The Cost of Gas and Transit

A recent article in the Los Angeles Times highlighted some signs that transit ridership is declining as gas prices fall. Although much of the ridership evidence is anecdotal at this point, given the roughly 50% drop in gas prices over the last few months a return to cars would not be unexpected. However, more data will need to be gathered (and numbers from recent months more fully analyzed) before any firm conclusions can be made about driving trends. Even then the implications may not be clear, because several questions cloud the situation.

The first x-factor is the weak economy. Economic growth or weakness has in the past correlated quite closely with vehicle miles travelled (VMT) - with growth increasing VMT and weakness hurting it -although vigorous debate still exists about which way the causation flows. In fact, recent events may yield some insight for this debate. For example, a year ago the economy was still fairly healthy and gas prices were rising sharply – two forces that should pull VMT in opposite directions. In recent months the economy has been hit hard, yet gas prices have also plummeted, once again creating forces that usually pull VMT in opposite directions. The data is not yet available to clearly assess how this is playing out, but it will be interesting to look at more closely in the near future.

The second x-factor is uncertainty about future gas prices. As we have discussed in past blogs, a decision between driving and transit can be made day-to-day, thus gas prices have an instant short-term impact on transit usage. But expectations of higher prices in the future may be continuing to shape longer term consumer decisions about vehicle purchases and the location of housing. If that is the case, a full rebound to previous VMT levels (per capita) may not occur, despite current cheap gas.

The LA Times article underlines the importance of having a flexible transportation system with multiple ways to get from point A to point B. But more than just current gas prices are at work in influencing transit usage today, and it would be a mistake to draw conclusions about the long-term health and viability of transit from recent anecdotal evidence. 

-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