Spotlight Vol. 7, No. 11: Gas Prices and Transit Use Soar, But To What End?

by Jeffrey M. Zupan, Senior Fellow for Transportation, RPA

The recent run-up in gas prices - widely bemoaned by drivers and elected officials alike - has had the effect of both lowering the amount of driving in the nation and increasing transit use. For transit advocates, environmentalists and regional planners this is good news; less driving means less traffic congestion and less carbon in the atmosphere, and more transit use can help supply needed operating revenue for beleaguered transit agencies. 

But the good news is temporary and unsustainable without complementary public policy actions. The United States still relies on most of its petroleum for transportation (three gallons in every four) from potentially unstable and / or unfriendly countries. Tapping domestic sources, as has been suggested, will not change that appreciably. Almost ninety percent of all commuting is done in an automobile, and, given current patterns of home and work locations, this will not change anytime soon. The recent drop in vehicle-miles traveled will not be sustained even if gas prices continue to rise, because drivers will find they cannot continue to avoid auto travel while sustaining their current life style. Thus any reductions in carbon emissions from reduced driving will only be temporary - a blip in the trends of global warming. Meanwhile, because gas taxes are keyed to gallons sold, and not to the price of the sale, the current drop in driving is causing a drop in government's revenue from gas taxes - revenue that is needed for transportation infrastructure investment, particularly for transit if ridership increases. 

What is to be done? 

We could raise gas taxes to yield more revenue for transportation investments and encourage still less driving, but that is politically unpopular. Gas taxes will also yield less revenue in the future as vehicle mileage efficiency goes up and other petroleum sources capture some of the market.

Or we could shift to a vehicle-miles-of-travel (VMT) tax, as Oregon is experimenting with, to encourage less driving, but that would reduce buyers' incentive to buy more fuel-efficient vehicles. 

We could also ramp up the miles-per-gallon standards as was done so successfully after the 1970s oil shocks, but that would lower the yield from gas taxes. Congress recently increased fuel-efficiency standards, but the levels and timelines are not aggressive (read: wimpy). 

Finally, we could find fuels other than petroleum, but their impact would be seen over a longer period and would not lower vehicle use and traffic congestion, increase transit ridership, or provide funding for transportation investments. 

The point is that none of these actions is a silver bullet. In fact, some of these actions, if not done with the others, could have unwanted impacts and could justifiably be opposed and defeated. 

But what if we moved forward to do all four, gaining the benefits of each while blunting the negative effects of the others? Something to think about.