$20 Per Gallon by Christopher Steiner

Christopher Steiner’s new book, $20 Per Gallon, released last month, tells the story of America’s future in a world of rising gas prices. Steiner combines the insight of experts and industry leaders in energy, transportation, and agriculture to paint a vision that inspires awe, anticipation, and sometimes apprehension. By the time gas prices reach—you guessed it—$20 per gallon, Steiner predicts that Americans will no longer enjoy a plethora of cheap, made-in-China products; vacation destinations such as Las Vegas, Jackson Hole, and Disney World will cease to exist; and sprawling suburban homes will grow vacant. All of this because oil prices, continuously heightened by decreasing supply and increasing demand, will kill most major airlines, exponentially raise the cost of shipping, and overthrow the automobile as America’s cheapest, most convenient mode of transportation.

Overall, however, Steiner’s envisioned future is a bright one. Even under the constraint of high oil prices, America will adapt, maintaining its position as an economic leader. To do so, the U.S. will need to maintain accessibility within and between cities, allowing people and goods to reach the jobs and industries that drive America’s production. Luckily, as Steiner points out, the world already has plenty of examples of fuel-efficient transport from which to learn. New York City’s subway system, unparalleled in capacity by any other mass transit system in the U.S., will become the envy of cities around the country. As suburbanites abandon their half-acre lots and take up residences closer to their jobs, these cities will grow not only in population, but also in density. This density, which now fuels the overwhelming use of New York’s subway, will drive cities to invest in new mass transit systems. Similarly, Americans will need a more fuel-efficient method than airlines to travel from city to city, and Steiner suggests that many regions will develop high-speed rail lines modeled after those in Europe that transport people in France, Germany, and Spain at 200 mph.

Steiner’s book is a thought-provoking and entertaining read, highlighting several illustrative examples of the effects of rising oil prices in each chapter, culminating in the end to provide a thoughtful and intriguing view of the future. These examples provide insight from a variety of experts and perspectives, calling attention to an important issue in a manner that is engaging and accessible to the public. Steiner makes many apt predictions. Many airlines, especially those that struggled at $4 per gallon, will probably fail before new technology will save them. Traveling overseas will be much more difficult for the average American. Certain everyday items will become luxuries in the future. Overall, $20 Per Gallon is a very worthwhile read.

However, $20 Per Gallon fails to fully consider the effects of new developments in technology, especially improvements to electric cars. First, one assumption on which the premise of the book is based, that demand for oil will keep increasing despite rising prices, lacks thorough justification. Second, the prediction that America will choose rail and mass transit as the sole modes of transportation to reduce oil use lacks evidence. In the chapter entitled “The Car Diminished but Reborn,” Steiner points out several upcoming innovations including GM’s plug-in hybrid, the Chevy Volt, to be released in 2010. According to a New York Times article published on August 12th, the Volt is estimated to get 230 mpg in city driving, and its competitor, Nissan’s Leaf, would get 367 mpg in the city. Steiner also refers to Better Place, which is developing the electric equivalent of gas stations, allowing drivers to take long trips without charging their batteries overnight.

Given these innovations, as well as the many others likely to develop soon given the huge economic incentive to develop alternative energy and transportation technologies, Steiner’s conclusions are not certain. At 300 mpg, over 10 times higher than the current average mpg, Americans could still afford to drive at $20. The Volt, currently priced at $40,000 may not be accessible to the average American. But as the technology is further refined and economies of scale develop, that price tag will surely drop. And with such little fuel required to operate these cars, demand for gas might not increase as quickly as Steiner expects. Furthermore, companies like Better Place will allow people to drive as far as they choose, challenging an increased necessity for alternative modes of transportation such as rail and transit. America has spent decades developing an infrastructure based on the automobile, and while many dense areas such as New York City depend on mass transit systems, the need to abandon roads for rail in all areas of the country is unlikely.

Although Steiner does not discuss policy implications in his book, the predictions in $20 Per Gallon speak to action today. While previous policies to reduce America’s dependence on oil have largely been aimed at environmental and security benefits, fuel-efficient transportation systems also frequently have economic benefits. As Steiner points out, fuel efficiency will be a necessity for the U.S. to maintain its economic standards at $20 per gallon; however, such developments would spur huge economic gains in present day. Mobility between and within cities is important regardless of gas prices; it is a major driver of economic growth in and of itself. Metropolitan areas with populations greater than one million account for 54 percent of the U.S. population and 65 percent of the nation’s GDP. These cities are the cornerstone of America’s economy, and it is essential that they be easily navigable and well connected. However, high speed rail and mass transit are not the only modes of transportation that could achieve these goals. Policy should reward transportation investments that improve mobility, connectivity, and economic competitiveness. Programs that score highest in these areas should be federally funded, regardless of mode, driving real economic growth in the present.

