Friday, April 11, 2008

Why insurance companies love red light cameras

I confess that I have a lot of mixed feelings about red-light cameras. On the one hand, I can’t count the number of times I have almost been T-boned by a red-light runner, much less the number of times I have seen it almost happen. On the other hand, people still run the monitored lights in high enough numbers that cities – and companies – keep using the systems.

A lot of folks think the cameras are yet another revenue-generating gimmick, like speed traps. Cops want them, because they’re like adding 24/7 patrol cars at an intersection with no job other than to nail light runners and folks who don’t make a complete stop before turning right on red. Politicians like them because they generate revenue and create the impression of doing something about traffic safety – when possibly the intersections were badly designed to begin with and can’t be fixed to reduce infractions. The companies that make the cameras love the profits.

If this sounds like a conspiracy foisted off on the public, dig this: A recent study out of South Florida claims that the increasingly popular red-light cameras actually can increase crashes. Besides generating revenue for municipalities and the companies that make the systems, the potential for increased crashes – and thus higher insurance rates – lead insurance companies to support their installation.

Forget about terrorists posing as convenience store clerks – this is a real paranoid, and terribly logical way of looking at the spread of these cameras.

The study, called “Red Light Running Cameras: Would Crashes, Injuries and Automobile Insurance Rates Increase if They are Used in Florida?” can be found here.

According to the abstract, or summary, of the study:

“Running a red light can cause severe traffic crashes especially when one vehicle runs into the side of another. Red light cameras photograph violators who are sent traffic tickets by mail. Intuitively, cameras appear to be a good idea. However, comprehensive studies conclude cameras actually increase crashes and injuries, providing a safety argument not to install them. Presently, Florida statutes do not permit red light camera evidence to be used as the sole basis for ticketing drivers for violating the law. Legislation to permit camera citations has been proposed since the 1990s, but none has passed to date. This paper explains red light running trends in Florida; effective solutions to reduce red light running; findings from major camera evaluations; examples of flawed evaluations; the automobile insurance financial interest in cameras; and the increased likelihood of even higher crash and injury rates if cameras are used in Florida due to the high percent of elderly drivers and passengers. The theory behind red light cameras as potentially effective is that they rely on deterring red light running primarily through punishment of a specific driving behavior and secondarily by changing drivers’ experience. Because the rigorous and robust studies conclude that cameras are associated with increased crashes and costs, any economic analysis of cameras should include these newly generated costs to the public. Indirect costs to the public are usually not considered in the calculation of total revenues and profits generated from red light cameras. Florida should be cautious in using traffic safety information from the automobile insurance industry. Insurance financial goals are to increase their revenues and profits, which do not necessarily include reducing traffic crashes, injuries or fatalities. Also, public policy should avoid conflicts of interest that enhance revenues for government and private interests at the risk of public safety.”

So look out – everyone really is out to get you.

Thursday, April 10, 2008

Stashing more oil into SPR ludicrous

OK, sometimes the Congressional Record is not the most thrilling read, and sometimes it is. Monday’s comments from Sen. Bryon Dorgan land in the latter category. His topic was the Strategic Petroleum Reserve, which is of course the DOE’s own emergency petroleum store and the largest emergency supply in the world.

In his rant regarding an announcement made by the Energy Department last week that it would continue putting oil into the SPR, Dorgan told the Senate that stands “logic on its head.”

DORGAN: They have announced they would continue putting oil into the Strategic Petroleum Reserve underground. They are putting about 60,000 barrels of oil underground right now, at a time when the price of oil is $100 or $110 a barrel. They are busy putting 60,000 barrels a day underground.

Dorgan goes on to explain that continuing to stash high-priced oil there makes no sense at all because the SPR, “which is where we store underground that amount of oil we want to use in an emergency is 97 percent full. So the Strategic Petroleum Reserve is 97 percent filled at a time when oil is at a record high. This administration is taking sweet light crude oil, which is a subset of all oil, and a highly valuable subset of oil, and putting 60,000 barrels of oil a day underground.”

This part also sets logic on its noggin. It’s not run-of-the-mill crude, but sweet light crude, which is naturally low in sulfur and the much sought after stuff used to make high quality gasoline and diesel.

Here’s part of his wrap. “So here is where we are: We have oil prices that are akin to a Roman candle, going right through the roof, and instead of doing things that would put downward pressure on oil and gas prices, the administration is taking oil through royalty-in-kind transfers, oil payments off the Gulf of Mexico wells, and sticking it underground in the Reserve and taking it out of supply.”

Dorgan’s hot commentary echoes what OOIDA has been saying for months. At the end of January, OOIDA’s Jim Johnston called on President Bush to stop putting oil into the nation’s strategic petroleum reserve until fuel prices ease.

“You have a double impact there,” Johnston said during an interview on “Land Line Now” XM radio show. “You first have the impact at the pump with the federal government competing with consumers for purchasing that fuel.

“The other thing is that the government is using taxpayer dollars to purchase fuel for the Strategic Petroleum Reserve at a time when fuel is at its highest price. It makes sense to discontinue that diversion until the price of that fuel drops and it has less impact on consumers.”

So why is the Bush administration taking our most sought-after crude product off the market and sticking it in those caverns on the Gulf? Taking it out of our supply and pushing the price up? The price of a barrel of oil is $110. Today, ProMiles surveys show 24 states with average diesel costs above $4 per gallon. Truck drivers are sending us phone photos of $5 a gallon diesel!

The senator from North Dakota pointed out another surprise in his comments, one that defies reason. He said the DOE wants to increase that 60,000 barrels a day to almost double, or around 120,000 barrels a day underground for the second half of the year.

Can someone explain how this can possibly be a smart thing do right now? When everyone is hoping and praying for something to put some downward pressure on energy costs? And when trucking desperately needs some relief and economists are looking longingly at the end of 2008, this seems to be a flat-out plan to make sure the price of oil stays at dangerous altitudes.