Saving Energy in U.S. Transportation

July 1994

OTA-ETI-589

NTIS order #PB94-209905

GPO stock #052-003-01376-2
Recommended Citation: U.S. Congress, Office of Technology Assessment, Saving Energy

in U.S. Transportation, OTA-ETI-589 (Washington, DC: U.S. Government Printing

Office, July 1994).
Foreword

T

his report was prepared as the final part of an OTA assessment on

U.S. Energy Efficiency: Past Trends and Future Opportunities,

requested by the Senate Committees on Governmental Affairs

and Energy and Natural Resources: the House Committee on Energy and Commerce; with an endorsement from the Subcommittee on

Environment, Energy, and Natural Resources of the House Committee

on Government Operations. Other reports in this assessment examine

energy use in the Federal Government, industry, buildings, and the role

of utilities in energy efficiency.

This report focuses on energy use in U.S. transportation, which accounts for over 60 percent of U.S. oil consumption. Opinions about the

health of the U.S. transportation system and the efficacy of proposed

measures to reduce its energy consumption are extremely polarized:

some view the system as basically healthy, though in need of some “finetuning” to deal with future growth pains: others view the system as extremely wasteful in its energy use, environmentally destructive, and

verging on breakdown, with the need for systemic changes. The report

attempts to put these opinions into context by examining the current status of the system and evaluating critical problems such as congestion,

presenting forecasts of future energy use, making some pointed comparisons with European transportation, and describing and evaluating a

range of options for saving energy.

d+- -

ROGER C. HERDMAN

Director

. . .

Ill
Advisory Panel

James F. Gibbons, Chairman

Dean

School of Engineering

Stanford University

Dale Compton

School of Industrial Engineering

Purdue University

Mark Cooper

Director of Research

Consumer Federation of America

Robert deHaanl

Amana Refrigeration, Inc.

Daniel A. Dreyfus

Director of Civilian Radiation

Waste Management

U.S. Department of Energy

Clark W. Gellings

Vice President

Customer Systems Division

Electric Power Research Institute

David B. Goldstein

Senior Scientist

Natural Resources Defense

Council

Cheryl Barrington

Director

Regulatory Assistance Project

Kenneth Hickman

Vice President

Applied Systems Division

The York International Corp.

Edward Mclnerney

Chief Engineer

GE Appliances Division

General Electric Co.

Alan Miller

Executive Director

Center for Global Change

University of Maryland,

College Park

Gary Nakarado

Technical Director

National Renewable Energy

Laboratory

John W. Rowe

President and CEO

New England Electric System

Maxine L. Savitz

Director

Garrett Ceramic Components

Garrett Processing Co.

Sherwood Smith, Jr.

Chairman and President

Carolina Power & Light Co.

Richard Tracey

Manager

Engineering Services

Ryland Homes

B.C. Waycaster

Vice President and

General Manager

Hydrocarbons and Energy

Dow Chemical

Irvin L. White

Senior Director

Laboratory Energy Programs

Battelle Pacific Northwest

Laboratories

Mason Willrich

Pacific Gas and Electric

Enterprises

James L. Wolf

Vice President

Energy and Environmental

Markets

Honeywell, Inc.

Eric R. Zausner

President

Strategic Performance

Management

I Retired.

Note: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel members.

The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report

and the accuracy of its contents,

iv
Peter D. Blair

Assistant Director

Industry, Commerce, and

International Security Division

Emilia L. Govan

Program Director

Energy, Transportation, and

Infrastructure Program

PRINCIPAL STAFF

Steven E. Plotkin

Project Director

Paul Komor

Senior Analyst, Freight Analysis

Andrew Moyad

TDM Measures

Jeffrey Boberg

Alternate Demand Forecasts,

Telecommunications

ADMINISTRATIVE STAFF

Lillian Chapman

Division Administrator

Marsha Fenn

Office Administrator

Linda Long

Administrative Secretary

Tina Aikens

Administrative Secretary

Gay Jackson

PC Specialist

Project Staff

CONTRACTORS

Mark A. Delucchi

University of California at Davis

Social Costs of Motor Vehicle Use

James L. Sweeney

Stanford University

Gasoline Taxes

Florence Poillon

Editor

Lynette Cooper

Contractor

v
Reviewers

Michael Arendex

American Trucking Associations

Deborah Gordon

Union of Concerned Scientists

Marc Ross

University of Michigan

Steven A. Barsony

Federal Transit Administration

David Gushee

Congressional Research Service

Harvey M. Sachs

University of Maryland

Norman L. Bryan

Pacific Gas & Electric

R.J. Kinsey

Ford Motor CO.

Danilo Santini

Argonne National Laboratory

Chris Calwell

Natural Resources Defense

Council

Marilyn Klein

Federal Railroad Administration

Maxine Savitz

Allied Signal, Inc.

Robert Larson

U.S. Environmental Protection

Agency

Lee Schipper

Donald Chen Lawrence Berkeley Laboratories

Rocky Mountain Institute

Will Schroeer

U.S. Environmental Protection

Agency

Cheri Davis

California Energy Commission

Charles Lave

University of California, Irvine

Michael F. Lawrence

Jack Faucett Associates

Vic Suski

American Trucking Associations

Elizabeth Deakin

University of California at

Berkeley

James Lerner

California Air Resources Board

Edward Thomas

Jack Faucett Federal Transit Administration

Jack Faucett Associates

Tom MacDonald

California Energy Commission

Steve Thompson

Lew Fulton Congressional Research Service

U.S. Department of Energy

James MacKenzie

World Resources Institute

Irvin L. White

Battelle Pacific Northwest

Laboratories

Bernard Gelb

Congressional Research Service

Barry McNutt

Clark Gellings U.S. Department of Energy

Electric Power Research Institute

Marianne Mintz

John German Argonne National Laboratory

U.S. Environmental Protection

Agency Sergio Ostria

Jack Faucett Associates

David Goldstein

Natural Resources Defense

Council

Philip Patterson

U.S. Department of Energy

vi
—

contents

Summary I

Introduction 1

= Varying Perspectives on the Nature of the Problem

and on Potential Solutions 3

A Snapshot of the U.S. Transportation System and Its

Energy Use

■ Passenger Travel 5

■ Freight Movement 7

Transportation Energy Use and Potential for

Conservation 7

U.S. Transportation Energy Consumption: Where Is It

Heading? 8

Is the U.S. Transportation System Energy-Efficient? A

Comparison With Europe 10

Why Intervene in the Transportation System? 12

~ Economic Efficiency, Externalities, and Unpriced

Inputs 12

■ Congestion 13

Options for Reducing Transportation Energy Use 14

= Gasoline Taxes 14

- Full Cost Accounting 15

■ Automobile and Light-Truck Fuel Economy

Standards 16

~ “Feebates”: An Alternative or Complement to Fuel

Economy Standards 19

- Transportation Demand Management Measures 20

~ Public Transportation 21

■ Urban Planning 22

_ High-Speed Intercity Public Transportation 23

● Improving Auto Fuel Economy: Moving Beyond

Current Technology 24

■ Shifting to Alternative Fuels 26

Freight Policy 28

Policy Overview 29

vii
1 Introduction 3 1

2 Where We Are, Where We’re Going 35

A Snapshot of the U. S. Transportation System 35

■ Passenger Travel 37

■ Freight Transport 43

Trends in U.S. Transportation 46

= Passenger Travel 47

m Freight 50

Forecasting Transportation Energy Consumption 53

● General Considerations—Factors That Will Affect

Transportation Energy Consumption 53

● Alternative Forecasts 65

3 Is the U.S. System Energy-Efficient? A

Comparison With Europe 77

U.S. Potential To Move Toward European Transport

Energy Levels 77

Passenger Transport Energy in the U.S. and Europe Today 78

Trends in U.S. and European Passenger Transport Energy 84

U. S. and European Freight Transport Energy Use 86

Conclusions 87

4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 91

Why Governments Might Want To Actively Promote

Energy Conservation in Transportation 91

● Correction for an Existing Network of Subsidies and

Inefficient Pricing 92

● Externalities 92

Auto Benefits 94

■ Attitudes Toward Automobiles 95

■ ‘*Internal” or Private Benefits 96

= Benefits to Society 96

Inefficient Pricing: Subsidies, Externalities, Hidden Costs 98

■ Introduction and Viewpoint 98

● Detailed Results 103

■ Conclusions 109

Congestion 111

● Proposition: There Is a Major National Congestion

Problem 111

- Counterarguments 114

● Evaluation 115

. . . Vlll
Energy Security and Transportation 122 9 Extent of the Security Threat 123 - Impact of Conservation on Security 125 = Energy Security Costs 126

Ozone Pollution and Transportation 128 ~ Why Control Ozone? 128

● Ozone and Its Precursors 129

■ Controlling Volatile Organic Compounds 130

Other Externalities 132

■ Other Air Pollutants 132 - Land Use Impacts 133

● Accidents 133

■ Noise and Vibration 134

● Ecosystem Losses 134

5 Policy Options for Transportation Energy

Conservation 135

What If the Federal Government Initiates No New

Policy Measures? 139

New Fuel Economy Standards 140 - Are Fuel Economy Standards an Efficient and

Effective Approach to Fuel Conservation? 141

~ What Is the Fuel Economy Potential of the U.S. New

Car Fleet’? 143

● Which Type of Standard Is Best? 148

● What Is the Best Schedule for New Standards? 149 _ New Fuel Economy Standards and Safety 150

● Employment Impacts 153

■ Fuel Savings From an Aggressive Fuel Economy

Standard (S. 279) 156

● Regulation of Light-Truck Fuel Economy 157

● Conclusions 159

Feebate Programs: An Alternative or Complement to

CAFE Standards 159

Moving to the Superefficient Automobile 162

● Designs Based on the Internal

Combustion Engine 163

■ Electric Vehicles 165 = Which Technology Will Win? 169

Alternative Fuels and Conservation 169 = Background 169 = Emissions and Air Quality Impacts 173

■ Energy Security Impacts 175

■ Sources of Uncertainty About the Greenhouse and

Energy Use Impact of Alternative Fuels 176

= Recent Estimates of Greenhouse Impacts of

Alternative Fuel Cycles 177 , \-- .

ix
● Policy Issues 178

Public Transportation 180

■ Views of Transit Proponents and Critics 180

B Transit Performance in the United States 183

= Evaluating Costs and Benefits 188

● Magnification of Transit Benefits 190

■ What Is Possible? 192

■ Conclusions 197

Urban Form and Transportation 199

● Evidence for a Strong Relationship Between Urban

Form and Transportation Energy Use 200

Q Reliability of the Data 205

● Cause and Effect 205

■ Can We Hope To Change Land Use? 206

● Conclusions 211

Intercity Travel and High-Speed Ground Transportation

Systems 212

Social Cost Pricing Policy 216

● Key Issues 216

Gasoline Taxes 224

● Impacts on Economic Variables 224

● Using Gasoline Taxes To Address Externalities 227

= Model-Based Results 230

Transportation Demand Management 230

● Economic Incentives 232

■ Regulatory Mandates 236

● Telecommuting 239

= Public Investments, Information, and Other Efforts

To Manage Transportation Demand 242

■ Conclusions 246

Reducing Freight Energy Use 247

● Po] icy Context 247

■ What Is the Potential? 248

● Policy Options 250

Index 257

x
summary

T

his report assesses an array of transportation policies designed to reduce energy use and describes the intersection

of these policies with general transportation problems

such as congestion and air pollution. The report:

■ describes the U.S. transportation system and its energy use;

■ presents and evaluates forecasts of energy use to 2010;

■ compares and contrasts U.S. and European travel and energy

use patterns;

= discusses reasons governments may choose to intervene i n

transportation markets; and

■ describes and evaluates a range of policy options to reduce U.S.

transport energy use, from gasoline taxes to urban planning.

Its objective is to provide a balanced, qualitative perspective of

issues and problems rather than a highly quantified analysis.

INTRODUCTION

A primary characteristic of transportation in the United States is

its high per capita energy consumption. The average U. S. citizen

consumes nearly five times as much energy for transportation as

the average Japanese and nearly three times as much as the average citizen of France, Britain, or West Germany. ] The energy efficiency of U.S. transportation has improved substantially over the

past two decades (both absolutely and in comparison to Europe)

and U.S. travel volume has grown more slowly than in most of the

developed world. However, the United States still consumes
2 I Saving Energy in U.S. Transportation

Washington, DC, on a smoggy day About 100 U.S. cities still

violate national ambient air quality standards for ozone.

more than one-third of the world’s transport energy.

2 Also, 96 percent of U.S. transport energy is

in the form of oil products.3 This is more oil than

the United States produces,4 despite its position as

one of the world’s largest oil producers.

In 1990, the U.S. transportation sector accounted for nearly 65 percent of all U.S. oil consumption.5 The oil consumed by U.S. transportation creates problems in terms of: 1 ) air

pollution— about 100 urban areas violate the

ozone air quality standard, and emissions from

transportation sources, primarily highway vehicles, contribute 30 percent of the volatile organic compound and 39 percent of the nitrogen oxide

precursors of ozone; 2) national security and balance of trade, because so much of our oil is imported; and 3) greenhouse warming, because large

quantities of carbon dioxide (the primary greenhouse gas) are emitted with oil combustion.

The intensity and magnitude of U.S. travel

create other problems as well. Growing congestion, especially in urban areas, leads to expensive

delays in passenger and freight transport, and increases fuel use and pollution. U.S. reliance on automobiles has resulted in a high percentage of land

being devoted to highways, parking facilities, and

other auto uses; the loss of wetlands and other ecologically sensitive lands to highways and the diffuse land use that highways support; and a range

of other environmental impacts.

