Monday, January 26, 2009

Mysterious inflation in Pittsburgh

P-I-A-C caught this quote from the Port Authority portending a possible fare increase at the end of the year. From the PG is this quote explains that....

A fare increase "in line with inflation" is likely Jan. 1 in any event, he said.

Inflation? The financial world is so screwed up these days that you have some people hoping for inflation. I just have to wonder, does anyone at the Port Authority read the financial news? Inflation is virtually nonexistent of late. Officially, inflation in all of 2008 was 0.1%. * Note the decimal point. So an increase 'in line with inflation' of PAT's $2 base fare would go up to $2.01. If you look at PAT's disproportionate fuel costs there is rampant deflation. Wholesale diesel costs are down like 66% from their peak last year and down significantly from their year ago prices. Even if they think that statement applies to their capital expenditures, by most accounts construction costs are falling as well. Most of that decrease in fuel prices across the board have yet to work their way through the supply chain as best I read.. so nothing about to change real soon.

Gonna have to have the PR folks come up with a better explanation than that if they want to raise fares. That or else riders might hold Bland to that promise and expect fares to be lowered next year if deflation shows up as some expect.

* I'm giving that the benefit of the doubt. The seasonally adjusted All Urban Consumers CPI is actually down year over year in December. But by any metric you choose, inflation in the last quarter of 2008 was more like deflation at a double digit annualized rate.


Blogger EdHeath said...

Actually, the new fare would be $2.02. I guess we still need pennies.

Clearly, the Port Authority did not actually get what it wanted in the contract negotiation with the drivers union, even though to my way of thinking the final contract seemed quite close to the fact finder's report. Guess the Authority exaggerated when it said it had gotten what it needs.

I see this as a political move. If the transit authority keeps raising its rates, maybe the State legislature will leave them alone. If it appears that PAT is trying to live within its means, that might mollify legislators from far away counties who don't like helping Pittsburgh (not to mention our exurb neighbors who also don't like helping Pittsburgh).

There is that $100 million dollar cost over run on the Chunnel. Again it might look good to the Feds if we are raising fares to help pay for that.

Monday, January 26, 2009 3:47:00 PM  
Blogger C. Briem said...

well, we are both a bit math challenged today. A 0.1% increase over the $2.00 base fare would come out to $2.002.

Monday, January 26, 2009 8:49:00 PM  
Anonymous MH said...

So the fare in dollars matches the distance from the next passenger on the 61c in centimeters.

Monday, January 26, 2009 8:55:00 PM  
Anonymous Ken Zapinski said...

C'mon folks. I expect better give-and-take on this board...

The Consumer Price Index as a measure of inflation in this instance would only relevant if any of the Port Authority's expenses were tied to the CPI. But they're not. About 75% of the budget is personnel costs (wages and benefits) and we know a) that wages are going up, no matter what happens with CPI and b) health care costs are rising between 8 and 10% per year.

One of the recommendations of the Governor's Transportation Funding and Reform Commission -- indeed a requirement for new Act 44 funding -- was that transit agencies (not just the Port Authority) maintain a more regular increase in fares that accurately reflect rising expenses, rather than bow to political pressure and keep them artificially low by not adjusting them regularly.

And the fact that you consider a proposed fare hike "news" is a further indictment of the short attention span and lack of context supplied by the news media. Since the time the Port Authority board started talking about fare hikes in Spring 2007, at the time of the Jan. 1 2008 fare hike, and continually through 2008, the Port Authority board and leadership repeatedly said they would be undertaking regular fare hikes.

Tuesday, January 27, 2009 10:06:00 AM  
Anonymous MH said...

Ken, I don't think the problem (at least here) is lack of context. Sure, there is new management, but it will be some time before I forget how much was wasted in the past. (And, in my opinion, how much is currently being wasted under the Allegheny.) Past performance certainly merits close attention to future spending.

Tuesday, January 27, 2009 10:23:00 AM  
Blogger illyrias said...

Also, Ken, the underlying current here is that Port Authority is expensive. They need to make some adjustments, but the price of service should not blindly increase regularly.

