The Surprising Flexibility of American Motorists

In recent days more evidence has emerged of the serious changes Americans are making due to $4 a gallon gas. According to a recent American Public Transportation Association (APTA) ridership report, 85 million more trips on public transportation were taken in the first three months of 2008 than in the same period of 2007, a 3.3% increase over last year’s record total. The largest increases were seen in the nation’s light rail systems, which experienced an average of 10.3% ridership growth over last year, though increases were seen on all major modes. At the same time, the number of auto vehicle-miles travelled (VMT) is beginning to decrease at levels unprecedented in recent history.

Major papers like the New York Times, the Washington Post, and the Associated Press are all writing more frequently about not just increased transit use but also about the purchasing decisions we discussed in our previous blog. Reading between the lines a bit, one detects a bit of shock that Americans are actually changing their transportation habits, because for years the conventional wisdom has been that in the short term our demand for gasoline is what economists like to call “inelastic.” In other words, it was thought that our transportation system was so car and gasoline dependent that people had little flexibility in the short term when gas prices rose.

While it’s true that Americans are feeling a serious sting from these prices, it’s also true that many have been surprised to discover that they have other options they had never really utilized. The conventional wisdom discounted the fact that America is no longer a rural nation: roughly 70% of Americans live in urbanized areas, and many of those areas have public transportation systems whether they are subways, ferries, street cars, or buses.

The fact that we have recently seen such significant shifts in consumer behavior should indicate to policymakers that the auto fuel market is more elastic than most have imagined. Increased transit usage and decreased VMT are only a reflection of the more permanent changes that will likely accompany higher fuel prices, including increased fleet fuel efficiency, urban redensification and more public transport-oriented development. Policymakers should be conscious that they can have a hand in changing (or preserving), the status-quo of transport behavior in this country through their treatment of the fuel tax and other fees. This newly discovered tool in the policy tool box is good news for the unusual alliance of interests that care about our high oil dependence, environmentalists and national security hawks alike.

-Andrew Lukmann and Daniel Lewis