June 26, 2009

Comments on Long-Range Funding Solutions Symposium

On June 24th, MnDOT held a "Long-Range Funding Solutions Symposium" to examine issues associated with the long-term funding of transportation. I was asked to be a discussant. These are my comments in extended form.

Thank you for giving me the opportunity to discuss the topics raised today.

First, MnDOT has identified $50 Billion of unfunded "needs" for additional resources of which 86% are for the purpose of "mobility" over the next 20 years. I am not clear as to how these needs were identified, but several points should be kept in mind. First, this is a slow-growing region (and outside the Metro a declining state). It has 5 million people now, and at best is growing at about 1 percent per year. Second, per-capita Vehicle Miles Traveled has been flat for almost a decade, and overall VMT growth has been flat for about half a decade. There are several reasons for this, most recently recession and high gas prices, but I think the most important is market saturation. if speeds are not growing (because we have maxed out the network given current technologies and face diminishing marginal returns to new road construction), and people have finite time, they choose not to devote additional time to travel (and thus distance). Fortunately, since the I-35W Bridge Collapse, MnDOT has adopted a "fix it first" approach, so that system preservation, operations, and maintenance get the largest share of the existing budget, and comprise the first funded element of needs.

We cannot know what "needs" for mobility are if we have an unpriced (or underpriced) transportation system. People will always over-consume if they are subsidized, and people do not presently pay for the congestion externality they impose on others. Once we have something like marginal cost pricing (or a second-best version thereof), we can determine which links generate more revenue than they cost to operate and maintain, and that will signal where capacity should be added, where the benefits of added capacity outweigh the costs.

Another way of thinking about what $50 billion means is that Minnesota is a state of 5 million people, so that amounts to $10000 of new construction for each resident of Minnesota (because this is above and beyond the funded part which takes care of preservation (we hope)). Over 20 years, $10000 per capita is $500 per year, or about $0.50 per trip. But that $0.50 per trip is not to pay for existing infrastructure, that is to pay for new infrastructure those travelers may or may not use; or if we were to charge users, we would be looking at 10 to 100 times as much per trip, as the new capacity built for $50 billion will serve only 10% to 1% of trips, most trips will continue to use pre-existing infrastructure.

We could also talk about mobility vs. accessibility, and why is it important to enhance mobility, but that is another long discussion, and the reader is referred to the Access to Destinations study for details.

Attention is a scarce resource, spending time on non-starters like $50 Billion in "mobility" needs detracts from real problems with existing infrastructure.

In short, the $50 Billion suggested comprises Wants not Needs. (as Jim Erkel calls it the Rolling Stones theory of transportation finance ... You can't always get what you want, but you get what you need).

Second, we need to re-examine the institutional structure of transportation funding and administration. We should consider a public utility model where a transportation authority or utility with independence from the legislation and executive branch of government determines how much is required to maintain (and as necessary expand) the transportation system, with oversight from a Public Utility Commission or similar. This would resemble how Natural Gas and Electricity and Water and Sewer in many places are currently delivered. Like those, transportation is a utility that has costs that users should bear as directly as possible. The user fee notion would be embedded into the governance structure of such a transportation authority. The British might call this a Transportation Trust. We could consider how this is organized at different levels of government (keeping state and local separate or bringing them together?)

Third, Value Capture has not been fairly characterized in the presentation made today. If we do not have road user fees, transportation creates value for land-owners. (If we do have marginal cost user fees, a closed system, and invest the revenue in transportation, making some simplifying assumptions, we would not have additional land value associated with investment (in the absence of agglomeration economies)). Since we do not have road user fees, value is created. Several of the methods proposed by the value capture study hold promise for financing transportation systematically, not just at the project level.

