.4% in the third quarter, while nonfood sales were flat in seasonally adjusted terms, and purchases are concentrated on large-format stores capable of larger discounts, according to Istat.
In Germany, the closely watched Ifo business confidence index rose to 101.4 in November from 100.0 in October—above economists’ forecasts of 99.5, but close to its lowest level in almost three years.(…)
Insee’s measure of French industrial confidence rose to 88 from a three-year low of 85 in October.
China stops filling strategic oil reserve Tank farms with storage capacity of 100m barrels said to be complete
(…) Early this year, Beijing shored up oil consumption and prices by diverting millions of barrels of crude oil into its burgeoning emergency reserve. But new data suggest that the buying spree ended in early September. (…)
The IEA says that in the first quarter the gap between China’s measure of demand and supply stood at 650,000 barrels a day – equivalent to storing 58m barrels over the three-month period.
In the second quarter, the gap narrowed to 510,000 b/d – or 45m barrels. And in July it fell to 100,000 b/d – or 3m barrels. Data for August and September show that the gap has closed. The Paris-based IEA concludes the figures “imply that filling has come to an end”.
“Evidence suggests that the filling of recently completed Chinese strategic storage capacity has ceased,” the IEA’s oil market report said.
The estimates by the IEA suggest that China diverted 106m barrels into its SPR in the first seven months of the year. (…)
The third phase, with capacity of around 200m barrels, is scheduled to be built between 2015 and 2018, with crude filling up the tanks until 2020. (…)
So: European demand is in the tank, the Chinese economy has slowed markedly, the U.S. economy is nearly stagnant and U.S. miles driven are down and still weakening (see above) and now, China’s SPR have been filled up. Why is oil holding up?
Try OPEC supply management. Can that continue much longer given the spectacular rise in non-OPEC production? Unlikely. Even OPEC acknowledges the challenges ahead:
Global need for fuel from the Organization of Petroleum Exporting Countries will shrink to 29.7 million barrels a day in 2016, 1.4 million less than this year, the group said today in its annual World Oil Outlook. The estimate for 2015 is 1.6 million barrels lower than that forecast in last year’s report. OPEC predicts it may have more than 5 million barrels of daily spare production capacity as early as next year. (…)
Supplies from outside OPEC will increase in excess of 4 million barrels a day from 2011 to 2016, reaching 56.6 million. The gain will be driven by output of U.S. shale oil, Canadian oil sands, and crude from the Caspian Sea and Brazil. The assessment for non-OPEC supply to 2015 is 2 million barrels a day more than in last year’s report. (Bloomberg)
Standard & Poor’s Ratings Services confirmed France’s double-A-plus rating, offering an important endorsement days after Moody’s Investors Service stripped the country of its triple-A rating.
“We believe that the French government is determined to implement budgetary and structural reforms, following up on measures already announced to reinforce the growth potential of the economy,” S&P said.
GLASS IN YOUR LIFE
My friend Roland, who worked with glass most of his life, sent me this interesting video showing how glass and computers will change our lives in the not too distant future.