From: josh@Happy-Man.com (Joshua_Putnam)
Subject: Re: Save the Planet and the Economy at the Same time!
Reply-To: Joshua_Putnam@happy-man.com
Organization: Happy Man Corp., Vashon Island, WA 98070-7399
Date: Wed, 30 Dec 1992 23:18:18 GMT

In <1992Dec30.194704.24013@pbhye.PacBell.COM> mjvande@pbhye.PacBell.COM (Mike Vandeman) writes:

>>What WOULD change my driving habits is a better transit system. The 

>That's what they all say. Except that no matter how good the transit gets,
>it is never good enough for them. Transit IS good enough, for those willing
>to use it. 

1988, there were 94,312,000 households in the U.S.  Of these, 
22,836,000 had family incomes under $15,000, while 9,004,510 had 
family incomes over $75,000 (both in 1990 81.3 million of these 
households owned motor vehicles.  22.0 million households with 
income under $15,000 (1988) owned vehicles, at an average rate of 
1.4 vehicles per household, for a total 30.3 million vehicles.  4.5 
million households with income over $75,000 owned vehicles, at a 
rate of 2.4 vehicles per household, for a total of 10.8 million 
vehicles.  

Households with income under $15,000 drove 264 billion miles per 
year, consuming 15.6 billion gallons of fuel.  Over $75,000 per 
year households drove 124 billion miles, consuming 6.3 billion 
gallons of fuel.  This works out to an average 16.9 mpg for "poor" 
households vs. 19.7 mpg for "rich" households.  

The frequently-cited cost per mile of driving, prepared by the 
Motor Vehicle Manufacturer's Association, has risen sharply in 
recent years, from 27.2 cents in 1985 to 41.0 cents in 1990.  
Interestingly, variable costs (gas, oil, maintenance, and tires) 
have remained relatively stable, rising from 8.04 cents to 8.40 
cents per mile.  Fixed costs, meanwhile, have risen from $2,441 
over the ownership period to $3,256, despite an increase in the 
projected ownership period to six years and 60,000 miles.  

Of the fixed costs included in the MVMA cost per mile, depreciation 
is by far the largest, rising from $1,253 in 1985 to $2,357 in 
1990.  Insurance rose from $503 to $675; license and registration, 
from $115 to $165; and finance charges from $570 to $680. 

In applying these costs to the real world, it's important to 
remember that they are costs *for new vehicles.* Only 31% of new 
cars sold are bought by households with incomes under $35,000 
(1990), even though such households make up 57.9% of the U.S. 
population.  The cost calculations also assume households dispose 
of the new car after 6 years / 60,000 miles, even though the 
*average* age of cars in use in 1990 was 7.8 years.  Over 20% of 
cars in use were 12 or more years old.  

For the MVMA, these assumptions make sense -- after all, 
manufacturers care mostly about the sales and costs of new cars.  In 
computing the actual cost of commuting by car, however, the MVMA 
assumptions are questionable.  Depreciation is heavily weighted 
towards the first few years of a car's life.  Extending the holding 
period from 6 years to 8 reduces the cost per mile significantly 
for new cars, but an even more substantial reduction in 
depreciation expense is achieved by purchasing used cars.  A quick 
look in your local classifieds will show that new car buyers take 
the heaviest hit in the first hundred yards off the dealer's lot.  

Thanks to their lower purchase price, used cars also have lower 
finance costs, registration fees, and insurance.  For many older 
cars, insurance costs drop more when owners opt out of 
comprehensive coverage.  Finance cost is zero if the car
is cheap enough to pay cash instead of borrowing.