Energy use in U.S. transportation is expected to

increase despite continued improvements in efficiency. The Energy Information Administration’s

(EIA) Annual Energy Outlook 1993 projects

steady but moderate growth in transportation energy use across all scenarios. EIA projects a 19- to

38-percent increase over the 20-year period of the

forecast. Thus, by 2010, transport energy use

would be 26.8 to 31.0 quadrillion British thermal

units ( 1015 Btus = 1 quad6

), about 12.9 to 14.9

million barrels of oil per day (mmbd), compared

with its 1990 level of 22.5 quads, or 10.5 mmbd.

And, as discussed later, the Office of Technology

Assessment (OTA) believes these forecasted levels are likely to underestimate future transportation energy use, because they rely on optimistic

assumptions about improvement in vehicle efficiency and growth in personal travel.

With current problems and expectations of continued growth in travel and energy use, Congress

has increasingly turned to transportation energy

2 U.S. Congress, Office of Technology Assessment, Changing by Degrees: Neps To Reduce Greenhouse Gases, OTA-O-482 (Washington,

DC: U.S. Government Printing OfTice, February 1991), table 5-1.

3 S.C. Davis and S.G. Strang, Transportation Energy Data Book, ed. 13, ORNL-6743 (Oak Ridge, TN: Oak Ridge National l-atxmmy,

March 1993), table 2.8.

Q Total 1990 transp)fiatlon oil pr(~ucts C(msumpti(m was 21.8 I quadrillltm British themlal units (Btus), versus domestic liquid production”

(crude oil, lease condensate, and natural gas plant liquids) of 17.91 quadrillion Btus. Energy Infomlation Administration, Annua/ Energy Out-

/wk /993, DOWEIA- 1383(93) (Washington, DC: January 1993), tables G] and G2.

s Ibid., table A-8.

b A “quad” of energy, aside from being one quadril]k)n ( 10’ 5, Btus, is equivalent to a~mt one trillion cubic feet of i’MtUd gas, (W a~)ut

one-twentieth of current annual U.S. natural gas consumption; about 170 mi]li(m barrels of oil, or a bit rmwe than (me-thirtieth of current U.S.

yearly oil consumpti(m; about 40 million short tons of coal (coal energy content is variable, so this is a rough approx imati(m ), or about one-twentieth of U.S. yearly coal consumption. In 1990, U.S. energy consumpti(m was ab(mt 85 quads.
conservation—in the form of improvements in the

technical efficiency of travel, increases in load

factors, reductions in travel demand, shifting to alternative fuels, and shifts to more efficient travel

modes—as an important policy goal. For example, the Clean Air Amendments of 1990 incorporate transportation demand management as a critical tool in reducing urban air pollution.

ISTEA—the Intermodal Surface Transportation

Efficiency Act of 1991—allows States to shift

highway funds to transit, promotes new highspeed ground transportation systems, and generally establishes energy efficiency as a major goal of

new transportation investment. EPACT—the Energy Policy Act of 1992-establishes fleet requirements and a series of economic incentives to

promote the use of nonpetroleum alternative

fuels. Legislation proposed (but not passed) in the

102d Congress sought rigorous new automobile

and light truck fuel economy standards. With continued increases in U.S. oil imports, urban traffic

congestion, and greenhouse gas emissions, and

the failure of many urban areas to meet air quality

standards, strong congressional interest in new

energy conservation initiatives is likely to continue.

1 Varying Perspectives on the Nature of

the Problem and on Potential Solutions

Although policy makers and the transportation

community may agree that transportation energy

conservation is a worthwhile goal in the abstract,

severe disagreements exist about the urgency of

the problems that conservation measures can

serve to address and the efficacy of conservation

alternatives.

Disagreement begins with two very different

perspectives about transportation itself:

1. Transportation, and especially automobiledominated transport, is a primary source of social and environmental ills such as air pollu2.

Summary I 3

tion, loss of ecosystems, greenhouse emissions,

loss of life and limb, and noise pollution.

Transportation is a key to economic progress

and to social, cultural, and recreational opportunity.

Since both perspectives are valid, both should

be considered in seeking a balanced approach to

policymaking. Many transportation stakeholders,

however, lean heavily toward one perspective or

the other. Those leaning toward the first tend to focus on the need to reduce and restrict travel, shift

travelers to less harmful modes, and enact strong

environmental safeguards; those leaning toward

the second focus on the need to increase access to

travel and to make traveling easier and more efficient. Thus, in terms of these two perspectives,

some of the key features of U.S. transportation—

the highest level of personal travel in the world

( 13,500 miles per person per year) and the most

vehicles per person in the world (nearly six autos

or light trucks for every 10 persons, and two vehicles per household)—appear as signs either of

the profligacy of the U.S. system or of its superiority. Such varying perspectives about the success of

the American system in turn lead to very different

perspectives about the need for changing that system, with one tending toward substantive change

and the other toward fine-tuning.

That transportation is not an end in itself, but a

means to attain access to economic and personal

opportunity, may aggravate the differences in perspective. The concept of access to a variety of opportunities is easy to grasp but difficult to measure, so transportation services are generally

measured simply in miles traveled or trips made.

Thus, there is a danger that a traveler who must

commute several hours to work will be judged in

some analyses to have obtained more value from

transportation services than another who walks 20

minutes to work. Also, those judging proposed

changes in transportation policy must distinguish

T Tr~spJr(a[if)n den~and managen]ent (TDM ) measures seek to reduce traffic volumes (or shift s(mle traffic tl~ ]CSS c(m:ested tinles (Jr

nwtes), especially during peak travel hours, by increasing vehicle occupancy, enc(mrag]ng modal shifts, and other means.
4 I Saving Energy in U.S. Transportation

carefully between changes that reduce travel and

access to opportunity, and those that reduce travel

but bring opportunity closer.

Three major problems are driving most transportation energy conservation initiatives—air

pollution (especially urban), energy security, and

greenhouse warming. Different views about the

urgency of these problems in turn lead to different

perspectives about the types of tradeoffs worth

making to achieve lower energy use. There appears to be a consensus that urban air pollution is a

critical national problem, and clear support exists

for strong corrective measures. There is a modest

level of agreement about the importance of rising

oil imports as a national security and balance-oftrade problem, with levels of concern ranging

from moderate to substantial and limited support

for corrective measures. Agreement is lacking

about the urgency of reducing greenhouse emissions to slow down potential warming: environmental groups urge strong action, whereas much

of the business community urges that no action be

taken until more is known.

Another potential disagreement about the nature of problems facing the transportation system

could further polarize policymaking. The Federal

Highway Administration (FHWA) projects large

increases in urban and suburban traffic congestion, which implies that strong policy measures—

including severe demand management and large

shifts to alternate modes—will be needed to maintain acceptable levels of urban mobility. A small

group of critics, however, claims that the FHWA

projections are grossly in error, and that growth in

congestion will be kept in check by changes in

travel behavior and land use. These views, of

course, yield a very different set of transportation

policy priorities.

Another disagreement about the need for

changes in transportation policy focuses on the

extent to which prices for U.S. travel accurately

reflect the true marginal costs to society of such

travel. Many analysts believe that a combination

of “externalities” (consequences such as air pollution that travelers do not pay for or take into account in their decisions) and inefficiently priced

inputs (services such as parking, with hidden, subsidized, or inaccurate prices) yields an overall cost

of travel that is too low and thus results in excessive travel. Other analysts conclude that the value

of externalities and unpriced inputs is small

compared with the prices paid openly by travelers,

so that "correcting” prices would not result in

large changes in travel behavior. These analysts

hold that there is not much excess travel in the

United States.

Finally, not surprisingly, there are major disagreements about the efficacy of virtually all conservation measures. For example:

Proponents of increased mass transit foresee it

as playing a major role in energy conservation

and the revitalization of U.S. cities. Skeptics

view it as basically irrelevant to most travel,

having only a small role to play (mobility for

disadvantaged populations, a major general

role in a few of America’s older, high-density

urban cores) given the auto-oriented U.S. land

use patterns and offering little if any benefits in

energy efficiency.

Proponents of stronger fuel economy standards

believe that there are inexpensive ways to

achieve large improvements in auto fuel economy, and view standard setting as a proven success in forcing these improvements. Opponents

see little opportunity for more than slow, incremental growth in fuel economy, and view standards as an antimarket, inefficient method of

achieving the small improvements that are

available.

Proponents of higher gasoline taxes view them

as proven revenue raisers, which offer improved economic efficiency by capturing “externalities” and inefficiently priced transportation inputs, and allow significant energy

savings. Opponents view them as harmful to

the U.S. economy, and as offering no economic

efficiency benefits and limited energy savings

benefits, given the unresponsiveness of travel

demand and technical efficiency to gasoline

price.

unifying feature of these policy arguments is a

difference of views about the importance of

policy-dependent factors versus policy-indepen-
dent factors in shaping travel patterns. If history

(including the history of technology), geography,

income, and demographics are the primary determinants of travel patterns, policy may play only a

minor role in changing energy use; but if fuel

taxes, urban planning, parking policies, and other

instruments of public policy are primary travel determinants, there is a large potential for policy to

reduce U.S. energy use.

Although much of the disagreement about

transportation policy stems from differences in

values and philosophy, including different views

about the role of government in markets, a significant portion stems from the lack of adequate research and data in several crucial areas.8 These include:

■

●

■

the relationship among travel behavior and

demographics, urban design, and transportation system characteristics (e.g., the extent to

which new transportation facilities can be used

as part of an integrated effort to shift land use

patterns and travel behavior);

the magnitude of transportation ● ’externalities,” or costs that are not accounted for or

borne by transport users;

identification and quantification of transport

benefits; and

Summary

the measurement of “accessibility,” which

5

is

the primary goal that personal transportation

attempts to satisfy.

SNAPSHOT OF THE U.S.

TRANSPORTATION SYSTEM

AND ITS ENERGY USE

I Passenger Travel

The transportation system in the United States

provides U.S. residents with the highest level of

personal mobility—in terms of trips made and

miles traveled—in the world. The United States

has the greatest number of automobiles per capita--0.575 in 1989—in the world,9 1.07 vehicles

per licensed driver and 1.92 vehicles per household. The average adult with a driver’s license

travels 30 miles per day of local, personal travel,

and even adults without licenses manage to travel

10 miles per day. 11 In 1990, the average U.S. resident traveled well over 13,000 miles. 12

U.S. passenger travel is dominated by the automobile and the highway system. In 1990, about 86

percent of passenger-miles were auto (and personal light truck) miles, and over 10 of the remaining

14 percent were air miles; buses and trains provided only 4 percent of passenger-miles.13 

8 A recent report by the Transportation Research Board (TRB) identifies critical research needs in transportation, land use, and air qual ity;

TRB, Transportation Research Circu/ar .?89: Environmental Research Needs in Transporla/ion (Washington, DC: Na(i(mal Research Council,

March 1992).

9 SC+ Davl~ and M.D. M{)mi5, ‘#f’’ra~s~~r/afi~~ Energy Dafa Bwk, ed. 12, ORNL-67 I () (oak Ridge, TN: OA Ridge Natitmal Laboratory,”

March 1992), table I-3.

lo Ibid., table 4-1. Note that “vehicles” includes ~cks and buses.

I I AT. Reno, ‘“personal Mobility in the United States, ” A Lwk Ahead-Year 2020, Transportation Research Board Special Repwt 220

(Washington, DC. Transpmati(m Research Board, 1988).

12 Da[a ~)b(ain~ fr(,m L CJchlp~r ~d N. Kiang, In[emational Energy Studies, Lawrence Berkeley Laboratf)ry, in advance ‘)f Publication ‘n

the Transportation Energy Da/a Bwk, ed. 14 (Oak Ridge, TN: Oak Ridge National Laboratory, forthcoming).

13 Ibid.
Saving Energy in U.S. Transportation

The U.S. highway system consists of about 3.8

million miles of roadway, including 44,000 miles

-

in the Interstate System.1415 The system also includes nearly 577,000 bridges.16 Much of this infrastructure—more than 10 percent of the Nation’s roads and nearly 42 percent of its

bridges—is considered deficient. 17

The U.S. mass transit system consists of a wide

array of regional and municipal systems, including buses, light rail, commuter rail, trolleys, and

subways, as well as an array of vehicles providing

“paratransit” services--dial-a-ride, van pools,

subsidized taxis, and shared rides in minibuses or

vans. Most cities of 20,000 or higher population

have bus systems, and buses on established routes

with set schedules account for more than half of all

Low-density suburban development creates travel patterns

that are not easily served by transit.

public transit passenger trips. However, about 70

percent of all such trips were in the 10 cities with

rapid rail systems, with 35 percent of transit passengers and 41 percent of transit passenger-miles

in New York City and its suburbs.1 8

The highway and public transportation systems

in U.S. cities are shaped largely by the need to offer capacity to satisfy peak traffic periods. These

peaks now are no longer dominated by worktrips,

although these trips still account for 37 percent of

peak person-trips. 19 And although the pattern of

workers living in surrounding areas and commuting to the central business district (CBD) may

once have been dominant, in 1980 the CBDs

employed only 9 percent of the workers in their total urban areas and only 3 percent of workers living outside the central city.20 In other words, peak

trips in general, and work trips in particular, are

now quite diffuse in origin and destination and

thus not easily served by transit. One reason for

this travel pattern is that urban development in the

United States is characterized by an “undifferentiated mixture of land uses and a broad plateau of

population density. . other central places scattered over the urban landscape challenge the primacy of the historic CBD.”21

Although the automobile continues to dominate U.S. travel, autos face strong competition

from commercial aircraft for trips of a few

hundred miles or longer. As noted above, air transportation has now captured about 10 percent of the

14 U.S. Congress, Office Of Technology” Assessment, Deli\ ’erin~ (he Goods: Public Works Technologies,A4ana~ement, and Finance, OTASET-477 (Washington, DC: U.S. Government Printing Office, April 1991 ), based on Department of Transportation data.

15 Routes that connect Princlpa] metroP)l i(an areas, se~’e (he nati(mal defense, or connect with r(mtes of continental im~mtance in Mexico

or Canada.

lb Offlce of Technology” Assessment, op. cit., fmtnote 14.

