“We drive too much … because there are all sorts of costs
associated with driving that the driver doesn’t pay”
– New York Times, April 20, 2008
Transportation: Supply, Demand and Price.
We keep building roads and parking garages and still end up with shortages. How do we get off this treadmill? It’s time to stop blaming “too much traffic”. In economics, shortages mean the price is too low. Charge the right price and demand and supply will match.
With the right price, shortages end. You can travel equally quickly at 5:00 am or 5:00 pm - if everyone pays. A full plan to balance transport supply and demand was outlined in 1960 by William Vickrey. The technology to implement Vickrey’s ideas – Skymeter – now exists. We can end traffic jams if we face the truth. Giving something valuable away free gives shortages and budget deficits.
Shortages or pricing are the only two choices.
The Congestion Paradox: More Cars, Going Faster, During Rush Hour
When roads fill up, fewer drivers get where they are going. In a study on Los Angeles freeways a lane that carried 8,000 cars/hr at 6:00 am was down to 4,000 cars/hr at 8:00 am. That's the same as closing half the lanes during rush hour!! How did this happen? The road passed a tipping point, and
the added cars slowed each other down from 55 mph to 15 mph. More cars moving much more slowly = half the road capacity.
To avoid this congestion paradox, we have to convince people to never overload the roads. How? Set the right price. The Highway SR91 in California (pictured) gives a strong visual example. The two central toll lanes move along at 55 mph. The four free lanes inch along, and carry fewer total cars per hour, even with twice the lanes!! With pricing, the four outside lanes would flow smoothly and capacity would double. You can spend billions on more roads - and not fix the problem - or better use the roads you have and have the problem go away.
Existing roads, if priced, can carry more cars per hour, driving four times faster. Sound strange? That’s the paradox!
The True Cost of Driving: Fixed vs. Pay-Per-Use
Today's flat fee pricing rewards "all you can drive" behavior. Your insurance and car lease are flat fees. Everyone pays for "free" parking and municipal roads, whether they drive or not.
Most drivers only see their gas costs and a bit of parking (around $0.12/mile or $0.08/km) as controllable costs. The other $7 500 is the price of owning a car, whether you use it or not. Imagine if this were all charged per mile (or km)? Including hidden costs, such as the increased risk of fatal accidents with more people on the road you reach a true cost of driving of over $1.00 per mile. Skymeter can measure this, so it can be fairly allocated by a mix of charges, rebates and rewards.
Public Transit and Private Transportation
Transit and car pooling are excellent solutions to traffic. The challenge is finding the drivers who will voluntarily give up their own car for a ride. Transit is not just less convenient than a car, it also costs 3x more per mile. People will only move to transit in large numbers if transit is cheaper than driving, including the hassle and time cost.
One innovative solution is New York’s Kheel-Komanoff Plan to make all city buses free. Buses run more efficiently. The remaining drivers - who are no longer stalled by traffic - subsidize buses that get cars off the street.
The emphasis on buses is intentional. Expensive subways, light rail and bus lanes are only needed in a world where roads are jammed by traffic. With smart pricing, roads flow freely. Buses, private jitneys and car sharing can use the existing infrastructure and still travel quickly. This was demonstrated in London, where subway ridership fell by 10% when congestion pricing started. Instead, bus and bicycle ridership went up over 50% each.
Social Justice and Pricing
A number of well-meaning people oppose pricing because it “discriminates against the poor”. Few of them recognize that a lack of pricing means shortages, which penalize everyone, including the poor. Secondly, the truth is that if you can afford a car, you are only moderately poor. The truly poor take public transit. The best poor-focused strategy would focus on how to provide extensive, heavily subsidized or free buses and jitneys. Lastly, an alternative poor-focused strategy would be to make small amounts of driving more affordable ... by eliminating the high fixed cost of owning a car, and instead allowing drivers to pay all their costs per mile (or km).
