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used as justification to arrange a Memorandum of Agreement with the Navy in 2003 with Congressional support to transfer MARAD vessels to the Navy for SINKEX purposes.

However, Congress was in fact misled. The 2001 cost estimates were inflated by 58%. Of the 140 vessel scrapping cost estimates, 63 were awarded scrapping contracts as of January 2008. The cost estimates for these 63 vessels amounted to $142,841,160; but the actual contracts amounted to merely $59,635,469. The actual cost per ton was $141, compared to the 2001 estimate of $338 (see Appendix A). The overinflated cost estimates of 2001 helped garner support from Congress to enact laws and amendments to allow the ocean disposal of vessels.

Indeed, recent evidence points to the fact that domestic recycling is most often the best value consideration even with externalities ignored, as evidenced in the sections discussed above. This is due to a combination of factors including commodity price increases, a steady supply of ships allowing domestic yards to maintain an active workforce and increased competition due to greater activity.

Furthermore, a well established and trained workforce allows for faster turnover of ships than other methods and thus lowers government storage and maintenance costs, which amount to approximately $20,000 per vessel annually. Obsolete vessels await disposal

an

average

of

22

years,76

equating

to

approximately $440,000 per vessel over the course of a ship’s obsolete non-retention status. Maintaining the Navy inactive fleet costs taxpayers approximately $14 million annually.77

High steel prices and strong competition in the domestic scrapping industry has reduced costs to the government from an average $79/ton

76 77

House of Representatives, 2000

http://www.navytimes.com/news/2008/02/navy_shipdisposal_08 0223w/

INTERNALIZED COSTS

(negative value) in 2007 to a profit (positive

value) of $21/ton in 2008.78

Dismantling costs

are well below that of artificial reefing, which cost approximately $554/ton on average, even when including vessels such as the Ex- ORISKANY in this average, in which only partial remediation was conducted.

Domestic ship recycling is economically sound: it creates U.S. jobs, provides commodities for sale and eliminates most externalities associated with non-recycling options. It is clearly a best value solution.

U.S. ship recycling operations in Brownsville, Texas, generate thousands of jobs throughout the dismantling and recycling processes. The dismantling alone of one single vessel, the Ex- SAIPAN, is said to bring 250 green jobs to Brownsville; jobs that are expected to last one year. These recycling jobs support the total job creation of approximately 875 jobs in the wider economy when accounting for indirect and induced employment. Image Source: www.clui.org/lotl/v33/k.html

78

http://www.whitehouse.gov/omb/expectmore/detail/10004010.20 06.html

BASEL ACTION NETWORK

31

2011

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