In the recent peer review of other transit cities, there is no bus service more expensive than us (and only Milwaukee comes close.)

If an increase in base fares goes along with a decrease in some complication or transfer fees, that might be palatable to people.

(Peer review )

Tuesday, January 27, 2009 10:37:00 AM  
Anonymous Ken Zapinski said...

I agree 100%. While getting a sufficiently competitive labor contract was a necessary condition to ensure future survival, it isn't sufficient to make the Port Authority the kind of transit system the region deserves.

The Port Authority needs to make great strides on improving the effectiveness of the system -- providing service where people want to go when they want to go there -- in an affordable way. The Connect 09 process seems to be working in the right direction, and the Port Authority will be going out this spring to get public comment on various network design alternatives.

Tuesday, January 27, 2009 11:58:00 AM  
Anonymous AMD said...

I think what is being ignored in this debate is that, like Ken points out, Port Authority's personnel expenses are 75% of its operating budget. Only a protracted strike could have led to a significant decrease in that number. Seeing as no one had an appetite for a strike, we're stuck with eating minor fare increases and service cuts.

And "more efficient" means fewer drivers providing more service. The trunk lines that are being discussed are designed in other cities to maintain service levels while decreasing the total number of buses in operation. By eliminating waiting times downtown and speeding up transfers with smart cards, buses will move more rapidly through the system. This will allow Port Authority to maintain the same amount of service for passengers while slowly cranking down the number of actual hours that buses are in service. I think that this is a sad consequence of Port Authority's outrageous union wage structure, which was not really addressed during the last round of negotiations.

Tuesday, January 27, 2009 12:10:00 PM  
Blogger C. Briem said...

Ken, among other things the whole economic situation has changed in the last year so it's not lack of attention to news but the appearance that the Port Authority has not noticed the news that is important here. Nobody out there is talking about inflation as the cause for any prices going up anywhere. When I read that I laughed out loud pretty hard. Truthfully I figure it had to have been taken out of context, he couldn't have actually said that as it came across.

Funny how the Port Authority is not talking about how their base fare ever compares when adjusted for that mythical regional cost of living that was touted so much by some during the labor negotiations. No reason at all to ignore it in one context when using it as exhibit number one in the other. Not surprising, but it is kind of sad.

as for the efficiency that is so sought after. What scares some of us Ken is the definition of effeciency some use which is nothing other than less service. Efficiency was the reason for the huge route cuts not long ago right. All that resulted in was fewer riders only hidden by the gas crisis and the vast increases across most agencies except for us. That isn't efficiency, its just simply less... and some want a whole lot less.

Tuesday, January 27, 2009 9:44:00 PM  
Anonymous MH said...

Apparently bus service is pretty good downtown. Bank robbers are using it for a get-away. See

Tuesday, January 27, 2009 10:52:00 PM  
Anonymous Ken Zapinski said...

Sorry, Chris, I think you're still off base. "Inflation" as measured by the the CPI is flat. But the Port Authority wages are going up by roughly 3% per year, and health care cost are going up 8-12%. That's inflation. Maybe not as measured by the CPI, maybe not as measured by other companies or consumers, but when 75% of your expenses are, by contract, going up by 4-5% per year, what else do you call it?

Wednesday, January 28, 2009 6:48:00 AM  
Blogger C. Briem said...

offset by well over $2/gallon drop in wholesale diesel prices which they have personally assured me they can take advantage of because they didn't lock in their prices for the year last summer and they were supposed to. At best the math is even for them.

And tell me... when the price of diesel was going up they went out of their way to point that out to the media and public what a big new cost that for them to absorb. Why are you or they not pointing out their fuel savings as diesel prices have collapesed.

You can't have it both ways.

Wednesday, January 28, 2009 7:12:00 AM  
Blogger Bram Reichbaum said...

Good discussion here. Ken, I hope you take another stab at NoComLefBehi -- it'd be a welcome readdition, and I think I got the preliminaries out of our system. :)

If health care costs have really been going up 8-12% a year, I can be forgiving. It also makes me think that everyone involved should be pro-actively clamoring for a federal health care bill.

Wednesday, January 28, 2009 5:51:00 PM  

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