Biofuels may prove more volatile than oil for transportation fuel

This story is the NY Times raises alarms that biofuels are subject to weather risks. As climate change is likely to increase weather swings and cause great damage to crops in the future, it seems that wholly embracing biofuels is not sound policy. Since the country is freaked out by the rising price of oil and there is no reasonable expectation of a major decline anytime soon (I'm doubtful of any type of speculative bubble in the oil market), switching to a fuel source that is more unpredicatable-at the cost of higehr food prices no less- may force uncomfortable and unpleasant choices in the future between mobility and hunger. It seems that biofuels will not solve many of the problems associated with transportation energy and will likely cause more severe and unexpected problems in the coming decades. Perhaps hydrogen is the way to go.

What is the real effect of gas prices on transit ridership?

There has been a lot of press recently about how transit use is way up because of high gas prices. I don't doubt that there have been some effects. However, people are not switching to transit willy-nilly, rather they are only switching to certain types of transit. Today's LA Times has two stories that show the problems with the idea that transit use is way up due to gas prices alone.

The first article is about the federal legislation that funds additional operating costs for transit. The lede mentions that people are flocking to bus and rail, but the statistics cited later refer only to light rail and commuter rail. Light rail is up 10% over last year, for instance. Since light rail is going through a growth spurt across the country, there is no doubt some of this increase is simply due to service expansion.

The second article really shows the complexity of luring riders to transit. This story details how LA MTA is suffering from declining bus performance. It also cites Metro staff who say that bus ridership is down nearly 6% from last year. Rail ridership has increased during the same period. Yet buses carry far more riders than rail-80% of the total boardings. This results in a net decline of local (not commuter) transit use year to year even in the face of higher gas prices.

A reasonable story about the auto market

There is finally a reasonable story on car buying in today's LA Times. It is the first I've seen that doesn't claim high gas prices as the primary reason auto preferences are shifting. The story makes two important points that diminish (but not eliminate-there is an effect) the role of high gas prices in the current auto market. First, from an economical point of view, small cars with conventional engines are a much better investment than hybrids over the life of the vehicle. The second point is that people do not buy cars based solely (or even mostly) on operating costs. They buy the car that they want. If operating costs were a big deal, then people would have turned away from large SUVs long ago since they have always had high fuel costs (and big tanks to fill) and cost far more to insure than cheaper small cars. Matt Kahn has written about the clustering of Prius buyers in the Bay Area of San Fransisco as a function of showing off one's "green" credentials. You can't show off a transit pass like you can a Prius.Publish Post

Wireless internet access on public and private vehicles

In Boston the MBTA is installing broadband wi-fi access on their commuter boats. This is a good idea and should be expanded to other transit vehicles as a way of encouraging transit use. As more hand held devices (such as the iPhone) can use wireless internet, installing wi-fi on buses and local trains makes sense, too, in addition to commuter vehicles where everyone sits and has space to use a laptop.

However, Chysler is threatening to derail all the goodness of wi-fi on public transit by offering it as an option on all of their vehicles. This is a collossaly bad idea. One way to reduce driving and encourage transit is to actually treat driving as a task that demands attention. I suspect (and I say this with no empirical evidence) that one reason that people are somewhat willing to deal with long commutes, lots of driving and congested roads is that cars have become far more comfortable and accomodating over the past few decades. Perhaps a return to AM radios and stick shifts would reduce some of the positive utility of personal auto travel. Or, maybe people will start to value their online and other communication connections more than the physical connections that they get from driving. If this becomes the case we'd expect people to switch to transit because they value they're ability to stay electronically connected more than whatever benefits they get from driving (which is a function of time, accessibility and other costs).

Proper incentives for electric autos

Jalopnik has been keeping tabs on the escalating price of the someday-to-be released Chevy Volt. What they bring up, and what seems pretty clear, is that GM is angling to increase the tax credit for the car in order to raise the price of the vehicle. The consumer will still buy the car for around $30,000 after the credit is accounted for, but the sticker price will increase to account for whatever the credit ends up being. So the higher the credit the higher the profit on each car and no direct discount to the individual buyer.

