Transit Up

Posted by on . 9 comments.

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.

Comments

  1. Doug says:
    March 9, 2009 at 4:16 pm

    OK, fine. I’ll build the damn thing. Any particular color you had in mind? Maybe some shrubbery for the depot?

  2. Cavan says:
    March 9, 2009 at 4:56 pm

    Ryan Avent, Peak Oil Theorist. Except he’s right. There are two ways to change habits: invest or subsidize. It took huge investments and subsidies in automobile-related infrastructure to bring about suburbia. It will take a similar effort to bring us back into a sustainable living arrangement.

    You are right about the oil prices coming back. Peak Oil Theorists have been saying that the first steps of peak oil will involve wild fluctuations on the global oil markets. Combine that with a credit environment that is hostile to financing new exploration and you have a recipe for disaster if we don’t do what Ryan suggests.

  3. Mixner says:
    March 9, 2009 at 10:47 pm

    There’s no serious case for expanding transit on energy-efficiency, energy-security or environmental grounds. Overall, transit is no more energy-efficient and no cleaner than automobiles. Most transit is buses, and most buses run on imported oil. Rail transit runs on power that is mostly generated by burning coal. And any remotely plausible expansion of transit would only have a tiny effect on driving.

    Transit fares pay on average only about 28% of the cost of providing the service. The only realistic way to significantly reduce the vulnerability of transit to cuts in services resulting from budget shortfalls is to increase the share of costs paid by users. Low-income users can continue to receive discounted fares or other special subsidies.

  4. Cavan says:
    March 10, 2009 at 9:32 am

    I don’t even know where to start with what you said.

    In the case of a bus, it gets about 5 miles to the gallon. A bus holds 40-50 people. A car gets 25 miles to the gallon. It usually has one person in it. You’re moving fourty times as many people for five times as much fuel consumption. That sure sounds like a better deal to me.

    You also completely fail to see the energy saved when a community is designed for walking. If everyone walks to the transit station because they live within a fifteen minute walk and have a pedestrian friendly human scale streetgrid to walk in, they use no fuel to get to a transportation mode that moves 40 times the people for five times the fuel. Transit is far less efficient if people are dispersed helter-skelter across miles of too-big curvy roads that are dangerous to walk on.

    In fact, the suburban arrangement was designed to be hostile to transit. It was designed by the Highway Lobby to guarantee perpetual profits to the car companies, oil companies, sprawl developers, and road builders. Nothing else. We’ve seen how well that’s worked out.

  5. Cavan says:
    March 10, 2009 at 9:35 am

    Also, transit is not for low income users only. That’s a sick joke that we embraced during the second half of the 20th century. It’s over. That world is over. The economic conditions that made the car culture affordable to “the masses” are gone forever. It’s now a millstone around our necks.

    I know that I personally ride the Metro every day. I own a car and prefer to save my money for other things. I’m not really low income, either.

  6. Marshall says:
    March 10, 2009 at 11:40 am

    This post is a trainwreck, kind of like mass transit in this country.

    (1) this reduction in transit service is bad for the economy itself, both because (2) transit operating assistance is an excellent form of stimulus, and because (3) a resurgence in driving will threaten to derail recovery.

    (1) is undoubtedly true, but (2) and (3) are non-sequiturs. Transit operating assistance is a public policy, specifically one proposal for how to dispose of federal economic recovery money. The fact that such a thing is a good idea, indeed, “an excellent form of stimulus,” has nothing to do with the notion that cutting transit budgets is harmful to the economy. Replacing those cuts is what you’re talking about, not the cuts themselves.

    I have no idea why (3) should be true, though I guess your argument later is that increased driving will cause oil prices to rise again. Note, however, that NOT increasing driving in the face of transit cuts would be more disastrous for the economy.

    Finally, what makes you say that oil prices haven’t fallen very far? A barrel was like $150 in June and now it’s $45–that seems like a precipitous drop to me. Of course it might spike up again, but under the circumstances of transit cuts and cheap gas, it’s neither surprising nor problematic that there’s more driving.

  7. ryan says:
    March 10, 2009 at 11:55 am

    Wait, what? The fact that shoring up operational assistance to transit is good stimulus is unrelated to the fact that reduced transit service is bad for the economy? It’s good stimulus precisely because reduced transit service is bad for the economy.

    More driving increases exposure to a rise in oil prices. Rising oil prices sap consumer purchasing power — they’re like a significant tax increase, which is, of course, highly contractionary. It’s extremely counterproductive to undo the gains that have been made in reducing exposure to swings in oil prices.

    I don’t say that oil prices haven’t fallen very far. In fact, I say gasoline prices have fallen dramatically. But $47 per barrel (which is the price today) in the thick of the worst global downturn since the Depression is indicative of continued tightness in oil markets. A decade ago, oil was at $20 per barrel in a booming economy.

  8. Marshall says:
    March 10, 2009 at 12:10 pm

    It’s good stimulus precisely because reduced transit service is bad for the economy.

    That’s true, but that isn’t what you said. You said that transit cuts are bad for the economy because operational assistance to transit agencies is good stimulus, which doesn’t make sense.

    More driving increases exposure to a rise in oil prices.

    That’s an odd way to put it. We will have more driving because oil prices are low. If they increase again, driving will decline. It’s true that better transit would reduce demand for oil, but characterizing that as “exposure” to high prices is sort of missing the point: good transit is good policy if oil prices are high and bad policy if oil prices are low.

    (Insert necessary point that fossil fuel prices should incorporate external costs, so carbon tax, etc.)

    I’m not sure what you mean by tightness in oil markets: the oil market is always tight (at least during the last couple of decades). It’s just that demand is way below where it was last summer. And it’s not by any means obvious that variable demand in a given market gives rise to inelastic supply.

  9. Mixner says:
    March 10, 2009 at 12:38 pm

    Cavan,

    Since buses are rarely full, you cannot determine the energy efficiency of buses from their capacity. The relevant number is the average load factor (roughly, the ratio of demand to capacity). You seem to recognize this with respect to cars, but you pretend that buses always run at capacity. They do not. In fact, the average load factor for buses is 20-30%. That is, on average, out of every 10 seats on a bus 7 or 8 are empty. The Department of Energy and the Bureau of Transportation Statistics publish data on the energy efficiency of transportation by mode, and their data shows that, overall, cars are at least as energy efficient as transit buses.

    As for density, Ed Glaeser found that on average suburban households use only about 10-15% more energy than central city households. So even if you could somehow eliminate suburbs entirely and transform the entire country into central city densities and lifestyles, you’d only reduce total household energy use by around 10-15%. But you’re not going to transform the entire country into central city densities. It’s a fantasy. Realistically, the potential for reducing energy consumption through densification is minuscule. The key to reducing household energy consumption is more energy-efficient automobiles and more energy-efficient houses.