Older cars do have a disadvantage in fuel economy, as shown by the 
lower fuel economy of vehicles driven by poor families.  The 
sharpest drop is found in cars from before the fuel crises of the 
1970s.  Of cars in use in 1988, those from 1976 or earlier achieved 
an average of 12.3 mpg, vs. 22.1 mpg for 1988-9 model years.  Cars 
from 1981-2, however, were nearly as efficient as those from 
1988-9, averaging 20.7 mpg.  At a gas cost of $1.10 per gallon, 
this equates to 8.9 cents per mile for 1976 and older, 5.3 cents 
per mile for 1981-2, and 5.0 cents for 1988-9.  Thus, while the 
buyer of a used car would probably get poorer fuel economy, this is 
an insignificant 0.3 cents of the purported cost per mile.  

The real cost of commuting in a used car is likely to be much lower 
than the MVMA's new-car cost estimate.  Basing transit plans on the 
MVMA estimate is therefore inappropriate unless the transit in 
question is aimed primarily at upper-income commuters driving cars 
they purchased new and which they intend to replace at 6 years / 
60,000 miles.  

At an anecdotal level, I maintain a spreadsheet covering all the 
costs I incur in using and maintaining my own car, a 1965 Ford 
Country Sedan.  The costs include a complete engine rebuild, tires, 
washing, fluids, belts, paint, a replacement gas tank and fuel 
sender, tuneups, stereo, lights, weatherstripping, brake shoes, 
etc.  Also, since I have no way to reliably estimate the car's 
life, I wrote off its entire purchase price the day I bought it 
used.  Despite including all these costs, and despite a piggish 12 
mpg average fuel economy (down from 13 mpg because of the 
introduction of oxygenated fuels), my cost per mile is under 14 
cents.  If the MVMA estimate of variable costs, 8.4 cents per mile 
in 1990, is correct, it will make economic sense to replace my car 
with a new one if the total fixed costs of a new car drop below 5.6 
cents per mile, or $5,600 fixed costs for a car with a life span of 
100,000 miles.  If you can sell me a new car for $5,600 with operating
costs under 8.4 cents per mile, you're in the wrong line of work.

My commute is about 15 miles round trip, under 4,000 miles per 
year.  If I commuted by car, my current car would cost me about 
$560.  An MVMA car would cost me over $1,600.  For a mass-transit 
system to be economically attractive, it would have to cost me no 
more than $46 per month, plus the value of whatever time it added 
to my commute.  A transit plan relying on the MVMA estimate would 
claim a breakeven cost of $133 per month, and transit advocates 
would rail against my irrationality if I declined to patronise a 
system costing me "only" $100 per month, about twice my cost of 
commuting by car.  

The bicycle I actually commute on cost under $800 new, including 
all commuting accessories.  It could easily last a year with no 
maintenance besides oiling the chain and patching a flat every few 
months.  Treating it as a disposable good, then, it would cost me 
half as much as an MVMA car, and only a few hundered dollars more 
than my 1965 Ford.  Based on my past experience, however, I'd 
expect a life span of more than 5 years with significant 
maintenance, making it much less expensive than my used car.  

Despite the very low cost of bicycle commuting, I do not expect 
everyone else to take it up.  Were I not the type of person who 
enjoys it, $150 would not be enough to make me ride in the dark, 
blowing rain and snow of November, December, and January.  If I 
were a consultant on call to various locations, the added travel 
time would certainly outweigh the savings.  If I lived or worked in 
a high-crime area, the vulnerability of cycling would outweigh both 
the health At the moment I'm recovering from two broken arms and a 
broken wrist, so cycling is out of the question.  

Transit is out of the question, too.  The nearest bus stop is a 
mile from my house, and no bus routes come within two miles of my 
office.  In any case, the savings would not amount to much, since 
at $2.00 per day the cost of 23 commuting days in December is $46, 
just breakeven compared to driving.  

So while I strongly encourage anyone considering cycling to work, 
and happily help those whom I can, I do not denounce motorists as 
irrational, greedy, or offensive.  They are my friends and 
neighbors, after all, and the value of community far exceeds even 
the cost of an MVMA car.  

-- 
 Joshua_Putnam@happy-man.com    Happy Man Corp.  206/463-9399 x102
 4410 SW Pt. Robinson Rd., Vashon Island, WA  98070-7399  fax x108
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