Fourth, in the short-term (next decade or so), gas taxes, indexed and adjusted appropriately should be used to fund transportation, as they are administratively much more efficient than road user charges. They have several advantages: foremost they are cheaper to collect than most of the proposed VMT charges. An annual odometer reading is certainly a similar alternative, but that does not have the environmental benefits of discouraging motor fuel consumption and encouraging better mileage. Ultimately as the fleet becomes electrified, the gas tax becomes a better and better incentive to move in that direction. If today 100% of the drivers use gas and pay for 100% of roads (which I recognize is not strictly the case at the state level, but is simply illustrative), and next year only 50% of drivers used gasoline, the remaining 50% would pay for all of the roads by doubling the gas tax. That provides a somewhat stronger incentive to switch to electricity. If the following year another 25% switch to electricity, than 75% use electric and 25% use fuel and pay the motor fuel tax, which is now 4 times as high. Eventually this becomes unsustainable as the last drive of a gasoline-powered car could not possibly afford 100% of the road system's costs, but in the meantime the incentive works in the right direction for the environment, and since government is always a lagging indicator, retaining the gas tax for as long as tenable should be considered the near term solution, with continuing research into road pricing, additional demonstration, and deployment of select strategies like High Occupancy Toll lanes. See Beyond the gas tax for a further discussion.

At any rate, as I have learned today, in Minnesota transit funding depends on the Motor Vehicle Sales Tax, so I will do my part to help fund transit and buy a car.

December 16, 2008

The Road Less Traveled

A study came out today from Brookings:

The Road…Less Traveled: An Analysis of Vehicle Miles Traveled Trends in the U.S.

saying VMT is down per capita and overall, (leading to the article mentioned in the previous post). As a consequence, I was interviewed on Mondale and Jones on WCCO, though no audio is available as of yet.

Driving is still down

Despite the fall in gas price, according to this Strib article: Minnesotans keep driving like gas costs $4 a gallon

As the article notes, the recession probably has something to do with it.

See especially the graphic:
Resisting cheaper gas

August 14, 2008

Will high gas prices lead to lower speeds

A nice article in Strib by Bill McAuliffe: Truckers ask other drivers to take go-slower approach (I am quoted on page 3.)

Some freight companies are having drivers slow down, but is the right economic decision for truckers the same as for passengers. Sure slowing down may save fuel, but it costs time, and time is still more precious than fuel.

July 22, 2008

Foreclosures down under

The foreclosure crisis hits Australia ... Fuel prices hit homeowners, with record Brisbane defaults

"National Shelter chairman Adrian Pisarski said the figures demonstrated the compounding effect of high petrol prices on already financially stressed homebuyers.

"It always seems to be in areas poorly serviced by public transport," he said.

"People there are double-whammied. Their housing costs are going up and their transport costs are very high because they are car dependent.

"I think many households would cope with one or the other, but not both.""

July 21, 2008

A dearth of fours

Via Ken Jennings, former quizbowler, A Shortage at the Pump - Not of Gas, but of 4s

July 9, 2008

T. Boone Pickens "My Plan to Escape the Grip of Foreign Oil"

From T. Boone Pickens, in the WSJ My Plan to Escape the Grip of Foreign Oil

In brief:
"My plan calls for taking the energy generated by wind and using it to replace a significant percentage of the natural gas that is now being used to fuel our power plants. ... We can use new wind capacity to free up the natural gas for use as a transportation fuel. That would displace more than one-third of our foreign oil imports. "

July 4, 2008

Va. Senator John Warner suggest reimposing speed limit

From AP: Senator asks if nation's drivers should slow down

"Sen. John Warner, R-Va., asked Energy Secretary Samuel Bodman to look into what speed limit would provide optimum gasoline efficiency given current technology. He said he wants to know if the administration might support efforts in Congress to require a lower speed limit."

The more important issue, while Congress obsesses about gas prices, is the safety effect. The results on this are complex.

Lowering speed limits on freeways, with enforcement, will encourage fast drivers to drive on rural roads with less enforcement and with less safety features, and likely drive up crash and fatality rates systemwide (though perhaps lower it on freeways).

Important research on this is by Charles Lave and Patrick Elias (1994) Accident Analysis and Prevention 26(1) 49-62 who studied the effect of raising the 55 MPH speed limit to 65 MPH in 1987.

June 15, 2008

Memo to the Next President of the United States on Transportation Policy

I have drafted a Memo to the Next President of the United States on Transportation Policy.

