How Much Does It Cost To Get There/Anywhere?

About 5 hours from now I will clamor onto a bus in Washington, DC and four hours later emerge in New York City. 12 hours after that I will board a plane at JFK airport and get off 16 hours later in Hong Kong. Soon after that I will climb aboard another jet and 5 hours and one layover later I will emerge on the tarmac in Penang, Malaysia, the merciful end to my journey at least for a few days. Surprisingly, every mile of that trip will cost roughly the same amount, whether it is traversed 37,000 feet above the North Pole at 600 miles an hour or at 55mph on the Jersey Turnpike. The cost per mile, based on a back of the envelope calculation, is somewhere between 9 and 13 cents.

Here are the calculations (all distances are as the crow flies, more important than the actual route):
· DC to New York: 205 miles, Bus $19 = 09 cents/mile
· New York to Penang: 9230 miles, $1200 (Cathay Pacific) = 13 cents/mile
· Bonus calculation: Penang to Kuching, Malaysia on Malaysia Air: 948 miles, $100 = 10 cents/mile

The similarity between the per mile bus fare and the per mile airplane fare is striking, and perhaps coincidental. But it raises some interesting thoughts about whether there is a rough baseline cost to travel across modes, something of a “natural level” as economists might like to call it. Are the most competitive fares per mile about equal across modes? In reality, at 9-13 cents per mile this trip to Asia falls somewhere between the cost of other trips and modes. For example, my daily metro ride into downtown DC costs about 51 cents per mile. Driving around in my car costs 34 to 38 cents per mile. When I sometimes fly home to San Francisco on a cheap ticket it can cost as little as 6 cents per mile. Looking at this wide variance, the similarity noticed in the Asia trip seems to become mere coincidence.

The calculations:
· Metro ride Van Ness to Metro Center: 3.6 miles, $1.85 rush hour fare = 51 cents/mile
· Mazda 3: 7500 miles a year, 25-35 mpg, $4.20/gallon gas, $1700 annual insurance = 34-38 cents/mile
· DC to San Francisco on Virgin America: 2437 miles, $150= 06 cents/mile

Taking a step back, what can account for these differences? When it comes to transportation, you are really paying for three things: convenience (i.e. proximity to where you begin you trip and end it), quality (like space, service, and privacy), and speed - plus the provider’s overhead costs of labor, capital, fuel, etc. Obviously there are significant differences in all of these categories between cars, trains, subways, buses, and planes; logically they should be priced very differently.

Yet there remains that surprising price similarity between the bus and two different airlines on this upcoming trip. What does it mean? It’s still unclear to me. But I will have plenty of time to think about it during my upcoming flights, so hopefully I will have an answer two weeks from now.

-Daniel Lewis

The Future of Cars

In earlier posts we have commented on how high gas prices appear to have a densifying effect, encouraging people to live closer to where they work and play so that they can avoid the cost of driving. Transit ridership is up. Home prices in urban centers appear to be holding their value better than those in the suburbs. Yet while these trends may develop permanence, it is also important to note that the high gas prices driving this shift are having an equally potent impact on vehicle technology. As technology improves vehicle fuel efficiency, it would make sense that the densifying power of gas prices will be moderated to some extent.

Most people have heard that more hybrid and several new plug-in electric vehicles are coming to auto showrooms in the next few years, signifying a step change in car technology. But there are also significant developments occurring in conventional cars that run on gasoline. And most experts agree that gas will still be an important source of fuel for years to come. It will likely take both innovations to conventional engines and the increasing use of electric cars to wean the country off of oil. Importantly, for vehicles running on gasoline, reductions in fuel consumption translate directly to greenhouse gas reductions: each gallon of gas avoided prevents the emission of about 20-25 pounds of carbon dioxide.

To improve efficiency car makers are focusing on all aspects of a vehicle: its engine, transmission, weight, drag, and rolling resistance. Surprisingly, only a fraction of the energy stored in a gallon of gasoline ever makes its way into the actual powering of a vehicle’s wheels. In fact, more than two thirds of the energy in gasoline is lost by the engine to heat, friction, and idling. More still is lost to the transmission. Automakers are turning to a host of new technologies to fight these losses.

Similar to how the airplane technologies developed for fighters and bombers in World War II led to the first jet-powered passenger aircraft, high gas prices are driving innovations in vehicles that only a few years ago were unimagined or seemed futuristic. Automakers are in some ways facing their own war time situation. Locked in struggle with their competitors, a weak economy, and producing a portfolio of cars that don’t meet consumer’s fuel efficiency needs, it literally is a battle for survival for companies like General Motors. The only way to stay afloat is to innovate and create cars that consumers want – that is, cars that can get more miles per gallon. Whether produced by Ford, Honda, Toyota or GM, it is likely that better cars will emerge from these tough times.

So while transit is alive and healthy, it is also possible cars may emerge from this mess looking better than ever. Which brings up interesting policy questions – assuming we reduce or eliminate the negative environmental externalities associated with automobiles, what should their role be in our future transportation network? How will growth patterns continue to change? Would we seek to infinitely expand roadway capacity? Or would a multimodal approach still be necessary? We’re a long way from needing to answer these questions, but they are worth pondering.

-Daniel Lewis