-Sarah Fletcher

Land Use Does Not Measure National Priorities

On July 22, the Urban Land Institute (ULI) released recommendations for transportation reform entitled “Transportation for a New Era: Growing More Sustainable Communities,” calling for the federal government to overhaul the planning and funding of our national transportation system. The recommendations propose the establishment of a new vision for federal transportation policy, recognizing the opportunity of the upcoming reauthorization to update current policies to the needs of the 21st century and increase investment to repair our crumbling infrastructure.

Two of the broad goals ULI recommends are recognizing the role of land use in linking infrastructure, housing, and sustainability and encouraging more compact development. The report indentifies land use as the intersection of infrastructure, housing, and sustainability and promotes it as a medium in which the federal government can address concerns for all three issues. In light of this, ULI promotes compact development to simultaneously minimize travel time to jobs, shopping and services and environmental impacts.

While NTPP does not endorse land use as a national transportation goal, efficient land use can help achieve both economic and environmental goals. By moving from a sprawling, highway-based system to a more compact, transit-based system, a city may reduce the distance to jobs and other activities, reducing the economic cost of time spent traveling. This could also reduce the vehicle miles traveled in the city and therefore reduce carbon emissions and fuel consumption. It may even promote safety by reducing highway congestion and the resulting collisions. Likewise, building affordable housing closer to public transit could have the same effects.

However, these decisions must be left to communities, not instituted in federal transportation policy. An efficient national transportation system should, in the end, promote economic competitiveness, environmental protection and safety. Land use is not a measure of success in and of itself, but rather a means to achieving these ends. Furthermore, it is not the only method for reaching national transportation goals. Developing carbon fuel standards and efficient vehicles will also reduce emissions; innovations in technology could promote safety. The use of congestion pricing or in-car information technology systems may improve economic competitiveness. All of these are viable options in developing efficient transportation programs, and the federal government should not mandate which option be given preference. Rather, a competitive system which evaluates programs on more high-level, outcome-oriented criteria will best achieve national goals.

Land use is an essential consideration in infrastructure development, and the research done in this area is vital to successful community development. However, every city and region has its own unique challenges. Federal transportation policy must allow enough flexibility for local authorities to develop their own approach to meeting regional and national goals.

-Sarah Fletcher

A National Infrastructure Bank Does Not Solve Revenue Problems

Proposals for a national infrastructure bank have continued to generate significant interest and debate in recent months. On May 20, Representative Rosa DeLauro introduced a bill that would create such a bank, and Pennsylvania Governor Ed Rendell, co-founder of Building America’s Future (BAF), has been outspoken in his support. Meanwhile, the Obama Administration has outlined its own plan for a national infrastructure bank.

These plans have several merits. Governor Rendell argued at an event sponsored by BAF on June 24 that an infrastructure bank governed by appointed officials could help depoliticize transportation funding and potentially limit the power of earmarks to allocate spending. Additionally, by working outside of the established donor/donee system, the bank could fund projects across traditional modal and geographic boundaries. DeLauro’s bill, for instance, would allow up to $625 billion in loans, bonds and other securities to be distributed to projects of national and regional significance on a competitive basis. Finally, the bank could encourage private investment in public infrastructure projects.

Realistically, however, a national infrastructure bank would likely not solve the fundamental flaws in our current transportation financing system. Even if Congress could be convinced to relinquish control of transportation project funding to an infrastructure bank, the act of establishing a bank does not create blank check power to give out hundreds of billions of dollars in loans. The capital must come from somewhere. DeLauro’s bill calls for the appropriation of $5 billion to the bank each year for 5 years, starting with FY 2010, but it does not identify a source in the budget. Additionally, states receiving funding would have to repay the loans eventually. This merely diverts responsibility for finding a revenue source to the state level instead of finding a national solution. A national infrastructure bank cannot be treated as a revenue source; rather, a successful bank would have to be accompanied by a sustainable revenue source.