17 Ibid.

18 Ibid

19 H w Rlchar&)n and p. Gordon,” Uni\ersi(y of !3wthem Ca]ifomia!

. . ‘“New Data and Old Models in Urban Economics,” preliminary draft,

December 1992, table 3. Peak periods are fnml 6 to 9 a.m. and 4 (o 7 p.m. The precise character of changes in trip purposes is made uncertain by

the manner in which trip purpose data are collected, A worktrip interrupted by a stop (o run an errand would be c(mnted as a shorter worktrip and

another trip. Because trip “chaining” of this s(mt has increased, s(m]e of [he shift away from worktrips may be an artifact of the data rather than an

actual shift.

201.S. Lowry, “Planning for Urban Sprawl, “ in A Look Ahead-Year 2020, op. cit., fmm-mte I I.

21 Ibid.
total passenger-miles traveled and is the most rapidly growing segment of the U.S. transportation

system, with passenger-miles growing more than

7 percent a year in the 1980s.22

The U.S. air travel system is quite centralized:

There are more than 17,000 airports in the United

States, but the top 100 handle 95 percent of all passenger trips, and the 10 largest serve 40 percent of

all passenger trips. This is due primarily to widespread use by the major air carriers of "hub-andspoke” routes. 23 The major airports experience

substantial capacity problems and resulting delays--conditions that waste significant amounts

of fuel by idling aircraft on runways and keeping

arriving planes in holding patterns. Of the 25 airports with the most delays, Chicago’s O’Hare

ranks first, with total delays exceeding 100,000

airplane-hours per year; two airports have annual

delays between 75,000 and 100,000 hours; two

more have annual delays between 50,000 and

75,000 hours; and the remainder are between

20,000 and 50,000 hours.24

Q Freight Movement

The U.S. freight system moves about 3.2 trillion

ton-miles of freight per year.25 Trains and trucks

each carry about 30 percent of this, barges about

25 percent, oil pipelines 16 percent, and air less

than 1 percent. Trucks are the dominant transport

mode for nonbulk cargo, such as mail, processed

foods, and consumer goods. Truck types and cargo are extremely varied, with light trucks used primarily for short-distance urban and suburban delivery and for carrying craftsman’s equipment,

and heavy trucks hauling mixed cargo, processed

foods, and building materials. Trains, on the other

hand, carry primarily bulk products, which the

United States ships in large quantities over very

long distances. Key products moved by train inSummary I 7

elude coal, farm products, and chemicals. An increasing fraction of train movement-now more

than one-quarter—is in the form of trailers or containers (i.e., intermodal shipments involving both

train and another freight mode, e.g., truck or

barge), typically carrying manufactured or intermediate goods.

TRANSPORTATION ENERGY USE AND

POTENTIAL FOR CONSERVATION

Figure 1 provides a broad overview of where energy is being used in the U.S. transport system. The

figure illustrates that light-duty vehicles—automobiles, pickup trucks, utility vehicles. and

vans—account for more than half of all U.S. transportation energy consumption. These vehicles are

used predominantly for passenger travel. Airplanes, also used predominantly for passenger

Quads

Ligt

—

SOURCE Energy Information Adm.nlstratlon data

22 Ibid.

23 J.F. Ht)mbcck, Transporlatlon In/r[/, \/r//[ tilrt’. fi”{(m(m~lt at?d f’olf(~ I.$SUCS, 92- I SHE (Washln:tf~n, DC. C{~ngrcssl(mal Rcwar~’h Scn ICC,

Feb. I I , 1992).
8 I Saving Energy in U.S. Transportation

travel, account for 14 percent of U.S. transportation energy use. These two components of passenger travel thus represent a tempting target for energy conservation measures.

Freight trucks are the second largest consumer

of transportation energy, accounting for nearly 23

percent of the total U.S. use. Freight truck energy

use is expected to grow substantially during the

next two decades and thus should also be an important focus for energy conservation. Other

freight modes-pipelines, shipping, and rail

(most rail energy is freight energy)—are all important, and rail may represent an opportunity to

attract freight from trucking, with subsequent energy savings, but they are clearly of lesser significance than trucks for national energy savings.

U.S. TRANSPORTATION ENERGY

CONSUMPTION: WHERE IS IT HEADING?

EIA’s Annual Energy Outlook 1993 (AEO93) provides a detailed picture of future U.S. energy supply and demand, and transportation energy consumption in particular. The forecasts of transportation energy consumption depend on a number

of critical factors and assumptions, including:

Quads

30

20

10

0

- AEO 93 baselil7e

1-

1990 1995 2000 2005 2010

SOURCE U S Department of Energy Annua/ t nergy c-l~(hx)k 1993

●

●

●

■

■

assumptions about future oil prices;

assumptions about important demographic and

socioeconomic trends, for example, the nature

of women’s evolving role in the workplace and

how this will affect their driving patterns, and

future rates of immigration;

future progress in automobile and light-truck

fuel economy;

the market success of alternative fuels; and

overall and sectoral growth rate of the economy.

EIA’s baseline forecast accepts mainstream

ideas about oil prices and economic growth: that a

combination of plentiful oil supply, gradually increasing world demand, and Saudi restraint will

maintain prices in the $20 per barrel (bbl) range

for a few years and then gradually push prices upward, to $29/bbl ( 1991 dollars) by 201 O; and that

slower growth in the U.S. labor force for the next

few decades (a projected rate of about 1 percent

per year versus 2.1 percent annually in 1970-90)

will restrain the growth in real output of goods and

services, but that the U.S. economy will remain

sufficiently competitive in world markets to keep

growing at the moderate rate of 2.0 percent per

year.

26

The forecast projects steady but moderate

growth in transportation energy use: 1.26 percent

per year, yielding a 28.5-percent increase from

1990 to 2010—the 1990 level of 22.50 quads

(10.8 mmbd) increases to 28.93 quads (13.9

mmbd) by 2010 (figure 2).

EIA has formulated alternative forecasts based

primarily on different economic assumptions: Alternative price scenarios reflect, on the low side, a

combination of more conservation than expected,

significant competition among Organization of

Petroleum Exporting Countries (OPEC) members

to expand production capacity, and high nonOPEC production and on the high side, more

global economic growth and less conservation

than expected, which boosts world oil demand, as

well as a decreasing supply. Alternative economic

~growth scenarios reflect differing assumptions

26 Energy Inf(m)]:itlon Adn)lnlslrali(m, 1991, op. (II.. footnote 4,
Summary \ 9

about the rate of labor force growth and product i vity. As noted earlier, these scenarios introduce a

range of transportation energy projections for year

2010 of 26.86to31.00 quads ( 12.9 to 14.9 mmbd)

versus the 28.93 quads/ 13.9 mmbd base] inc.

The uneven history of energy forecasting demands that EIA forecasts, and all others, be

viewed with some skepticism. Over the past few

decades, sharp changes in both energy demand

and supply characteristics-especially the former—have caused actual national energy trends to

diverge sharply from widely accepted forecasts.

For example, during the 1970s, forecasts of future

electricity demand were revised downward so

often that a simultaneous plotting of forecasts

made in consecutive years described a wide fan,

with the top of the fan representing the earliest

forecast and the bottom, the latest.

Absent important new Federal policy measures—many of which are the province of Congress—several factors may increase the likelihood that actual transportation energy use in2010

will diverge substantially from EIA forecasts. Potential sources of divergence include: sharp

changes in urban travel behavior (e. g.. more carpooling and telecommuting), initiated by Transportation Control Measures under the Clean Air

Act; major success of alternative fuels spurred by

fleet purchases mandated by the Energy Policy

Act, California's low-emission and zero-emission

vehicle requirements, and technological breakthroughs; large increases in mass transit usage

courtesy of State initiatives supported by ISTEA:

breakthroughs in automotive technology, together

with large shifts in market conditions: and continuation of recent trends in vehicle-miles traveled

(i.e., high rates of grow(h) and energy efficiency

(i.e., stagnation), in contrast to EIA’s more optimistic assumptions.

Some potential sources of divergence (e.g., unforeseen success of Transportation Control Measures) imply that the EIA forecasts of transportation energy growth could be too high. The most

likely sources, however, imply the opposite. The

most likely sources of- forecasting error are as- . .

sumptions about growth rates of travel and efficiency. EIA has consistently chosen growth rates

of travel that are lower, and efficiency increases

that are higher, than recent historic rates. For example:

■

■

●

■

Light-duty vehicle-miles traveled (vmt ) grew at

.

rates well over 3 percent per year during the

1980s, compared with EIA’s assumed

1990-2010 rate of 1.7 percent annually. The

history of light-duty vmt growth during the

past four or five decades has been one of seemingly inexorable growth, despite expectations

.

to the contrary.

New car fuel economy has fallen since 1987.

compared with EIA’s assumed 1990-2010 increase of 1.1 percent per year. Low oil prices

and consumer preferences for luxury, performance, and size are pushing the market away

from fuel economy gains.

Air travel grew at a better than 7 percent per year

pace in the 1980s, compared with EIA’s assumed 1990-2010 pace of 3.9 percent per year.

All categories of freight trucks had mileage in- . L

creases well above 3 percent per year (combination trucks’ mileage grew at 4.7 percent per

year from 1982 to 1990), compared with EIA’s

assumed 1990-2010 annual rate of 1.9 percent

per year.

In OTA’s view, without substantial policy intervention (excluded in the projections), future rates

‘ - of travel are quite likely to be higher and effi- . .

ciency lower than EIA projects, with a resulting 

greater increase in transportation energy use than

the projected levels. There is room for technological breakthroughs in engines and other aspects of

vehicle design to make some difference (e.g., in

energy savings ) in the 2010 time frame, but this is

less probable than the potential for significant diversions from the forecasts in travel and efficiency

growth rates, toward higher energy use. There ap-

.-
10 I Saving Energy in U.S. Transportation

pears little likelihood (again, without substantial

policy intervention) that shifts to mass transit,

other important changes in travel behavior, or

market breakthroughs in alternative fuels will

cause major changes (beyond those already included in the forecasts) in transportation energy

use by 2010.

IS THE U.S. TRANSPORTATION SYSTEM

ENERGY-EFFICIENT? A COMPARISON

WITH EUROPE

Decisions to initiate pro-conservation policies

would be served by a determinant ion about whether

the current U.S. transportation system is particularly inefficient in terms of energy use, as suggested by some, or whether it is relatively efficient. Some analysts and policy makers have

compared U.S. energy use in general, and that

used for transportation, with energy use in other

developed nations, particular y Japan and Western

Europe. Typically, these comparisons are described as demonstrations of U.S. energy inefficiency, because Japan and Western Europe use

considerably less energy per capita in most sectors. As noted above, the average U.S. citizen uses

about five times as much transportation energy as

the average Japanese, and about three times as

much as citizens of Great Britain, West Germany,

and France. An examination of comparative energy use in the United States and Western Europe

demonstrates that the disparity in per capita consumption is caused by a variety of factors, some

of which clearly are related to differences in efficiency, but some of which have little to do with efficiency or are only vaguely connected to it. The

discussion here does not address the critical question of comparative access to recreational, social,

cultural, and employment opportunities, nor can

the relative roles of government policies and other

influences in shaping transportation energy use be

separated definitively.

The major reason for the difference between

U.S. and European transportation energy use is a

difference in travel volume: on average, Europeans travel only about half as much (in miles per

capita per year) as Americans.** This one factor

accounts for half of the total difference in energy

use. The causes of the difference are multiple and

difficult to unscramble: higher cost of travel;

much denser land use in Europe—in urban areas,

in suburbs, and overall (which may be due in part

to higher travel costs, but also is the result of different cultural histories, lower availability of land,

stricter land use controls); differences in socioeconomic factors affecting travel (e.g., women participation in the workforce, household size, willingness of workers to relocate far from their

families); differences in lifestyle; and so forth.

Another reason may be timing: Europe began its

shift to “automobility” later than the United

States and, despite now having per capita incomes

equal to or greater than U.S. levels, is still catching up in auto ownership. Part of the difference in

travel volume may translate into greater accessibility to economic, cultural, and recreational opportunities for U.S. citizens, but OTA is not aware

of any evidence to support this; the existence of

such a difference in accessibility, especially in urban areas, is debatable because European population densities and prevalence of mixed-use development make access to work, recreation, and other

destinations closer at hand; because much European urban travel is by walking and bicycling

(which tend to be overlooked in statistical analyses); and because accessibility is a subjective, culture-laden term. European land use patterns will

be described as “more efficient” than U.S. patterns by some, but this too is highly subjective.

The other half of the energy difference is accounted for by differences in the proportions of

various travel modes used (modal shares), load

factors, and vehicle efficiency. As a fraction of

their total travel, Americans travel somewhat

more in private autos, and far more in energy-intensive airplanes, than do Europeans, who make

far greater use of buses and trains. Mass transit has
Summary I 11

about a 15 percent modal share—measured as a

percentage of passenger-miles—in Europe versus

about 3 percent in the United States.29 And European automobile fleets are more efficient than the

U.S. fleet, partly because Americans purchase

large numbers of light trucks for personal travel

use, and partly because American automobiles are

larger than their European counterparts. These differences are lessening, however, as are the differences in per capita travel: the rates of growth of

travel and auto ownership are much higher in Europe than in the United States; U.S. auto fleet efficiency is catching up to most European fleets; and

mass transit modal shares—although not absolute

levels of ridership--are shrinking in most of Europe.

Unlike personal travel, European freight transportation is not more energy-efficient than its U.S.

counterpart, though its volume in ton-miles in

proportion to total economic activity is much lower than in the United States. The types of goods

transported and the physical conditions differ sufficiently from those in the United States that there

seem to be few lessons easily extracted from a

comparison of the two systems.

