Gas about Public Transit By John Semmens - Independent

February 04, 2008

With world crude oil prices hovering near $100 per barrel and prices at the gas pump exceeding $3 per gallon in most parts of the country, all the ingredients would seem to be in place for dramatic changes in our daily commuting patterns, with millions of Americans shifting from private cars to public transit.

That’s how markets are supposed to work: Higher prices encourage consumers to seek less-costly alternatives, substituting margarine for butter, Hondas for Cadillacs, a cup of McDonald’s coffee for Starbucks.

Reducing automobile use and encouraging public transportation is said to have other benefits as well: less traffic congestion; less air pollution and a more-satisfied work force, as fewer people start the day frustrated or angry from the morning commute.

Even before oil prices reached their current record levels, many were suggesting that the government push consumer costs higher by raising gasoline taxes. The assumption is that higher prices would result in use of less gasoline: the basic law of supply and demand.

However, the American people—known for their fierce independence as well as their common-sense frugality—don’t always act the way academic theorists and computer models (even free-market computer models) say they should act.

Indeed, the dramatic rise in gasoline prices over the last several years seems to have had almost no impact at all on the driving habits of most Americans.

The National Automobile Dealers Association, for example, reports that sales of larger vehicles are still robust. In 2006, the last year for which final numbers are available, nearly a million more Americans purchased light trucks than purchased automobiles—the sixth year in a row in which truck sales exceeded car sales.

Inflation-adjusted gasoline prices more than doubled in the 1995-2005 period (the latest for which both fuel and travel data are available). Theoretically, an increase this large should have driven many Americans to alternate modes of transportation. Instead, auto travel rose 23 percent, twice as fast as the 11 percent population growth in the same period.

As for the notion that rising fuel costs would inspire people to use public transportation, the data do not support this theory either. While gasoline prices were doubling, public transportation ridership—including all forms of urban public transportation, as well as intercity buses and Amtrak—increased by only 7 percent, less than the rate of population growth.

In fact, public transportation’s share of travel has actually declined in recent years, from around 7 percent of the total in 1995 to around 6 percent in 2005.

Despite the dramatic increase in gasoline and diesel fuel prices, most Americans continue to forgo public transportation.

There are several reasons for this, some of which are discussed in a recent book, Street Smart: Competition, Entrepreneurship and the Future of Roads, published by Transaction Publishers and the Independent Institute. The most obvious is the fact that Americans like the freedom to come and go as they please, on their own schedules, not somebody else’s.

Americans also value their time. Public transportation is slow compared to automobile travel, with the typical trip taking twice as long as driving a car. The amount of time available in any given day is fixed, so those who can afford to do so put a premium on conserving this valuable resource.

As suggested in another recent book, Trading Up, by Michael J. Silverstein of the Boston Consulting Group, there’s a third reason higher gasoline prices are not driving people away from personal automobiles: Many Americans—even those with limited budgets—consciously choose to spend more on certain things, while perhaps cutting back in other areas. Thus, they are willing to pay extra for the convenience and time savings associated with the personal auto.

The hope that rising gasoline prices or increased gasoline taxes will substantially reduce automobile travel by inducing people to choose public transportation is unrealistic.

Far from being disdained and disparaged as an “energy waster,” the automobile should be hailed for its ability to save our most precious resource: time.

John Semmens is a research fellow at the Independent Institute, a research project manager in the Arizona Department of Transportation Research Center, and contributing author to the Independent Institute book, Street Smart: Competition, Entrepreneurship and the Future of Roads, edited by Gabriel Roth.

S. Fred Singer, an atmospheric physicist, is Research Fellow at the Independent Institute, Professor Emeritus of Environmental Sciences at the University of Virginia, and former founding Director of the U.S. Weather Satellite Service. He is author of Hot Talk, Cold Science: Global Warming’s Unfinished Debate (The Independent Institute, 1997).

Dr. James L. Payne is Research Fellow at the Independent Institute and Director of Lytton Research and Analysis and author of numerous books, including A History of Force: Exploring the Worldwide Movement Against Habits of Coercion, Bloodshed, and Mayhem,and he has taught political science at Yale University, Wesleyan University, Johns Hopkins University, and Texas A & M University.