An alternative approach that deserves more attention is expansion of the Transportation Infrastructure Finance and Innovation Act (TIFIA). Established as part of TEA-21 in 1998 and extended by SAFETEA-LU in 2005, TIFIA is a federal credit program that funds transportation projects of national and regional significance on a competitive basis. As of April 15, 2009, TIFIA has provided $6.6 billion in assistance to 19 projects, which sum to $24.4 billion in total investment, and all loan repayments have been made on time. Instead of creating a bank to provide similar credit assistance, it makes more sense to capitalize on the success of this existing program. On June 2, 2009, Representative Eddie Bernice Johnson introduced a bill (H.R. 2663) to extend TIFIA, increase yearly appropriations for the program from $122 million to $285 million, and raise the maximum federal funding share from 33 percent to 49 percent. While these numbers would need to be raised further to match the scale of a proposed national infrastructure bank, this bill is a good start towards expansion. It has not received any action from the Transportation and Infrastructure Committee since its referral to the committee on June 2.

As the highway trust fund dries up and the gas tax continues to provide insufficient revenue, federal infrastructure financing needs an overhaul. Finding a new, sustainable revenue source is the first and most important step in this reform. A national infrastructure bank, by itself, does not take this step at all. While a carefully constructed national infrastructure bank may help to stimulate efficient and competitive transportation investment, something which the TIFIA program already does, it is not the best tool for solving the transportation financing crisis.

-Sarah Fletcher

Break the Political Traffic Jam on Transportation Overhaul

Big thinking after World War II changed the nation. It must evolve again.


By Joshua Schank , Matthew Dallek
Posted June 25, 2009

Joshua Schank is transportation research director at the Bipartisan Policy Center and was the transportation policy adviser to former Sen. Hillary Rodham Clinton. Matthew Dallek is a visiting scholar at the Bipartisan Policy Center and teaches history and politics at the University of California Washington Center.

In recent months, the heated-up healthcare debate has short-circuited a serious and much-needed discussion about America's transportation and infrastructure agenda—and all of the economic benefits that will flow from enacting a revitalized transportation policy. Transportation has become a policy orphan amid the healthcare tsunami that's overwhelmed the news coverage of Obama's America...

To read the full piece, head on over to the site of US News & World Report

A website devoted to infrastructure

FYI, There's a new website out, www.infrastructureusa.org, devoted entirely to, you guessed it, infrastructure. We are not affiliated with the group but are spreading the word anyways!

User-Pay and Mode-Neutrality – Inconsistent? Responding to Bob Poole

The recently released NTPP report has started to generate discussion, including articles in The New York Times, The Minneapolis Star-Tribune, and in the Journal of Commerce. The coverage has generally been favorable, but if everyone agrees where is the fun in that?

Bob Poole at the Reason Foundation, for example, agrees with NTPP’s proposed performance-based approach and that great reforms are necessary. But he also says that that the NTPP principles of “user - pay” and “mode neutrality” and inconsistent with one another. Jeff Davis of Transportation Weekly spoke of the same “conundrum” when he asked a question of the Finance Commission at a press conference releasing their report.

A charge of “inconsistency” is rarely just that – people will often overlook inconsistencies if it suits their intended outcomes. The real issue is that Reason and others do not like it when user fees are collected from highway users but spent on other forms of transportation.

On the face of it this might seem like a reasonable complaint. If highway user fees are being spent on “other” modes of transportation, we will under invest in highways relative to their use. This will lead to insufficient highway capacity and poorly maintained roads, while “alternative” modes receive overinvestment unrelated to their use.

There are two fatal flaws with this kind of thinking. First is that it assumes that different modes of transportation operate independently from one another. Second is that it assumes that highway users pay something approaching the full costs of their transportation. Both assumptions are clearly incorrect.

All modes of transportation interact with and depend on one another. Highway users, being the primary mode in the U.S., benefit from the use of other modes because it frees up capacity. And transit users typically do not have subway stations in their living rooms – they must access these stations using roads or sidewalks (which are typically provided as part of road construction). Moreover, the vast majority of public transportation users in the U.S. ride buses, and these run on roads and highways.

This leads to the second flaw. It could be argued that because transit systems, sidewalks, and bicycles are all subsidized through government revenues that are not strict user fees, these systems are not paying for themselves. But this argument only works if highway users are actually paying something approaching the full cost of their transportation, which they are not. They are not paying the congestion, environmental, energy or safety costs, much less the full cost of maintaining the highway system. Moreover, now that the U.S. Government owns General Motors, many highway users are being subsidized even more.

Perhaps, someday, we will charge highway user fees that approximate true marginal cost. When that day comes, perhaps it might be useful to discuss user-pay consistency across all modes. But we are a long way from that. Until we get there we will never have a cohesive and comprehensive transportation system unless we break down the modal silos and start considering the network.

-Joshua Schank

The panel has wrapped up and the official launch is concluded, but our full report and executive summary are available on the website!