The available statistical comparisons between

Europe and the United States allow only tentative

conclusions. They do demonstrate clear] y that the

substantial differ ence.s between European and

U.S. transportation energy use patterns are

associated largely with different levels of travel;

about half of the difference in per capita energy

use is due to differences in energy efficiency, at

least in terms of common perceptions of what efficiency is. On the other hand, Europe’s faster rates

of growth in travel demand should not be interpreted as meaning that European transportation is

simply at an earlier stage of automobile dominance than the United States and destined to

“catch up” to U.S. energy consumption levels. Although there will be some continued convergence

between the two, European levels of per capita

High European population densities and prevalence of

mixed-use development reduce the need for long trips to

access work, recreation, and cultural opportunities

travel and energy consumption should continue

significantly below those of the United States because of a combination of different geography and

urban histories; European gasoline prices that

are three to four times higher than prices in the

United States; different policies regarding land

use controls, parking availability, automobile restrictions, and other factors that affect travel; Europe’s reasonably robust mass transit systems;

and cultural and socioeconomic differences.

Could the United States, if it chose, match European levels of transportation energy use? Fuel

price and other policy differences between the

United States and Europe can be made to disappear by legislative will, and future U.S. moves to

raise fuel prices, enact land use controls that increase urban densities, restrict parking, and so

forth would move U.S. transportation energy use

in the direction of European levels. However,

some or all of these policy changes may not be

politically acceptable: they would not affect all of

the factors that make European energy use lower

than U.S. levels; and some resulting changes in

energy use, especially those associated with land

use, would come quite slowly, over many de-
12 I Saving Energy in U.S. Transportation

cades. The remainder of this discussion examines

the incentives for and potential of U.S. government intervention in transportation.

WHY INTERVENE IN THE

TRANSPORTATION SYSTEM?

As noted above, a variety of problems and issues

are driving U.S. transportation policymaking, and

perceptions of the importance of these problems

and issues will be a key determinant of future

policy decisions.

1 Economic Efficiency, Externalities,

and Unpriced Inputs

To the extent that travelers do not pay for, or do not

account for, the full costs of their travel, they will

overuse it. Travelers do not pay the full price of the

air pollution and congestion they cause, the impacts on national security of the oil they consume,

(a portion of) the costs of the injuries and fatalities

they cause in auto accidents, and so forth. They indirectly pay for, but do not account for in their

travel decisions, the costs of parking in the shopping malls they patronize (these costs are embedded in the price of the goods being sold). Similarly, they may indirectly pay (in the form of lower

salaries) but not account for most parking costs at

workplaces. They pay and/or take into account

only a portion of the costs of building and maintaining roads, because some of this cost is met

from general funds, not user fees. And they pay

and account for some services inefficiently: gasoline taxes that pay for roadbuilding are only indirectly related to actual road requirements.

In this study, OTA asked Mark DeLuchi of the

University of California at Davis to prepare estimates of the social costs of motor vehicle travel,

separating private, efficient] y paid costs from external costs, hidden private costs, and inefficient y

priced costs. 30 These estimates indicate that

approximately two-thirds to four-fifths of the

total monetary costs of motor vehicle use31 

are

efficiently priced, that is, paid for entirely by

motor vehicle users, considered in their travel

decisions, and priced at marginal costs to society. Based on some preliminary estimates of the

dollar value of external costs, motor vehicle users efficiently paid for about one-half to twothirds of the social (public plus private) costs of

motor vehicle use, both monetary and nonmonetary, excluding the value of time.

These estimates represent a long-term view of

costs and their effects on behavior; that is, they

make no distinction between costs that must be

paid only occasionally (e.g., vehicle purchase

price, insurance premiums) and those that are incurred frequently (e.g., fuel costs, air pollution

damages). Some analysts prefer to focus on frequently incurred costs because they believe that

these have a more powerful impact on travel behavior. Because many of the private, efficiently

paid costs are paid infrequently, and most externalities and hidden or inefficiently priced costs are

incurred daily or at least frequently, an analysis of

frequently incurred costs would yield a lower ratio

of efficiently priced costs to total societal costs.

Which perspective—a focus on total costs or only

on those costs incurred frequently—is more “correct,” however, is not a settled issue.

These conclusions imply that there is some significant opportunity for improving the economic

efficiency of motor vehicle travel by incorporating external costs, hidden private costs, and inefficiently priced private costs into the price paid by

travelers. However, there are four important caveats:
Considerable uncertainty remains about both

the magnitude and the appropriate monetary

value of several external costs.

Measures to incorporate these costs must carefully match the pricing mechanism (gas tax,

road pricing, etc. ) to the patterns with which the

costs are incurred and should avoid high implementation costs. If this cannot be done, it may

sometimes be better to leave the costs unpaid

by users.

Attempting to charge full social costs only in

the motor vehicle sector ignores the reality that

all economic activities have hidden, inefficiently priced, and external costs. Although

there are reasons to believe that these represent

a higher percentage of motor vehicle costs than

of the costs for other activities, failure to apply

full social cost accounting to other activities

may reduce the economic efficiency benefits

that would otherwise result from correcting

transport pricing.

There may be external benefits as well as costs

associated with motor vehicle travel that, ideally, would be incorporated in a “full social cost”

accounting. Little research has been done on

external benefits, but this does not mean that

they are negligible.

Congestion

As noted, FHWA and others have projected large

increases in traffic congestion for the coming decades, with delay costs soaring to tens of billions

of dollars and average vehicle speeds dropping calamitously in many urban areas. For example,

FHWA has projected a 450 percent increase in

annual delay times from 1984 to 2005, from

slightly more than 1 billion hours to nearly 7 billion hours. And local studies project that Los Angeles freeway speeds will drop to 11 miles per

hour (mph) by 2010, from their present 31 mph.

Skeptics of these estimates have attacked them at

Summary I 13

least in part on the basis of survey results showing

that average U.S. commuting times remained essentially unchanged during the 1980s, a seemingly odd result if congestion has grown as much as

estimated. Increases in reported average freeway

speeds also appear at odds with estimated increases in congestion.

Rush-hour traffic in the Virginia suburbs of Washington, DC,

represents a familiar pattern that is spreading geographically

to more cities and suburbs, and, temporally to a greater

number of hours per day

OTA’s evaluation of the available data indicates

that it is possible that both the estimates of growing congestion and some of the apparently contradictory travel and highway speed data may both be

right. 32 However, there is another reason to be

concerned about the accuracy of the congestion

estimates—they are based on traffic counts rather

than on measurements of actual speed declines

and travel delays, an indirect method that invites

inaccuracy. And the dire projections of future congestion costs also invite skepticism because they

take no account of shifts in job and residential

locations or of changes in travel behavior (although these have been important factors in the

past), and they assume that rising travel time costs

will have no negative effect on the growth in traffic volume. In other words, these projections ap-

~Z ~1~ ,~ ~rinlarll) ~,cau~e ~ongestion ” de]a}s still represent a retat]~ eIYI sma] I ptmi(m of tt~tal highwa}f travel. consequently, ad~’erse effects

of c(mgestl(m (m highway speeds and trat el limes could be offset by factors such as ]ncreased hi ghway speeds during unc(mgested periods and

shifts in cf~n]nwtlng patterns.
14 I Saving Energy in U.S. Transportation

pear to be worst-case extrapolations rather than

“most likely case” estimates.

OPTIONS FOR REDUCING

TRANSPORTATION ENERGY USE

The options available to policy makers to pursue

transportation energy conservation activities include:

1. economic incentives--direct taxes, granting or

eliminating tax breaks, subsidies, granting of

regulatory exemptions, making pricing more

efficient;

2. public investment--in new infrastructure (including new types of systems and services, e.g.,

mass transit), maintenance and rehabilitation

of old transportation infrastructure, expansion

of service, urban development, research and

development; and

3. regulatoryincentives-efficiency standards,

zoning, fuel use requirements, speed limits, inspection and maintenance requirements, and

travel restrictions.

Some of the main thrusts of transportation energy conservation policy are discussed here, from

raising gasoline taxes to increasing the use of

mass transit.

B Gasoline Taxes

Raising taxes on gasoline is often viewed as both

a means to raise revenue and an energy conservation measure. Higher gasoline prices serve as an

incentive to purchase more efficient cars and light

trucks and to change travel behavior-toward carpooling, transit, and reduced tripmaking.

For every 1 percent increase in the price of gasoline, the number of vehicle-miles traveled is expected to decline by 0.1 to 0.25 percent;33 

new car

fuel economy may also respond by increasing a

small amount,34 unless fuel economy standards

are already forcing fleet miles per gallon (mpg)

higher than the market would drive it. Current corporate average fuel economy (CAFE) standards

do seem to be propping up fuel economy against a

market-induced drop. Consequently, small increases in gasoline taxes maybe more likely to allow some automakers to stop subsidizing sales of

small cars (which they do to comply with the standards) than to actually raise their CAFE levels.

Although there is a substantial range of views

about the effect of gasoline taxes on gasoline demand and vehicle efficiency, the primary source of

controversy about such taxes is disagreement

about their impact on the deficit and on the economy. This disagreement stems from three major

sources: failure to account for differences in the

actual scenarios being analyzed; analytical uncertainty introduced by the use of different models,

parameter choices, and baseline assumptions; and

differences in beliefs about the extent to which

gasoline is “underpriced” because of externalities

and unpriced economic inputs associated with

driving.

Any discussion of the impacts of a gasoline tax

must recognize that such a tax, like any tax, acting

alone, will in the short term depress the overall

economy, increase unemployment, and reduce

gross national product (GNP); after several years,

these effects die out. Although there are multiple

pathways for these effects, the primary paths include the reduction in gasoline demand and demand for new cars, which cuts jobs and income,

and the reduction in aftertax income for people

who must buy gasoline, which reduces their demand for most goods and services. These impacts

then reverberate throughout the economy.

Gasoline taxes provide revenue, however, and

the use to which this revenue is put makes a criti3 \ see C,A, D:lhl, “Gas(J]ln~ Demand SU~ ~Y. “ 7’}lc Ener~j Journal, vol. 7, N(). 1, 1986, pp. 67-82.

~L! ~e ~]il~llclt} of fuc] ~conolll}” ~ ilh rc~w~c[ [() ~;i~()]lne Price is highlv uncertain, h’cause [he large changes in fuel ec(m(m]y during the

. .

11)705 ;ln~ ~:lr]) I !)h, w hic}l prot idc the best opportunity t{) obtain data for computing elasticities, (Kxurrcd during a pcri(d when factors other

than m-ml gasol inc prlcc pr~dxibly played an inpmtant role in h)osling fuel ecxmmy. In particular, CAFE standards had been passed and

IIvili Iabk f(mxmts prdlctd astr(m(mllcal ()1 I prices. Al s{), U.S. new’ car fuel ec(mlmy’ had decl ]ned to wry 1( )W kwls. M) [hat the in it]al in]-

prof mcnls were 12asy 10 achkwe.
Summary I 15

cal difference in the overall economic impacts of

the taxes. This is why evaluation of gasoline tax

impacts must be linked to scenarios of how tax

revenues are used (e.g., reductions in other taxes,

additional expenditures, or deficit reduction; in

addition, the Federal Reserve System may accommodate tax changes with changes in monetary

policy, and these changes will strongly influence

overall economic impacts). For example, if revenues from an increase in gasoline taxes were used

to reduce the tax rate on capital investments, the

net macroeconomic effect would likely be positive because taxes on investment are particularly

distorting to the economy. On the other hand, coupling the tax to a reduction in personal income

taxes would likely yield a net negative impact because income taxes do not have large distortionary

effects on the economy.

Analytical uncertainty is introduced to estimates of gasoline tax impacts by the use of alternative models. The Energy Modeling Forum at

Stanford University has conducted carefully controlled evaluations of alternative model runs that

examine the same tax scenario. These evaluations

have uncovered large differences in predicted outcomes among the alternative models.

The above factors influence evaluations of the

effects of a gasoline tax on quantifiable measures

of the health of the U.S. economy. Another indicator of the health of the economy, one that cannot be

directly measured, is economic efficiency, which

is a theoretical concept of the “goodness” of resource allocation in the economy. As discussed

earlier, the presence of externalities and unpriced

economic inputs associated with driving leads to

an underpricing of driving costs, and thus to more

driving and more gasoline use than would be economical 1 y efficient. To the extent that a new gasoline tax reduces this underpricing, it will add to the

efficiency of the economy; any further increase

beyond the point at which gasoline price matches

the marginal cost to society would reduce economic efficiency.

A gasoline tax is limited in its ability to compensate efficiently for externalities and unpriced

inputs. It tracks well only with greenhouse warming and energy security costs. but quantification of

monetary equivalents for these two externalities is

extremely uncertain. Other externalities and unpriced inputs, such as congestion delays and unpriced road services, can be addressed more efficiently by means other than fuel taxes, for

example, variable congestion charges on roads.

According to the social cost estimates prepared for

this study, inclusion of greenhouse warming35 and

energy security costs into the cost of gasoline

would add approximately $0.15 to $0.80 per gallon to current prices. Thus, if these estimates are

correct, additional gasoline taxes of up to

$.15/gallon and perhaps higher would improve

overall economic efficiency.

B Full Cost Accounting

Although gasoline taxes should be considered a

primary option for transportation energy conservation, they are also one component of a broader option, full cost accounting of all transportation

modes. As discussed above, full cost accounting

attempts to maximize economic efficiency by repricing transportation services so that travelers

\

T

x

r==

Free parking at suburban malls and "super stores” represents

a partially hidden cost of motor vehicle travel Parking costs

must be “paid” in higher prices for goods but shoppers may

not account for these costs in their travel decisions
16 I Saving Energy in U.S. Transportation

pay and account for the full marginal costs to society of the transport services they select. Such a

system would force travelers to take account of the

air pollution (and other environmental effects, and

negative impacts on society) that a trip would

cause; would force payment for all transport services received (e.g., law enforcement); and would

move hidden payments, such as parking costs,

into the open so that travelers would account for

them.