Randal R. Rucker is Research Fellow at the Independent Institute, Professor of Agricultural Economics and Economics at Montana State University, and co-author (with E.C. Pasour, Jr.) of Plowshares & Pork Barrels: The Political Economy of Agriculture.

Charles V. Peña is Senior Fellow at the Independent Institute as well as a senior fellow with the Coalition for a Realistic Foreign Policy, senior fellow with the George Washington University Homeland Security Policy Institute, and an adviser on the Straus Military Reform Project.

William Ratliff is Adjunct Fellow at the Independent Institute, Research Fellow at Stanford University's Hoover Institution, and a frequent writer on Chinese and Cuban foreign policies.

Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute and Assistant Editor of The Independent Review. Dr. Eland is a graduate of Iowa State University and received an M.B.A. in applied economics and Ph.D. in national security policy from George Washington University. He has been Director of Defense Policy Studies at the Cato Institute, Principal Defense Analyst at the Congressional Budget Office, Evaluator-in-Charge (national security and intelligence) for the U.S. General Accounting Office, and Investigator for the House Foreign Affairs Committee. Full Biography and Recent Publications

Jonathan J. Bean is Research Fellow at the Independent Institute, Professor of History at Southern Illinois University, and editor of the forthcoming book, Race and Liberty: The Classical Liberal Tradition of Civil Rights.

Anthony Gregory is a Research Analyst at The Independent Institute. He earned his bachelor's degree in American history from the University of California at Berkeley and gave the undergraduate history commencement speech in 2003. In addition to his work with the Independent Institute, he regularly writes for numerous news and commentary web sites, including LewRockwell.com, Future of Freedom Foundation, and the Rational Review.
Full Biography and Recent Publications

Dominick T. Armentano is professor emeritus in economics at the University of Hartford (Connecticut) and a research fellow at The Independent Institute in Oakland, Calif. He is author of Antitrust & Monopoly (Independent Institute, 1998).

Alvaro Vargas Llosa is director of The Center on Global Prosperity at The Independent Institute. He is a native of Peru and received his B.S.C. in international history from the London School of Economics. He is widely published and has lectured on world economic and political issues including at the Mont Pelerin Society, Naumann Foundation (Germany), FAES Foundation (Spain), Brazilian Institute of Business Studies, Fundación Libertad (Argentina), CEDICE Foundation (Venezuela), Florida International University, and the Ecuadorian Chamber of Commerce. He is the author of the Independent Institute books The Che Guevara Myth and Liberty for Latin America. Full biography and recent publications.

Pierre Lemieux is an economist and co-director of the Economics and Liberty Research Group at the Université du Québec en Outaouais and a Research Fellow at The Independent Institute in Oakland, California.

Alexander Tabarrok is research director at The Independent Institute, associate professor of economics at George Mason University, editor of the Independent Institute books, Entrepreneurial Economics, The Voluntary City (with D. Beito and P. Gordon), and Changing the Guard: Private Prisons and the Control of Crime.

Robert Higgs is Senior Fellow in Political Economy at The Independent Institute, author of Against Leviathan and Crisis and Leviathan, and editor of the scholarly quarterly journal, The Independent Review. Click here for a bio on Dr. Higgs, the noted economist and historian.

William Marina is Research Fellow at the Independent Institute in Oakland, Calif., and Professor Emeritus of History at Florida Atlantic University.

David T. Beito is a Research Fellow at The Independent Institute, Associate Professor of History at the University of Alabama, and co-editor of the book, The Voluntary City: Choice, Community and Civil Society.

William Marina and David T. Beito belong to "Liberty and Power," a group blog at the History News Network.

For further articles and studies, see the Center on Peace & Liberty and OnPower.org.

Nicolas Heidorn is a public policy intern at The Independent Institute in Oakland, California.

New from Ivan Eland!
THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed
Most Americans don’t think of their government as an empire, but in fact the United States has been steadily expanding its control of overseas territories since the turn of the twentieth century. In The Empire Has No Clothes, Ivan Eland, a leading expert on U.S. defense policy and national security, examines American military interventions around the world from the Spanish-American War to the invasion and occupation of Iraq. Buy It Today.