Oil Price Drop Implies Possible Delay For Road Improvement
The oil and gas boom has put a lot of money back into the state’s highway fund through the collection of severance taxes--the money that the state earns on oil and gas extraction---but it's never been enough.
And already-overwhelmed roads in the region could get worse because of the drop in oil prices.
If you drive in Midland-Odessa, you know that feeling…like driving in a pinball machine. Traffic’s round-the clock and even with crude’s decline, 20 car accidents take place in Midland and Ector counties every day.
Dave Smith is a delivery driver from Odessa who describes his work like driving in a pinball machine.
“It’s chaotic," said Davis. "You’ve got to be on your toes at all times or you could be in danger.”
Oil’s fall triggers a chain reaction. Less oilfield activity means less tax dollars…which means completing projects Midland’s Loop 250 and Odessa’s Loop 338 will almost certainly take at least a while longer than had been expected when a barrel of oil topped more than 100 dollars.
Not good news for Smith.
“Every day, ya’ know, I avoid three or four accidents ‘cause people aren’t paying attention,” he said.
Roads aren’t just a just a concern in the Permian Basin. In November, Texans said ‘Yes’ to Proposition 1. Prop 1 takes money destined for the state’s Rainy Day Fund and puts it into road improvement.
James Beauchamp President of the Midland Odessa Transportation Alliance, or MOTRAN. He says Prop 1 is a positive step but one that only goes so far.
“The problem is the same in Midland and Odessa, the same as it is in Alpine, Marfa, Presidio, Ft Stockton, Monahans, anywhere out here," he exclaimed.
"We’re in a part of the state’s that’s often forgotten.”
Proposition 1 translates into 1.7 billion dollars in year one. But the region’s still-growing population means it needs 4 billion a year to keep up with the current traffic volume.
“There are a lot of people who say, ‘ya’ know the price is going down, you’re going to see a decline in activity.’ Well that’s true. That’s basic supply and demand," he told KRTS and its sister station West Texas Public Radio.
"But I think at 40-something dollars a barrel, there’s still an enormous amount of activity. And that’s not to say that some people aren’t going to lose their job. That’s not to say that there’s not going to be a reduced amount of available capital out there. But there’s still going to be people driving on the road and there’s still going to be needs.”
Needs that Beauchamp suggests could be helped if the tax on gasoline we buy at the pump were raised. It hasn’t been since the early 1990s and not all the money raised there actually goes to its intended mission, and that’s to be used in road maintenance.
Republican State Representative Brooks Landgraf of Odessa—driving the roads of his district—says the highways and roads of west Texas now represent a public safety issue.
Statistics from 2013 buttress that claim.
In 2013, there were an average of 25 car and truck crashes every day in and around Odessa. Those accidents caused 29 injuries--every day--with nine being either serious or life threatening. One life was lost every 3.5 days in the Midland and Odessa area.
Despite that, Landgraf said this region’s weather hurts prospects for getting road funding.
“Some of the TxDOT formulas that they use to fund highway projects include precipitation,” he explained.
And normally this region doesn't get much.
“I don’t think you have to drive far in west Texas to see that in spite of a severe lack of rain, our highways are in a dilapidated state,” said Landgraf.
Now with severance tax revenue expected to dip, Landgraf wants all gas taxes that we pay at the pump is all used to fix broken roads.
“We couldn’t have relied on Prop 1 alone and the fact that we might not be able to rely on it as much as we thought send a bit of a wakeup call that we have to get creative and serious about maintaining our highways.”
Crude’s decline means that Texas won’t receive about one third of the money it had hoped to collect in Severance taxes in 2015. The ripple effect won’t be felt for at least a year because Proposition 1 money is guaranteed until then. The elephant in the room though is, what happens if little has changed with the price of crude a year from now.
Which is why Rep. Landgraf said Texas should not solely harness road improvement to the price of crude oil.
Instead he suggests that the state legislature contemplate other revenue sources already in place--such as the approximately twenty cents per gallon that drivers pay at the gas pump, money that was pledge to road improvement in the early 1990s that since then has been diverted to other non road-related agencies.
- Lorne Matalon