There is little argument about the clear value of

full cost accounting in the abstract, but extensive

controversy about the practical aspects of such accounting—the magnitude of externalities and unpriced inputs; the monetary values that should be

placed on various externalities; the appropriate

methods for implementing required price changes;

and the likely impacts of price changes on travel

behavior.

As noted, gasoline taxes could serve well to

“internalize” the external costs associated with

energy security and greenhouse warming because

these effects vary with gasoline consumed, and

thus with gasoline taxes collected. A variety of options exist to incorporate other externalities, unpriced inputs, and other ignored costs into the

transportation price structure. For example, congestion pricing with electronic scanning of vehicles can be used to internalize the externalities

associated with highway congestion. Parking

costs can be “charged” to commuters by requiring

firms to offer a cash option as an alternative to free

parking. The costs of currently subsidized services—police and fire protection, for example,

and a portion of local roadbuilding--can be translated into travel charges, although matching the

nature of the services to an appropriate collection

mechanism will be difficult. And the external

costs of accidents can be added to driving charges

by stricter requirements for insurance coverage or

by incorporating a portion of insurance costs into

fuel prices, vehicle registration fees, or other

charges, thereby decreasing the incidence of uncompensated accident victims.

I Automobile and Light-Truck Fuel

Economy Standards36

Because light-duty vehicles—automobiles and

light trucks---consume more than 50 percent of all

transportation energy and 70 percent of energy

from all motor vehicles, raising fuel economy

standards for new light-duty vehicles is an obvious candidate for part of a national conservation

strategy. The earlier legislative debate on new

standards focused on a number of critical issues:

the effectiveness of a regulatory approach to increasing fuel economy; achievable fuel economy

levels; the most effective format for a new standard; timing of implementation; potential adverse

effects on auto safety; effects on employment; and

the likely fuel use reductions that would occur if

standards are implemented. Each of these issues

has generated substantial controversy.

Arguments about the effectiveness of new standards tend to revolve around perceptions about the

actual impact of the 27.5-mpg standard (for automobiles only) set in 1975. Claims and counterclaims have been made about whether the large

gains in U.S. fleet fuel economy in the 1970s and

early 1980s37 were a response to the standard or to

changed market conditions. ‘*Proof” of either side

of the argument is elusive, but the sharply different fuel economy trends of companies that were

either constrained or not constrained by the standards are persuasive that the past standard was a

critical factor in the fleet’s improvement.

The range of estimates for an “achievable” level of fuel economy over the next decade or so has

been very wide, with domestic automakers arguing that future gains will at best be small and incremental, and conservation groups arguing that

gains of 40 to 50 percent over current levels are

readily achievable soon after the turn of the centu36 For more details, see U.S. Congress, OffIce of Technology” Assessment, Impro}’ing Aulomobi/e Fuel ECWWI}’: Ne~\ Slandards, Ne~+ APprom%es, OTA-E-504 (Washington, DC: (J.S. Government Printing Offke, October 1991).

37 us, new car fleet fuej econonly” rose frtm~ 17.2 mpg in 1976 to 27.9 mpg in 1986.
Summary I 17

ry. OTA concluded in 1991 that U.S. new car fleet

fuel economy levels of about 33 mpg could likely

be achieved soon after the turn of the century, with

additional vehicle costs balanced by oil savings38

and few measurable safety consequences (no

downsizing would be necessary), but (probably)

some limits on performance. Fleet levels of about

35 or 36 mpg were projected to be achievable in

the same time frame with little technical risk and

no forced early retirement of model lines but with

costs that would not be recouped by fuel savings

alone. During the nearly 3 years since these estimates were made, U.S. new car fleet fuel economy

has not improved, and average vehicle weight has

risen. Taking this into account, an updated estimate would likely project potential attainment of

33 mpg (at full cost recovery) or 35 to 36 mpg

(cost recovery at $2 per gallon gasoline) by 2004

or 2005.39

The potential for- light trucks is somewhat less

than for automobiles. Recent analysis of lighttruck fuel economy projects that the domestic

light-truck fleet could achieve about 23 mpg by

2005 with additional vehicle costs balanced by oil

savings, and about 26 mpg by the same date with

application of all available fuel economy technologies but no forced early retirements.40

Justification for the higher targets for both automobiles and light trucks would presumably be

based on a belief that further fuel savings will

yield added societal benefits in the form of lower

greenhouse emissions. national security benefits

from reduced oil imports (for the United States),

and environmental benefits from lower oil production that are not incorporated in the price of oil.

The above increases in fleet fuel economy are

based on application of well-known technologies

and designs. New technologies, not yet introduced

commercially into the fleet, could begin to play a

significant role within the same time frame, The

potential for these technologies is discussed below’.

If more stringent standards are to be imposed

on new automobiles and light trucks, lawmakers

will have to give serious consideration to the appropriate format for new standards. The current

uniform 27.5-mpg standard for automobiles. applied separately to domestic and imported fleets

for each company, has created large marketplace

distortions by ignoring differences in the mix of

vehicles manufactured by each automaker and by

allowing gaming between domestic and imported

fleets.41 In particular, the uniform standard offers

substantial market advantages to makers who

have focused on smaller cars (e.g.. the Japanese

automakers), by leaving these makers relatively

unconstrained. Lawmakers might consider standards that vary with the average attributes of each

automaker's fleet, so that each company’s fuel

economy target bears some relationship to the true

technical potential of the vehicles it manufactures.

Attributes such as interior volume, “footprint”

(wheelbase x track width). or even combinations

of weight, engine torque, and interior volume

might be appropriate candidates for such a standard. New standards for light trucks might deal

with different categories of trucks individually—

for example, basing standards for passenger vans

on interior volume and standards for pickup trucks

on load carrying capacity. Design of appropriate
18 [ Saving Energy in U.S. Transportation

standards for the light-truck fleet will be a special

challenge for regulators.

A centerpiece of recent congressional debates

about new fuel economy standards has been concern about effects on vehicle safety, with the chief

concern being the potential for forced downsizing

of vehicles and an accompanying increase in injuries and fatalities from higher incidence of vehicle

rollover or other causes. The potential for adverse

safety consequences from either downsizing or

downweighting is a legitimate concern. Although

1 O-year fleet fuel economy gains of 30 percent or

so are feasible without downsizing, and market

forces would appear likely to weigh against downsizing, there are no guarantees that automakers

would not choose this course; further, moderate

reductions in weight (a few hundred pounds

would be likely) might have some adverse safety

consequences. Also, requiring gains greater than

30 percent in this time frame, or a shorter schedule

for required gains, could create severe pressure to

downsize the fleet, with likely adverse safety consequences. On the other hand, measures are

available to mitigate safety problems, including

Barrier tests are an important safeguard in assuring the safety

of new car designs, including designs stressing materials

changes and other weight reduction measures

small increases in track width to reduce rollover

risks, universal application of anti lock brakes, and

enhancement of interior padding to prevent head

injuries.

Another strong concern of lawmakers has been

the potential employment consequences of new

standards. Clearly, standards that can be achieved

only by severely compromising consumer amenities could adversely affect sales and have an unfavorable impact on industry employment. However, there is no indication that standards at the levels

discussed would hurt domestic automakers’ competitive position or strongly affect their sales.

Analyses by both the industry and the conservation community have concluded that new

standards would have strong employment impacts. However, competing analyses drew sharply

different conclusions: the industry’s analysis projected large job losses, and the conservation community’s analysis projected large job gains. OTA

found that both projections were driven more by

their starting assumptions than by objective analysis.

42 The only defensible conclusion is that oil

savings from new standards, like oil savings from

any source, will tend to have positive impacts on .

national employment because the oil backed out

of the economy will likely be imported oil, which

generates fewer jobs per dollar spent than most

other expenditures.

43 However, this is only one of

several sources of employment impacts from new

standards. Depending on the cost of required

changes in auto design and the gasoline savings

achieved, consumers may have more or less to

spend on other goods and services, which would

affect nonindustry employment; and net auto sales

as well as auto manufacturing productivity rates

might change, which would affect industry employment. These impacts could be negative or

positive.

Finally, there has been considerable debate

about the likely fuel savings associated with new

~? Although [he Conserva[lon” Conm]uni[y’s analysis, c(mducted by the American Council for an Energy-Efficient Ecmmly, nlade nmch

n}(m use t)f ec(momic analysis in its projectitmo

43 ]n ~)ther ~ords a do]]ar no/ swn[ (Jrl in]~)ficd oil c{)sts fewer jobs [han are added by spending that d(dlar elsewhere in [he ~ct)nt)nl)’.
Summary I 19

standards. Most of the debate has been centered

around Senate bill S. 279, which required each

company fleet to improve by 20 percent for 1996

and 40 percent by 2001. Most differences in estimates occurred because of differences in assumptions about the likely values of fuel economy that

would occur without new standards; the likely use

of alternative fuel credits by automakers; the magnitude of any increase in driving because of reduced “per-mile” fuel costs associated with higher-efficiency autos; and the likely magnitude of

future growth of vehicle-miles traveled. Two estimates that can serve as “outliers ” are the Department of Energy’s estimate of 1 mmbd saved by

2010, and the American Council for an EnergyEfficient Economy’s estimate of 2.5 mmbd saved

by 2005. OTA estimates that the most likely savings from compliance with S. 279 would be about

1.5 to 2.2 mmbd by 2010, if compliance does not

significantly hurt new car sales.

B “Feebates”: An Alternative or

Complement to Fuel Economy

Standards

“Feebate" plans offer a market substitute for, or

supplement to, new fuel economy standards.

Feebate plans involve charging fees to purchasers

of new cars that have low fuel economy44 and

awarding rebates to purchasers of new cars with

high fuel economy. The plans can be designed to

be revenue neutral or revenue generating, but their

general purpose is to provide an incentive for consumers to purchase efficient vehicles and for

manufacturers to produce them. Feebates avoid

the danger inherent in CAFE standards: that the

estimated costs and fuel economy benefits of

available technologies are too optimistic. so that

complying with the standards will end up costing

much more than expected. Also, unlike CAFE

standards, feebates provide continuing incentives

to improve fuel economy beyond the level initially desired by rewarding the deployment of new,

unforeseen technologies. On the other hand, leaving fuel economy results entirely to the market

runs the risk that the actual improvements obtained may be considerably less than hoped for. In

OTA’s view, the potential for error in projecting

the costs and benefits of feebates is quite high. Attempting to predict the actions of auto manufacturers in a free market adds considerable uncertainty to an analysis of fuel economy potential

—beyond the important uncertainties in technology costs and benefits inherent in OTA’s analysis of

CAFE standards.45

Recent analyses by Lawrence Berkeley Laboratory (LBL) conclude that feebates large enough

to award a $500 differential between a 20-mpg and

a 25-mpg car can achieve a significant new car

fleet fuel economy increase—15 percent over expected levels by 2010.4b Virtually all of this improvement is expected to come from manufacturer

responses to feebates, with changes in consumer

behavior contributing little. If this analysis is correct, feebates will have an impact similar to CAFE

standards aimed at the same 15 percent improvement, although with more flexibility y for manufacturers but less certainty of attaining the desired

improvements in fuel economy. The dominance

of the manufacturer response implies, however,

that small-scale programs (e.g., programs conducted by one or a few small States) are unlikely to

have much effect because they would be unlikely

to affect manufacturer decisions.

An important concern of feebates is the possibility that they would provide an advantage to foreign automakers, because foreign companies, especially the Japanese, tend to have higher CAFE

levels than U.S. automakers. The LBL analysis

concludes that foreign automakers will gain more

rebates than U.S. automakers, although this effect

would diminish over time. Basing the feebate system on car size would diminish the adverse impact
20 I Saving Energy in U.S. Transportation

on U.S. companies, because much of the difference between the U.S. fleets and the Japanese

fleets is due to the larger average size of U.S. cars.

However, LBL concludes that this type of feebate

yields considerably less improvement in fuel

economy than a feebate that allocates fees and rebates based only on fuel economy.

B Transportation Demand

Management Measures

Both the Clean Air Act Amendments of 1990 and

ISTEA include requirements for programs that

improve transportation efficiency by reducing

traffic volume, especially during peak travel

times. These transportation demand management

measures (TDMs),47 including parking charges,

high-occupancy vehicle (HOV) lanes, and intelligent vehicle-highway systems (IVHS), could play

an important role in a national conservation strategy. (In essence, many TDM measures are similar

or identical to measures that would form the basis

for full cost accounting.) Although few analysts

expect any particular TDM to make great inroads

in fuel use, especially because of likely political

limitations on the severity of incentives considered, fuel savings of several percent may be possible from an intensive program combining a variety of such measures. Unfortunately, the limited

number of trials of TDM measures and the diversity and complexity of travelers' reactions to them

imply that policymakers must accept considerable

uncertainty in gauging their likely impacts. Some

promising or prominent measures include:

1. Pricing parking: Parking charges would be one

of the largest and most visible costs of commuting and other local travel if most travelers paid

them, but 90 percent of commuters receive free

parking. Asking employers to offer workers a

cash alternative to free parking (i.e., either

parking or cash, at their choice) or otherwise

providing a market incentive not to park appears to have substantial potential to reduce vehicle worktrips.

2. Congestion pricing: Placing electronic tolls on

heavily traveled roads during peak periods

should both reduce total trips and displace trips

out of peak periods, when congestion makes

them inefficient. Although congestion pricing

is economically efficient because it asks travelers to pay for costs they impose on others, the

substantial magnitude of the per-mile charges

needed to make significant inroads on traffic

volumes (estimated to be as high as $0.65 per

mile in California’s urban areas) represents a

powerful roadblock to implementation.

Telecommuting: The growth of informationoriented service industries and simultaneous

radical improvements in telecommunications

capabilities may allow growing numbers of

workers to “telecommute” from home or satellite offices, thereby avoiding long commutes.

