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Thursday, April 30, 2009

Clearing The Winter Roads


After discussing in class about Global Warming, and hearing repetitively about the use of salt in NY last year, I thought this would be a good blogto write about. Unlike Global warming, there is more evidence of harm because of the associated costs for DOT ( Departments of Transportation) and taxpayers, which are monopolies.

Image- Penndot Warehouse of Salt


Morton Salt and Cargill Incorporated are the big producers in selling its salt to "Salt Belt States"particularly departments of transportation in certain states, that use considerably large amounts of corrosive salt for winter roads. It has been believed that salt is a better tool in clearing the roads than sand, but is it true? - Well for a blog I think it is better not to determine what science has to offer and the resulting environmental effects. Instead, the attention should be on the incentives and other problems that are involved.

Note- Salt belt states are CT, DE, IL, IN, IA, KY, ME, MD, MA, MI, MN, MO, NH, NJ, NY, OH, PA, RI, VT, VA, WV, WI and DC

The big problem is that there is a shortage of salt among these states and increasingly high prices.Prices that are too high for the various departments of Transportation to continue using salt. Another neighboring problem is that state governments place the restrictions on what to use on winter roads( salt). Does this sound similar to monopolies...

1) Government first created salt monopolies once they introduced permits for salt mining and restrictions on the amount of salt used in each food stuff/item. When they created these restrictions they made if difficult for competitors to stick around because the restrictions may have been based on measurements which would require accurate and more expensive capital equipment. Permits were also another restriction that would increase competitors cost. Permits were allocated to a firm for the right type of equipment that would follow the standard regulations of the government.
Note- Salt belt states are CT, DE, IL, IN, IA, KY, ME, MD, MA, MI, MN, MO, NH, NJ, NY, OH, PA, RI, VT, VA, WV, WI and DC

2) The Supreme Court has played its role in securing these salt monopolies through the backing strength of permits.In the case, International Salt Co. v. United States, the U.S. filed for a civil suit against International Salt Company under the Sherman Act to break-up the salt monopoly. The Court decided that the Sherman Anti- trust laws would not work here and declared jurisprudence because indirectly the government gave them a patent right to establish this monopoly. Below is a statement of this case.

Due primarily to the Constitutional dimensions of the patent grant, an
extremely specialized jurisprudence controls the manner in which the competing
policy considerations must be balanced at the interface between the patent and
antitrust laws. The proper application of the “misuse” doctrine represents an
important portion of this specialized jurisprudence.


3) In the 1950's, the Supreme Court case United States vs. Morton Company, had penalized the those that bought salt for roadways because they couldn't afford the conditions of the agreement that the legislation intervened in creating.

4) Last year in the month of December, many DOT's were not able to support the growing rates of 50% price hikes for their supplies of salt.They even tried to come up with a program called "Costars" for states to sell excess amounts between states that use salt. The reason for salt monopolies to exist is just as abstract as it was in 1950 or earlier. According to the website, RecordPub.com, the Ohio Department of Transportation has been forced by the state to buy salt in the State of Ohio particularly with the Morton and Cargill companies because these companies are located in Ohio.

Falling short of a paper from the length of this blog...


List of Effects of using salt and possible reasons why monopoly has not been tampered with:

- Higher car insurance for states that use salt= corrosion of undercarriage
- Increasing monopoly prices that states may no longer afford or devise in selling among states
- Higher turn over of cars because of the corrosion of spark plugs and other parts ( don't forget the welder before taking out the car battery)

Without the time to create more research, it seems there are a lot of different groups to gain, but I'm not all that sure about Morton and Callagri as the only ones that profit from these prices. I couldn't find anything on input prices of salt or the signers of the legislation for the continuance of these monopolies. Also, after the class discussion over global warming and my findings about salt monopolies, I am becoming skeptical about extraordinary circumstances and legislation. Emotive forces are a good disguise.

Websites
http://www.nyipla.org/public/11amicusbriefs/Reply_Amicus_Brief_US_Phillips.pdf
www.dot.state.oh.us/Services/Documents/ODOT_Road_Salt_Market_and_Price_Analysis_12-15-08.pdf
http://www.usroads.com/journals/p/rmj/9712/rm971202.htm
http://seattletimes.nwsource.com/html/localnews/2008554976_roads24m.html
http://www.mortonsalt.com/faqs/road_sidewalk_faq.html#q2
http://www.kktv.com/home/headlines/29482709.html
http://www.tfhrc.gov/focus/archives/Fcs498/048rwis.htm
http://www.citizeneconomists.com/blogs/2008/08/26/privatize-the-roads-says-phd-economist/
http://www.witruck.org/weight_restrictions.htm

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