All of this points to the dangers of poorly conceived incentives. If the price of gas is so high that people are buying super fuel efficient cars in droves it seems that no credit is needed. If the US government wants to subsidize electric vehicles, a direct payment to automakers to develop the electric systems makes far more sense than a per car tax credit. The Volt will likely suffer if the sticker price ends up being around $40,000 or more because GM accounts for the credit in the price, even if concumers "only" pay $30,000 or so. As a related concern, the government should not subsidize vehicles that do not contribute to the gas tax until some types of user charges are put in place to help pay for infrastructure (which should happen in any circumstance).

Adaptive reuse for all the abandoned gas stations

The high price of gas seems to have sparked a new round of interest in hydrogen powered cars. I've always wondered what should be done with the existing 180,000 gas stations in the U.S. if we switch to another fuel sources for transportation. Apparently I'm not the only one who thinks about this as ExxonMobile has proposed turning some of their stations into live/work spaces. The name, Exxonmobilehome, makes me this is a joke, but maybe there is a market for living in glass boxes on top of polluted sites. If this happens in California they should probably hurry up and pass the legislation allowing landlords to prohibit smoking by tenants and guests anywhere on the property.

How should transportation infrastructure maintenance be financed?

The Washington DC Metro system is a busy rail system that has become an essential part of DC transport. Yet it is at capacity in terms of vehicles and the system is starting to break down. There is a bias in transport finance towards large capital expenditures and very little interest in maintenance. This isn't limited to the US (the London Underground is facing capacity constraints and dilapidated facilities) nor transit (the Interstate bridge collapse in Minneapolis was a maintenance/replacement issue).

With any technology the bulk of the economic benefits come after the technology is mature, not when it is new. Yet we finance expensive new systems without adequately thinking through how we will pay for them over their useful economic life. Relying on large federal payments is politically difficult and a poor use of federal dollars in many cases. Sales and use taxes to pay for infrastructure maintenance is regressive, and too often maintenance projects do not offer good enough photo ops for politicians (with the exception of an occasional pothole filling, though here in the governor California digs his own potholes to fill).

User fees seem much more fair and efficient, though there figuring out the right user fee is difficult. High transit fares will discourage riders. Road tolls are a good solution especially in areas where the potential revenue from tolls is substantial, though they are extremely difficult to pass politically. Higher gas taxes are okay, but as the price of gas rises people will shift to other modes or more efficient vehicles, lessening the financial benefits.

Somehow travelers need to pay for what they use through some type of marginal cost pricing. To say that new taxes, fees or tolls are bad because we've already paid for infrastructure and facilities through gas or other taxes misses the big picture and main problem we face. We are not paying for the infrastructure we have. We are only paying for part of it, and not even the part where we derive most of the economic benefit, namely the technology at maturity.

Evidence that people are traveling less

Today's NY Times has a story about the unexpected rise in retail sales over the past month. In part this is attributed to the tax rebate checks. What I am curious about is the relation between rising sales and fewer miles traveled (popularly attributed to higher gas prices). If VMT are declining the related economic effects should be seen elsewhere through lower employment or depressed retail sales (and other discretionary purchases) if travel is a derived demand. While unemployment is up, it hasn't increased to the point that we'd see a large drop in traffic.

Calculated Risk points out that while retail sales are up, they are down on a year to year basis by a bit less than a percent. This makes more sense considering the drop in VMT than the optimism of the NY Times story. The elasticities between VMT, retail sales, and transit use based on the price of gas (or other marginal costs of travel) deserves a closer look.

Micromotives and macrobehavior of congestion

(With apologies to Thomas Schelling)
Today's LA Times looks at the lives of all those people sitting in traffic on the 110 near downtown Los Angeles. They tracked down people through their license plates and profiled a few drivers. While the story is mildly interesting, it becomes clear that everyone they featured knew what trade offs they were making that led to their commute. Hence the reference to Schelling's work. One guy didn't want to leave his rent controlled apartment (though his wife only had a five minute commute, which means that the household had a reasonable average commute). Mostly people were hesitant to leave jobs, or once they bought a house were hesitant to move. These reactions are understandable. It was also clear that non-work activities played a big part in people's decisions about where to live, such as wanting to live by the beach. No one, however, considered the external costs of their travel when making locational choices.