Currently, between 2 million and 8 million

workers telecommute,48 and the Department of

Transportation projects that as many as 15 million workers could telecommute by 2002. Although all such estimates are highly uncertain,

the potential clearly is large, with accompanying energy savings of more than 1 billion gallons of gasoline per year at the upper end.

High-occupancy vehicle lanes: HOV lanes are

freeway lanes restricted during peak hours to

vehicles containing two or more passengers.

They provide an encouragement to carpooling,

as well as providing some potential congestion

relief—and increased efficiency-to the remainder of the roadway (unless they are conversions from previously unrestricted lanes, in

which case their effects on congestion depend

on circumstances). There is controversy about

the ability of new HOV lanes to reduce overall

vehicle-miles of travel and energy use, because

the added roadway capacity and reduced congestion will stimulate additional travel, cancel-
-,5.

B

ing some of the benefits from increased ride

sharing.

Intelligent vehicle-highway systems: IVHS encompasses a range of systems that can provide

services from timely information to drivers

about congestion and alternative routes to fully

automated control of vehicles on limited access

roads. ISTEA authorizes several hundred million dollars for IVHS development. These systems should have substantial potential to relieve congestion in crucial corridors. The

ability of IVHS to reduce overall energy use is

more problematic, however, because the energy saved by reducing congested (and inefficient) traffic flow must be balanced against any

increased energy use from additional travel

stimulated by increased road capacity.

Public Transportation

Whether public transportation is a key to revitalizing U.S. central cities and substantially reducing

automobile use or has only minor relevance to future transportation policy is an ongoing argument

in the transportation community. This is largely an

argument between the hoped-for potential of public transportation and the disappointing record of

its actual performance in the United States; it is

also an argument about unpaid-for costs and unaccounted-for benefits.

There may be many local success stories of

U.S. public transportation, and the central business districts of many American cities could not

survive in their present forms without mass transit; yet for the past several decades, transit has

shown a disturbing trend toward increasing costs

and declining market shine despite heavy subsidies. Labor productivity y, for example, fell sharply

during 1960-85, although it has rebounded a bit

during the past few years. Similarly, per-mile labor costs rose by 80 percent after inflation from

1965 to 1983, with relative stability since then.

With higher operating costs and reluctance to raise

Summary I 21

fares because of declining patronage. transit subsidies have risen. Local, State, and Federal governments now pay about 57 percent of transit operating costs and almost 100 percent of capital

costs. This means that on capital-intensive systems (e.g., heavy rail systems such as Atlanta,

Washington, DC, Buffalo), ticket prices may be

paying for only 1() or 20 percent of total costs,

with governments picking up the rest.

---

a ,

d

..:

Heavy rail systems are a transportation mainstay of many U S

cities, including New York, Philadelphia, Chicago, Boston,

Washington DC (Washington's METRO shown here) and

others

Aside from high costs, it also is not clear that

most U.S. transit systems in their present form are

saving much energy. From 1970 to 1989, both bus

and rail transit energy intensity (fuel use per passenger-mile) increased substantially: buses by 70

percent, primarily because of lower load factors,

growing urban congestion, and greater orientation

to suburban services that require more nonrevenue

backhauls; and rail systems by 38 percent, at least

in part because a number of new systems were

added that are faster and tend to operate at lower

load factors than earlier ones. Right now, on average there is little difference between auto efficiency and public transportation efficiency in Btus per 49 Unfortunately, obtaining a fair passenger mile.

comparison between auto and transit energy in ten-
22 I Saving Energy in U.S. Transportation

sity is quite difficult, requiring an accounting of

trip circuity;50 energy built into capital structures;

trips used to access mass transit: appropriate auto

load factors, given not only the type of trip but the

characteristics of those auto users who are potential transit users; travel conditions (e.g., congestion); and transit system characteristics. Automobiles may in some instances be more energyefficient than mass transit.

51 This does not imply,

of course, that transit systems cannot save considerable amounts of energy under the right circumstances: high load factors for the transit system;

private vehicles operating in congested conditions, often with single occupancy; transit operating on its own right of way or lane, or sharing an

HOV lane.

I Urban Planning

The potential of public transportation cannot be

discussed properly without simultaneously discussing the role of urban form in shaping transportation patterns and energy use. It is clear from

evaluation of urban areas worldwide and within

the United States that residential density, as well

as other urban characteristics such as centralization and mix of land uses, plays a crucial role in

both the amount of per capita travel and the mode

chosen. Cities with high residential densities

(greater than 12 persons per acre), a strong central

focus, and an intertwining of residential and commercial land uses tend to have both low overall per

capita travel and relatively high use of public

modes of transportation, as well as walking and

bicycling, compared with cities with lower densities, lack of centralization, and separated land

uses. Other urban characteristics that are strong

indicators of both travel and mode choice are the

relative volume of roadway and the volume of

parking spaces per 1,000 vehicles. Given these

relationships, many in the environmental community wish to consciously reshape American cities

to make them more compatible with transit, bicycling, and walking, and to greatly reduce the

travel necessary for access to employment, recreational, and cultural opportunities.

The urban characteristics discussed above are

the result of both immutable factors—the cities’

wealth and its distribution, their history (especially when they experienced their major growth), and

their geography-as well as factors that are controlled by governments, such as roadbuilding policies, housing policies (including tax breaks afforded private dwellings), parking requirements,

and land use planning controls. The precise role of

the various forces is still the subject of considerable debate, with environmental groups stressing

the role of policy and pro-development groups

stressing the role of factors not controllable by

policy. In reality, however, even those factors

theoretically controllable by policy have become

embedded in the American political system and

are difficult to change. A few U.S. cities have

made serious attempts to change some of these

factors, however—Portland, Oregon being one of

the most widely known

52—but the results are not

yet evident, And even these cities can change only

some factors; other important matters, such as

mortgage interest exemption and a tax policy that

treats free employee parking as exempt from taxation, are controlled by the Federal Government.

What this implies is that a serious effort to shift

land use patterns into forms more compatible with

reduced travel and greater use of transit, bicycling,

and walking will require strong efforts at all levels

of government, that changing the necessary policies will be politically difficult, and that the re-

‘~ Pfmliind hii\ ~~tiibllsh~d an Llrhan Gr(lwih B(mndar) [[) dlrccl dc~clopn]ent into the cit) ra[hcr than its suburbs, prohibited aut(mlobilcs in

ii he! d(Iu ntt)wn corridor” scr~cd b} bus transii, rcs[rwkd park]ng spaces Inc(mptmitcd into nw office dckeh)pnwt; and dctcl{)ped a light rail

S) stcn], Tk clt) has [hus fiir {~htalncd g[xN.I results rcgiirding [riiftl~ \oluTIIe and lransit share for a small dt)w ntown artii but, as a whole, has seen

ht)th ii lt~~s In transit share and il lilrg~ lncrcasc [n s]ngl~-t)~~t]piincj ~~hlcles fr(m] 1980 to 1990.
Summary [23

suits, in terms of actual changes in land use, are

uncertain. Without a coordinated effort of this sort

and a successful shift to denser land use patterns,

however, it is difficult to imagine any kind of revitalization of public transportation in this country,

regardless of the investment capital poured into

new systems.

A corollary to the idea of changing land use to

revitalize transit and reduce travel demand is that

of installing transit systems to shape land use. Unfortunately, although it is clear that introduction of

rapid transit systems can have large effects in the

immediate locality around stations, there is little

indication that such systems have had much effect

on urban structure, at least over the past few decades. This lack of a strong, measurable impact

implies that access to a transit system, although

certainly a factor in determining locational decisions for new development, is only one of many

such factors. Building a transit system can be part

of a multifaceted strategy to affect land use, but it

is unlikely to do much in relative isolation.

This conclusion is disputed by some environmental organizations, which maintain that comparisons of travel behavior and land use density

across areas with different levels of transit service

show clearly that such service creates higher densities of land use and reduces per capita levels of

travel. Were such an effect to occur, transit evaluations should properly count the induced reductions in travel—and resulting decrease in air

pollution, congestion, and other social costs of

auto travel—as a direct benefit of transit. OTA’s

evaluation of the available studies indicates, however, that they are not adequate to demonstrate

such an effect: they generally do not show changes

over time, do not account sufficiently for demographic differences between areas with differing

land use, fail to distinguish among different trip

purposes, and cannot prove cause and effect.

However, the positive relationship between good

transit service and dense land use, on the one hand,

and lower levels of travel, on the other, does lend

weight to the argument that policies aimed at both

increasing transit service and increasing land use

density, if successful, would likely reduce travel

and should be credited with this reduction in a

cost-benefit analysis. Further study is needed to

define the likely magnitude of such an effect, however.

1 High-Speed Intercity Public

Transportation

Only 1.2 percent of all person-trips are at least 75

miles in length, but these trips represent more than

one-quarter of all person-miles of travel. For trips

from 100 miles (below which autos can be expected to continue their dominance) to about 500

miles in length (beyond which air travel should

continue dominance), investments in high-speed

ground transportation (HSGT) systems capable of

speeds around 200 mph or faster—rail or maglev53—represent an option to relieve congestion

in both auto and air modes and possibly (depending on system characteristics) to save energy (and

reduce oil use). In fact, proposals have been made

to install such systems in a number of U.S. inter-

,.-

-,

z

T

The Train a Grand Vitesse (TGV) currently operates at high

speeds (185 mph) along more than 1,000 miles of track in

France

53 Maolev ~y~tems are trains tha[ OFra[e suspnded in air (m fixed, dedicated guideways, held LJp by nlagnctic ft~rces and Pr~~W’ll~d ‘Y 1‘nc:kr

e

electric mot~ms.
24 I Saving Energy in U.S. Transportation

city corridors, including Miami-Orlando-Tampa,

Cleveland-Columbus, San Diego-Los AngelesSan Francisco-Sacramento-Reno-Las Vegas, Atlanta-Columbus/Macon-Savannah, and the Northeast Corridor (Boston-New York City-Washington, DC). The Transportation Research Board

has found that further testing and development are

necessary for maglev systems to prove they can

operate safely and reliably in revenue service; European high-speed rail systems operating at

speeds approaching 200 mph are firmly established. 54

Although high-speed rail systems have been

successful in Europe and Japan, this does not automatically demonstrate their applicability to U.S.

conditions. The United States has some key disadvantages—less densely populated intercity corridors, with major cities farther apart; lack of preexisting heavily traveled rail links; lack of wellestablished intracity trains in most destinations;

and availability of competitively priced air shuttle

services. Further, much of the current and projected airport congestion is due to airline management decisions favoring hub-and-spoke operations, and is not entirely a function of physical

capacity. Thus, the extent of future airport congestion, which is a key argument in favor of intercity

high-speed rail, is somewhat in question.

Available analyses indicate that new HSGT

systems would likely require strong government

capital subsidies to maintain financial viability.

With full capital subsidies (which new urban rail

transit systems have received), operating and

maintenance costs for new systems should be low

enough to allow them to compete well with air and

low-occupancy auto travel. Without such subsidies, annual ridership levels would have to be at

least 2 million, and most likely about 6 million,

passengers (high estimate: 17 million passengers

per year), for the systems to break even. By 2010,

only four city pairs are expected to have total air

ridership exceeding this mark—Los Angeles-San

Francisco, Boston-New York, Washington, DCNew York, and Los Angeles-Phoenix. Although

maglev costs are quite uncertain because fullscale systems have not been built, early analyses

imply that they would have a more difficult time

breaking even without subsidies; OTA has found

that the infrastructure costs of a maglev system for

the Northeast Corridor would be approximately

double those of a high-speed rail system.55

The keys to the future success of HSGT systems, if they are built, will be the extent of congestion growth in both road and air modes (available

forecasts for both modes have large uncertainties),

the level of subsidies Federal and State governments are willing to extend (which depend, in

turn, on the value society places on the oil displacement, congestion relief, and other societal

costs reduced by use of the systems), and the response of competing modes.

1 Improving Auto Fuel Economy:

Moving Beyond Current Technology

Recent congressional deliberations about fuel

economy standards have focused on relatively

evolutionary improvements in automobile design, on moving available fuel efficiency technologies widely into the fleet, and on a short-term (10

to 15 years) time horizon. Another potential direction for fuel economy improvements is a radical

shift in technology and design, possibly including

a change in basic powerplant. Such a direction is

embodied in calls for the introduction of "supercars, ” extraordinarily light-weight, electric-hyT4 Tran\P)nati{)n Re~c.iirCh Board, /n Pl,r$l(ll ot’.yl>eed: jVew options tijr ln!erci~’ Possenxer Transport, Transpwtalitm Research Board

Special RePwt 233 (Washingttm, DC: Nati(mal Research C(mncil, 1991 ).

‘s U.S. C(~ngrcss, office of Technology Assessment, Ne\\ Ways: TillrotorAlrcrq/r and Mqqnetically Le\’ilated Vehi(/es, OTA-SET-507

(W’ashlngt(m, IX’ (1,S, Ci{~vcrnnwnt Prinling office, October 1991).
Summary 125

brid-powered vehicles, by the conservation community56 and in a recent announcement by the

Administration and the three domestic automakers of a partnership to develop a new passenger car

with up to three times the fuel efficiency of current

autos.

The basic features of an advanced automobile,

one that went well beyond current technology,

might include:

m

■

■

●

m

a shift in body materials, probably to carbon-fiber or other composite materials, with higher

materials costs counteracted by greatly reduced

assembly costs;

a total dedication to streamlining, bringing the

vehicle drag coefficient down to the range of

0.2 or lower, compared with the current commercial state of the art of about 0.3;

high-pressure, low-rolling resistance tires, perhaps similar to those in General Motors’ Impact electric vehicle;

an advanced engine, probably either a super-efficient four-stroke design with four or more

valves per cylinder, adjustable valve lift and

timing, and other low-friction measures or a

two-stroke design; and

extensive use of aluminum and other lightweight materials in suspension and other components (e.g., brake rotors and calipers, sway

bars, wheels).

