I’m about the last urbanist writer to note that, yes, transit ridership did in fact hit its highest level since 1956 last year. Ridership was up 4% in 2008, and up 38% since 1995. While precipitated, in part, by the significant increase in gas prices during the first half of the year, much of the gains persisted through falling fuel prices and a teetering economy.
As plenty of others have also noted, the upward trend in transit use has run itself into a wall of service cuts and fare increases resulting from the implosion of state and local budgets. I’ll just say two things about this. One is that the reduction in transit service will directly and negatively impact the poorest households in the economy. The other is that this reduction in transit service is bad for the economy itself, both because transit operating assistance is an excellent form of stimulus, and because a resurgence in driving will threaten to derail recovery.
The rapid increase in oil prices last year directly contributed to the economic downturn by gutting the disposable income of households around America. This might not have been hugely problematic, had households been able to continue borrowing to pay for consumption, but in combination with the credit crunch the effect was deadly. It was deadly, note, because Americans were not able to rapidly and easily substitute away from driving, thanks to the country’s settlement patterns and inattention to transit.
Meanwhile, the decline in gasoline prices that has taken place since July has been a major source of economic stimulus. Had prices not fallen so dramatically, consumption would have fallen by considerably more. Still worse, authorities might have been more reluctant to use fiscal and monetary stimulus, given the threat of ongoing inflation.
But this is a temporary respite. It’s worth pointing out that the most significant collapse in global economic activity since World War II barely managed to push oil into the $30 per barrel range. Even now, as economic outlooks remain dim, prices have edged back up into the neighborhood of $50 per barrel. Given the collapse in new exploration and investment that has accompanied the drop in oil prices, one doesn’t have to be a genius to predict the path of oil prices once recovery begins. And the rise in oil prices will be a drag on growth. It will be a drag on growth because it will crimp disposable income, and it will be a drag on growth because it will exacerbate inflationary pressures and encourage the Fed to step on the brakes more quickly than they’d prefer.
This isn’t a problem that’s going to go away. If given the keys to economic policy, then, I’d push for a transportation-oriented recovery package that consisted of several parts:
1) Immediately step up funding of transit operations around the country.
2) Begin a long-term program of support for transit and intercity rail construction, focused on return on investment rather than immediate stimulus potential.
3) Agree to fund the long-term program with an increase in the gas tax, to begin phasing in in 2011, and a national push to congestion toll limited access roads, again beginning in 2011.
This would provide an immediate and targeted stimulus boost, it would put in place a funding stream to address budget issues, and by setting the long-term path of transportation funding and revenue collection in place, it could support a shift in demand toward walkable, transit-oriented neighborhoods in cities and in suburbs. This demand shift, in turn, could precipitate what I previously called a “migratory stimulus, that would drive new private investment and help bring about recovery. And in the process we’d reduce our exposure to high oil prices, and we’d strike a blow in the battle against climate change.