The memo outlines ten visions, which are summarized here, for fuller discussion, see the full memo:

  1. Within eight years more cars sold in the United States will be powered primarily by electricity and bio-fuels than by fossil fuels. All buses and passenger trains will use electricity or bio-fuels.
  2. Within eight years Americans will be able to ride autonomous smart cars that drive themselves in mixed traffic.
  3. Within a year, an independent federally-funded Bridge Inspection Service will begin to inspect and publicly report on the quality of all bridges on the National Highway System.
  4. After thorough evaluation, within eight years, bridges and pavements on the US Interstate Highway System will be upgraded to handle trucks carrying up to 100,000 pounds, increasing the efficiency of the trucking industry and by reducing the number of vehicle trips, increasing safety for other road users. These improvements will be paid for by the trucking industry, which directly benefits from the improved system. In heavily traveled corridors, a system of truck-only toll lanes will be constructed.
  5. Within eight years American travelers can choose to travel congestion-free by car or bus through America's largest metropolitan areas.
  6. Within four years American travelers will enter airports and transit, and train stations and cross borders, passing both security and immigration controls without delay while ensuring security.
  7. Within eight years a new source of transportation revenue based on time and place of use will be deployed, replacing the federal and state gas tax. This funding will support highway and transit networks.
  8. Returning to the vision of Democratic President Andrew Jackson, items in federal transportation legislation that do not serve a national purpose will be vetoed.
  9. Extending the bipartisan efforts of transportation deregulation in the late 1970s and early 1980s, within four years, highway and transit services and infrastructure will begin to be competitively provided by independent (public, private, or non-profit) organizations under appropriate local or federal oversight. Infrastructure will be provided under a public utility model, ensuring quality of service in exchange for earning a rate of return.
  10. Within one year, the United States federal government will establish separate capital and operating budgets. This will be coupled with a federal program to guarantee loans and bonds for highway and transit infrastructure projects.

  11. Full memo after the jump

    Continue reading "Memo to the Next President of the United States on Transportation Policy" »

June 1, 2008

US Gas temperature map by county

From Gas Buddy: USA National Gas Temperature Map

The differences by state are probably at least as much do to differences in taxes as some fundamental market difference.

May 8, 2008

Voters seem to reject gas tax holiday pander

As even Paul Krugman notes: Talleyrand and the gas tax holiday

"I’m on record as saying that Hillary Clinton’s advocacy of a gas-tax holiday, while it wasn’t good policy, didn’t rise to the level of a crime.

Judging from last night’s results, however, it was worse than a crime: it was a mistake."

If it wasn't a crime, perhaps Clinton should suggest a "social security tax holiday", to give taxpayers a break.

April 29, 2008

Pander bears

With Clinton in bed with McCain and Bush on the gas tax holiday, it is nice to see Obama opposing.

From the Strib comments Roadguy Blog Archive � Gas taxes: Ads at the pump? A federal holiday?

The sensible readers of the Strib have spoken, the gas tax holiday is a bad idea, of 17 responses, 0 were in favor and most against.

April 28, 2008

Gas May Finally Cost Too Much

From BusinessWeek Gas May Finally Cost Too Much

"Now, with nationwide gasoline prices having passed the inflation-adjusted record of $3.40 a gallon set back in 1981, the U.S. Energy Information Administration is predicting that gasoline consumption will actually fall 0.3% this year. That would be the first annual decline since 1991. "

January 8, 2008

GM demoes at CES

From the New York Times: G.M.s Fuel-Cell Car Makes a Statement. GM demoed a fuel cell powered Cadillac (the poorly named Provoq) and a modified Chevrolet Tahoe that drives itself. Neither is ready for production, but maybe we are finally asymptotically approaching the long-forecast future of cars that drive themselves and do not pollute.

June 18, 2006

Fuel efficiency: Prius SOV vs. SUV HOV

Briefly noted: The Skeptical Optimist: The Prius gas-guzzler vs. the SUV planet-saver

It is interesting (& amusing) to examine gas consumption per passenger, but again ... data is not the plural of anecdote. The question is what is the overall auto occupancy of different vehicles. I am dubious that the SUV is in general more fuel efficient, but will be persuaded by analysis of data ... which someone should do. Lots of it is here .