Rather than an advanced internal combustion engine, a radically redesigned automobile might use

electric motors powered by batteries or fuel cells.

or a hybrid combination including batteries and a

motor/generator (or one of a variety of other combinations of power sources, including flywheels).

Recent strong technical advances have placed

such an automobile closer to reality, although still

a considerable way from commercialization.

Some important advances are small, lightweight

direct-current inverters that allow use of highly efficient, lightweight alternating current motors:

GM's Impact electric vehicle represents a “ground up,n

innovative design focused on the unique requirements of an

electricity based power source

and a 40-fold reduction in the amount of platinum

required in proton-exchange membrane fuel cells,

moving platinum availability and costs into the

“realistic” range. Not surprisingly, there remain a

number of crucial technical hurdles: improving

the manufacturability and reducing the cost of advanced materials; designing adequate safety systems for a vehicle in the 1,000-pound range;

achieving major improvements in fuel cell and

battery technology; and so forth.

Thus far, the major "driver” for the development of advanced light-duty vehicles has been

California’s zero emission vehicle (ZEV) requirements. which require automakers to achieve at

least 2 percent of their in-State sales with vehicles

emitting no criteria pollutants by 1998, and 10

percent by 2003 (some northeastern States have

adopted identical requirements). These vehicles

will almost certainly be electric. The ZEV requirements have succeeded in stimulating a major research effort to develop electric cars: the eventual

success of the requirements in bringing commercially acceptable electric cars to the marketplace

remains an open question. however.

On September 29, 1993, the President announced a “Clean Car Initiative" with the three
26 I Saving Energy in U.S. Transportation

domestic auto manufacturers. The initiative has as

a primary goal the development of a manufacturable prototype automobile within 10 years that

achieves a threefold increase in fuel efficiency

while maintaining the affordability, safety standards, performance, and comfort of today’s cars.

This joint government-industry research program

may add to the impetus for a large improvement in

light-duty vehicle efficiency.

I Shifting to Alternative Fuels57

The use of alternative, nonpetroleum-based fuels

in vehicles, though generally viewed as a fuel substitution measure, also offers opportunities to reduce overall energy use and greenhouse emissions; in other words, alternative fuels can play a

role in energy conservation. Energy savings may

be gained from changes across the entire fuel

cycle, ranging from changes in fuel efficiency at

the vehicle58 to changes in the energy required to

find, collect, and transport fuel feedstock materials. Greenhouse gas emission reductions may be

obtained directly from the energy savings and also

from differences (from gasoline) in the alternative

fuels’ carbon content and general chemical makeup, which yield different fuel cycle emissions of

carbon dioxide and the other greenhouse gases

(carbon monoxide, nitrogen oxides, nitrous oxide,

methane, etc.) .59

The primary alternative fuels under consideration for use in light-duty vehicles are the alcohols

methanol and ethanol, natural gas, liquefied petroleum gas (LPG), hydrogen, and electricity. Except

for electricity, all the fuels can be used in internal

combustion engines. Hydrogen also can be used

in fuel cells;60 and methanol and natural gas,

which are hydrogen-rich, can act as hydrogen carriers for fuel cells.61

Several factors inhibit the introduction of these

fuels into the marketplace: the entrenchment of

gasoline in the light-duty vehicle market; the lack

of supply infrastructures and mature vehicle

technologies for most of the alternative fuels; and

various cost and range problems.62 The Energy

Information Administration expects, however,

that a range of government incentives will help alternatively fueled light-duty vehicles capture

from 1.9 to 2.4 percent of the light-duty vehicle

fuel market by 2010.63 These incentives include

the 1990 Clean Air Act Amendments (CAAA),

which establish a set of clean fuels requirements;

the State of California’s Low Emission Vehicle

Program under the CAAA, which requires minimum sales of vehicles in different emissions cate57 For more de[al]s, see U.S. congress, Office of Technology Assessment, Rep/acing Gaso/ine; Alternative Fue/s~or Lighl-DuV VehiC’/es,

OTA-E-364 (Washingt(m, DC U.S. Govcmment Printing Office, September 1990).

S8 Because the a]tematlyre fue]5 have di fferen[ c(mlbustitm characteristics (e.g., methanol’s octane rating is 101.5 and natural gas’s is 120 to

130 versus 87 m 93 for typical gasolines; this allows methanol and natural gas engines to use higher compression ratios, raising thermal efficiency) and may require basic shifts in the drive train and fuel storage systems (e.g., electricity demands the use of electric drive motors and battery

or ultracapacitor storage).

59 See MA. DeLuChi, En~i.T,~[~ns tjj’Greenhc)use Gases From the Use oj’Transportation Fuels and Electricity, AN~EDS-Th’l/22 (Argonne,

IL: Argonne National Laboratfmy, 1991). This report presents detailed estimates of the greenhouse emissions foreach portion of the fuel cycle

for a variety of alternative fuel/vehicle/supply source combinations.

6CI Fuel cells are e]ectr{)-chenlical devices that conve~ hydrogen into electricity without combustion and with water as theiron]y bypr(~uct!

acting like batteries that have continual recharge of their chemical electrolyte.

b I However, use in fue] CeIIS of hydrogen carriers rather than pure hydrogen requires the addition of an onboard reformer to first release the

hydrogen from these fuels. Although the fuel cell has no air emissions, the reformer does, so a fuel cell vehicle with a hydrogen-carrier fuel will

not strictly be a zero emission vehicle.

@ AI I of the a]tematl Ye fuels are less energy-dense than gastdine, and thus need a higher volume of fuel to achieve an equivalent range.

6J U.S. ~pa~nlent Of Energy, Energy Infom~ati(m Administrati(m, Assurnp~ion.~~or ~he Annual Energy Oul/uuk 199.?, DOHEIA-0527(93)

(Washingt(m, DC: January 1993).
Summary 127

gories, including the 19982 percent ZEV sales

mandate discussed earlier; and alternative fuel

fleet requirements and tax incentives under the

Energy Policy Act of 1992. Vehicle manufacturers

can also get fuel economy credits toward meeting

their CAFE requirements by manufacturing alternative fuel vehicles. Because most automakers

can comply with current CAFE standards without

a great deal of difficulty, the availability of the

credits may have little effect unless CAFE requirements are raised.

Government incentives for alternative fuel use

hinge on three potential benefits: energy security

and economic benefits from reducing oil use and

imports; air quality benefits, especially from reduced emissions of ozone precursors; and greenhouse benefits from reduced fuel cycle emissions

of CO2 and other greenhouse gases. The likelihood that these benefits will actually be obtained

is mixed and uncertain, however. Take energy security, for example. Although all of the alternative

fuels will substitute for oil, some raise their own

security concerns because they may be imported

(e.g., methanol if U.S. natural gas prices were to

rise,

64 LPG in large quantities). These concerns

may not be as severe as those associated with oil

imports, however; feedstock resources, e.g., natural gas, tend to be less concentrated geographically. Security benefits also will depend on market

penetration (which will affect fuel supply sources

and costs) and other factors that are uncertain. And

the existence of fuel economy credits adds uncertainty to security benefits. Were CAFE standards

to be raised, automobile manufacturers might

choose to use credits from sales of alternative fuel

vehicles to avoid some of the fuel economy improvements otherwise required by the standards;

the oil use reduction benefits of the alternative

$

. - —

“-—

Chevrolet Lumina Flexfuel auto can use straight gasoline,

M85 (85 percent methanol, 15 percent gasoline mixture), or

any combination in between

fuels might then be at least partially offset by

loss in efficiency gains.

Air quality benefits depend on the nature

emission standards promulgated for alternative

fuel vehicles and on the tradeoffs vehicle designers make among factors such as emissions, vehicle

performance, and fuel economy. Where regulators

try to adjust standards so as to weight emissions

according to their potential to impact air quality,

as California is doing, the emissions from vehicles

using gasoline, methanol, natural gas, and other

alternative fuels in internal combustion engine

vehicles may be similar; only electricity and hydrogen. and methanol and natural gas in fuel cell

vehicles, would then enjoy a clear emissions advantage.

65 Finally, greenhouse benefits depend ‘n

a variety of system design details, including

choice of feed stocks, tradeoffs in conversion facility energy efficiency between capital and operating cost, and vehicle design decisions, as well as

the uncertain progress of immature technologies.

In the near term, any greenhouse benefits are likely to be small and easily lost (though early growth

he

of

hf Scc DE GushCc, Congrcsflonal” Research s~m’lc~ ““A Itematl\ e Fuels for ,Autlmlobilt’s Arc Thy Cleaner Than Gas(~l]nc”” RepJrt ft)r

Ctmgrcs$, 92-275 S, Feb. 27, 1992.
28 I Saving Energy in U.S. Transportation

of alternative fuels use may lay the groundwork

for later benefits); large greenhouse benefits will

come when renewable provide the majority of t he

feedstocks or when design decisions are controlled by strong incentives to reduce greenhouse

emissions from the entire fuel cycle.

Two important issues facing Federal policymakers involve fuel taxation policy and the current Federal policy of fuel neutrality. Currently,

Federal taxation of alternative fuels seems at odds

with interest in promoting fuels such as methanol

and in maintaining a “level playing field” among

competing fuels. Electricity, for example, pays no

Federal highway tax, and natural gas pays very

little, whereas LPG and methanol pay higher taxes

than gasoline (on a $/Btu basis). Although it may

make sense to tax different fuels at different rates

based on their perceived benefits, current rates

seem to bear no relation to Federal goals. Congress might consider adjusting tax rates to establish either a uniform tax (per unit energy) among

competing fuels or a differential tax weighted according to emissions benefits or other perceived

benefits.

Current legislation (especially EPACT) provides large economic incentives (thousands of

dollars per vehicle) to alternative fuels with little

regard to any differences among the various fuels

in their likelihood of satisfying environmental or

other Federal goals. Some types of alternatively

fueled vehicles likely to enjoy success in the marketplace may, however, provide benefits that are

significantly inferior to those provided by other

vehicles. 66 At some point, perhaps when the environmental and energy security attributes of various vehicle/fuel combinations become clearer,

Congress may want to reconsider the current

policy of fuel neutrality (among the competing alternative fuels) in awarding incentives.

FREIGHT POLICY

The future potential for energy conservation in the

freight sector lies largely in reducing truck energy

use, because trucks consume the major part of

U.S. freight energy (more than 80 percent) and because truck mileage is expected to grow rapidly—

about 2 percent per year in the EIA forecast, and,

in OTA’s opinion, probably somewhat faster. The

technical measures available include improvement in truck fuel economy-both for new trucks

and, with retrofit technology, for the fleet as a

whole (including improvement in driver skills);

shifting to alternative modes and intermodalism

(linking with other modes); and changes in operations to reduce waste.

Tests of the most energy-efficient new trucks

under optimal driving conditions for high efficiency have achieved fuel economies 50 to 70 percent above the current fleet average efficiency.

Similar tests of prototype trucks have achieved

fuel economies over twice the current fleet average. Although real-world operating conditions,

including average rather than optimal driving

skills, would yield reductions in these efficiency

advantages, the test results do suggest that there is

a considerable energy savings potential from using commercially available and new technologies.

Thus, a key to improving the efficiency of the fleet

is both to encourage purchase of the most efficient

vehicles and to speed up turnover, which is slow.

Policy options to raise new truck fuel economy include fuel taxes, fuel economy standards, feebate

programs, and government purchase programs;

measures to encourage turnover include fuel

taxes, retirement programs, and tax code changes.

Both fuel economy standards and feebate programs will encounter difficult technical problems

because the great variety of truck types and cargo

confounds efforts to establish fair efficiency goals
Summary 129

for trucks and to appropriately group trucks into

classes. Combination trucks pose a special problem for regulation because they are sold as separate trailer and engine units, with the design of

each being crucial to fuel economy.

It is sometimes argued that mode shifts from

trucks to rail or to barges would save significant

amounts of energy since rail and barge shipping

appears to be much more energy-efficient than

trucks. In fact, shippers have found intermodal operations to be very attractive, and this form of

shipment has been growing rapid] y, with the common form being containers moving from truck to

train to truck. Care must be taken not to exaggerate the energy benefits, however: national data

suggest that rail movement is 11.5 times as efficient as truck, but not for the same types of cargo.

Limited analysis of alternative modes of moving

the same cargo over the same routes suggests that

trucks use 1.3 to 5.1 times as much energy as do

trains. And incorporating the energy embodied in

equipment and in getting freight to and from the

rail terminal may reduce rail advantage further,

although it still comes out ahead. With the limited

portion of freight movement likely to be eligible

for shifting to rail, however, total likely savings

are in the range of one- or two-tenths of a quad, a

few percent of total U.S. freight energy consumption.

POLICY OVERVIEW

Depending on their perception of the urgency of

transportation problems and problems associated

with urban air pollution, energy security, and

greenhouse warming, Federal policy makers have

a number of choices to make regarding transportation that can be simplified into three basic options:

1. retention of the status quo, with fine-tuning;

2. an activist approach that focuses primarily on

improving technology; and

3. an approach that attempts to move U.S. transportation gradually away from its dependence

on the private vehicle.

A status quo approach might use some moderate regulatory and economic policies to ease transportation problems: new CAFE standards set at

levels achievable with available technology;

modest gasoline taxes, perhaps $0.25 to $0.50 per

gallon but likely lower; encouragement of local

transportation initiatives taken in response to

Clean Air Act requirements; some increased investment in transit with funds shifted from highway allocations (allowed by IS TEA); and so forth.

Under such a scenario, congestion would likely

increase, but the marketplace would moderate the

increase by forcing changes in business and housing locations and in travel behavior. Cars will become more comfortable and will offer more opportunity for entertainment and work. In

particularly congested areas, businesses will establish more use of telecommuting, perhaps by establishing satellite work centers. There would

likely be a diversity of solutions to local transportation problems, most of them modest, but

some drastic as in Portland, Oregon, a city that

seeks to remake itself. Given political realities,

most jurisdictions will likely try to satisfy both

majority auto-oriented drivers and the conservation-environmental community by improving

highways and transit services, but the latter is

likely to have limited success without more basic

changes in the existing incentives for private travel and in urban form.

The “livability” of the results of such an approach is difficult to predict, because analyses that

forecast disastrous results invariably ignore society's adjustments to emerging problems. In the absence of technological breakthroughs (e.g., an inexpensive, energy- and power-intensive battery

that allows electric vehicles to compete successfully with gasoline cars), urban pollution levels

may worsen or not improve, congestion will probably grow worse (but not by as much as current

government analyses predict), most urban centers

will likely continue to weaken, and transportation

energy use is likely to grow and continue to depend primarily on oil. However, there may be

some surprises. If local solutions work well and

seem transferable to other areas, they will spread.

Simple steps that fit well into this overall strategy

might make some inroads into auto use. Two measures that could work are requiring employers to

“cash out” parking costs to employees and con-
30 [ Saving Energy in U.S. Transportation

gestion pricing using electronic sensors (although

this measure might more comfortably fit into the

next approach).

A “technological fix” approach could make

some serious inroads into some important transportation problems, while not affecting others.

Such an approach might focus on leapfrogging

current automotive technology to achieve very

high levels of fuel economy, perhaps twice as high

as today ’s. Government-industry cooperative research programs could also move toward replacing internal combustion engines with electric

drives powered by batteries or fuel cells, but

strong economic incentives would probably be

necessary to make the transition. Investment in

IVHS could make moderate inroads in congestion, although probably not in urban centers. It is

not clear that the congestion relief offered by such

systems would yield better conditions than simply

allowing marketplace adjustments, however, because the increased highway capacity such systems create could easily spur travel demand.

In predicting the eventual outcome of this approach, a key unknown is whether travel demand

will keep on growing and overwhelm the effects

of efficiency or will, instead, reach a plateau or period of very slow growth so that raising efficiency

will reduce total energy use.

The third approach is to try to shift the U.S.

transportation system substantially away from the

private automobile, especially in urban areas and

for intercity travel. Such an approach could have a

chance of success only if it followed a multipronged strategy of drastically reducing highway

building and accepting slower highway speeds;

practicing ‘*full societal cost accounting” on autodriving costs; redirecting urban structure toward

higher density, centralization, and corridor development, with strong limits on parking and limits

on suburban/exurban development; and investing

massively in existing and new public transportation systems, with high-density mixed-use development focused on station areas.

The goal of such an approach is not only to

drastically reduce gasoline use and urban air

pollution, but to revitalize America’s urban centers, making them places where walking and bicycling to multiple activities are feasible and

where urban life is far more vibrant than is possible in most of today’s U.S. cities. Whether the

measures necessary to follow this approach are

politically and socially feasible, and whether the

goal is achievable even if such measures are taken,

are two critical uncertainties. Many of the measures that would be necessary for this strategy to

have a chance for success+ specially the strong

controls on development and the increased costs

of driving—are likely to draw severe opposition.

Also the strategy seeks to reverse a process that

appears to be going on worldwide, in a country

that has a mature infrastructure designed around

inexpensive automobile access. Ultimately,

whether the goal is achievable even with successful implementation of the necessary policy measures depends on the answer to the question raised

earlier: Has the past and continuing evolution of

our city structures and travel behaviors depended

primarily on policy or on technological change,

rising income, and other immutable factors, and

what will be the future relationships among these

variables? Only prolonged experimentation with

sharp changes in policy can answer this question.

mobiles, probably with significant increases in
I

Introduction 1

T

he focus of this report is transportation energy use in the

United States and the potential for reducing that use. The

quality of an area’s transportation system is central to its

over-till quality of life. A system’s characteristics impact

numerous vital areas: the accessibility of employment. recreational, and cultural opportunities; the availability of leisure time

to its users, as well as their levels of frustration and tension; environmental parameters such as air pollution, noise, visual intrusion of roads, and their disruption of communities; the economic

and social viability of inner cities and the shape of new development: the ability to move goods easily and inexpensively, which

is crucial to economic competitiveness: and the safety of users

and the general public. Moreover, these impacts are intertwined

with wider impacts at a national level—the U.S. use of oil and its

implications for global warming, energy security. and balance of

payments.

By some important measures, the United States has a transportation system of very high quality, U.S. citizens enjoy the

highest level of personal mobility in the world1 --at least on the

average. They travel more miles--13,500 miles per person per

year

2—than the citizens of any other country, nearly twice as far

as the citizens of the richest European nations.3 They own the

I 31
32 I Saving Energy in U.S. Transportation

most vehicles—nearly six autos or light trucks for

every 10 persons, or almost two vehicles per

household, compared with fewer than five per 10

persons for West Germany (the European leaders

in vehicle ownership,) and fewer than three vehicles per 10 persons for Japan.4 They also benefit

from an efficient freight system that allows rapid

delivery of everything from mail to oil to manufactured goods, virtually anywhere in the country.

However, the United States also faces daunting

transportation problems. First, the U.S. transport

system uses enormous quantities of oil—almost

65 percent of the total U.S. oil consumption,5 and

more oil than produced by all U.S. oil fields,6 despite the United States’ position as one of the

world’s largest oil producers (second in 19907).

The average U.S. citizen consumes nearly five

times the transportation energy used by the average Japanese citizen and three times that used by

the average citizen of France, Britain, or West

Germany. 8 Although this higher level of consumption is not solely’, and perhaps not even primarily, a function of relative “inefficiency” (at

least not in the usual sense of the word) compared

with Japan or Western Europe, it still represents a

combined problem involving national economic

security, balance of trade, and greenhouse gas

emissions.

Second, the automobile’s dominance of the

transportation system contributes greatly to the

Nation’s problems with urban air quality. Today,

almost two decades after passage of the Clean Air

Act, about 100 urban areas (depending on weather

conditions) still violate the ozone air quality standard.9 Transportation sources, primarily automobiles and trucks, account for about 30 percent of

the emissions of volatile organic compounds and

39 percent of the nitrogen oxides, which are precursors of ozone.

Further, other environmental impacts from

U.S. auto dominance include high percentages of

urban land devoted to highways, parking facilities, and other auto uses; the loss of wetlands and

other ecologically sensitive lands from both the

highways themselves and the diffuse land use that

the highways support; and high emissions of

greenhouse gases.

Third, although the average U.S. citizen enjoys

great mobility, the dependence of the transportation system on privately owned vehicles leaves

many lower-income people with the consequences of poor mobility—inability to get to decent jobs, limited access to convenient (or lowercost) shopping, and inaccessibility to many

recreational and other amenities that most citizens

take for granted. 10

4 L. SchipFr and N. Kiang, op. cit., f{~f~tnote 2, 1990 data, except for Japan ( 1988 data).

s Energy lnf(mnati(m Administrati(m. AnnIM/ Energy Out/wk 1993, DOE’ EIA- 1383(93) (Washington, DC: U.S. Department of Energy,

January 1993), table A.8.

b In ] w() transP)tiatlon oi] produC[5 Consurllp(lon” Was 21.8 I quads versus d(m]estic liquids production (crude oil, lease condensate, and

natural gas plant liquids) of 17,91 quads. Ibid., tables G] and G2.

7 In 1990, (rely the Soviet Uni(m twtpnx!uced the United States. Energy lnf(~m~ati(m Administrati{m, “lntemati(mal Energy Outlook

1992,” DOE/E1A-0484(92), April 1992.

8 Schipper and Kiang, op. cit., footnote 2.

9Asof1991, according to U.S. Envir(mmental Protection Agency, NfJ[iona/Air Q//~~/l~}’andEn]l~si~~n.r Tkends Report, /99/, 450-R-92-001

(Washingt(m, DC: October 1992),

lo It is inlP)flmt t. note that, in the United States, autos are so inexpensive and fuel prices arc M) low that many poor pCOplC do own and

operate automobile s.” For example, according to Pisarski, 60 percent of w (whcrs in the pwerty jx)pulati(m (defined in 1989 as a family of f(mr

with annual inc(m]e less than $ 12,674) c(m]mute to w(wk in single-( xcupancy vehicles (A. E. Pisarski, 7}a\’e/Behmior /ssues In (he 90’s, Federal

Highway Administration, July 1992). of course, a less positive view of this high level of auto ownership and use armmg the pw)r is that the

U.S. transp(mation system gives pm~r people few other opti~ms than to s[~nwhow obtain an auto, and that doing so f(wces them to forgo” other

uses of their limited income. Also, any move 10 increase fuel prices and auto ownership costs could reduce the access of the p)or m aut(mlobiles.

In fact, a f(wthcon~ing increase in the “waiver 1 imit ” in emission inspccti(ms required by the Clean Air Act Amendments, to $450 per vehicle,

may have a similar effect by f(wcing ret]renwnt of man} older autos.
Chapter 1 Introduction 133

Fourth. growing congestion is beginning to rob

many travelers, especially in urban areas, of a precious commodity-time. Congestion also adversely affects freight movement and degrades

U.S. economic competitiveness. Further, congestion reduces the efficiency of vehicle use, adding

to fuel use and to pollution levels. Although widely cited projections of impending highway gridlock deserve careful (and perhaps skeptical) scrutiny, congestion represents an important and increasing problem for U.S. highway and air travel.

The combination of high mobility and daunting

problems contributes to sharply different perceptions about U.S. transportation energy use and

travel demand. Some observers of the U.S. transport system see the measures of high U.S. personal travel (e. g., 13,500 miles of travel per year per

capita) as distinctly positive indications of a high

quality of life. In this view, high levels of travel are

directly translated into access to a wide range of

employment, educational, recreational, cultural,

personal, and shopping opportunities. Others,

however, question whether this level of travel is,

at least in part, a reflection of how inefficiently

U.S. cities are laid out, how widely separated its

residences are from centers of employment, and

how distant its sterile suburbs are from exciting

recreational and cultural opportunities. Similarly.

the high levels of energy use are viewed differently. To some, they are an indication of high mobility, albeit inflated by certain technical inefficiencies in the transport system (which should be

corrected). To others, they are a measure of systemic inefficiencies involving hidden subsidies

for energy-intensive travel modes and the abovementioned failure to build habitats that put a di -

versity of employment, recreational, and cultural

opportunities within easy reach of where people

live.

The existence of these conflicting views represents a problem to policymakers because some

significant opportunities for transportation energy

conservation involve reductions in the number of

trips made and miles traveled. For example, not

only will raising energy and other transportation

prices encourage improvements in the technical

efficiency of transportation and shifts to more effi -

cient modes, it also will reduce travel. Is this a positive or a negative outcome? Economists would

consider this outcome positive only to the extent

that transportation may have previously been underpriced because of subsidies (e.g., road maintenance and services paid out of general revenues

rather than through user taxes), externalities (e. g.,

uncontrolled vehicle emissions causing damages

to the general public), or inefficient pricing (e.g..

parking costs for shopping malls embedded in the

price of goods rather than priced separately). To

the extent that fuel prices. parking costs, and other

transportation costs might be raised to a level that

exceeded the full societal costs of transportation

(market price plus subsidy costs plus externalities), any travel reductions caused by the portion

of the price that exceeds total costs are a negative

outcome. To place this issue in better perspective,

chapter 4 explores the externalities, subsidies, and

inefficient pricing associated with automobile

travel. Chapter 5 discusses options for “internal-

.

 izing some of the hidden costs of transportation,

as well as pricing some transportation services

more efficiently.

Valuing transportation services and energy

conservation measures that involve reduced tripmaking is further complicated by the reality that

transportation is not an end in itself, but a means to

attain access to economic and personal opportuni -

t y. The concept of access to a variety of opportunities is easy to grasp but difficult to measure, so

transportation services are generally measured

simply in miles traveled and trips made. Thus,

there is a constant danger that a traveler who must

commute several hours to work will be judged (at

least in the “benefits” value of some transportation analysis) to have obtained more value from

transportation services than another who walks 20

minutes to work. Also, those judging proposed

changes in transportation policy must distinguish

carefully between changes that reduce travel and

access to opportunity, and those that reduce travel

by bringing opport unit y closer. This compli cat ion

conceivably could be resolved by introducing a

factor that measured accessibility. Although this

is a worthy goal, it is not attempted here. In discussing alternative policy measures to reduce trans-
34 I Saving Energy in U.S. Transportation

port energy use, however, the attempt is made to

distinguish qualitatively between reduced travel

and reduced access to opportunity.

Transportation and energy policy makers are

faced with other dilemmas, as well, in addressing

potential reductions in transport energy use. For

example, they must deal with the essential incompatibility of attempts to simultaneously improve

both private and public transportation modes: because public transport is generally at a severe disadvantage in competing with the private auto, in

terms of comfort, flexibility, and travel time, in

most cases transit can thrive only when auto travel

is allowed to become congested or otherwise restricted. Further, policy makers face a highly polarized public and analytical view of mass transit

potential, ranging from a basic rejection of any

large additional role to continued hopes for a massive increase in transit usage. And efforts to improve highways, to reduce congestion and the environmental damages it causes, are controversial

because of continuing arguments about the likelihood that adding new highway capacity will ultimately prove self-defeating by attracting more

travel and creating the same levels of congestion

and even greater oil use, air pollution, and other

damages.

Policy makers also are faced with critical disagreements about the nature of the forces that have

shaped the patterns of urban development in the

United States. Because land use patterns are important determinants of travel demand and modal

choice, changing hese patterns could be a critical

component of a transportation energy conservation strategy. But substantial controversy exists

about whether the U.S. pattern of low-density development is due primarily to policy choices that

can be changed (zoning rules, tax treatment of

mortgage interest and parking costs, etc.) or to basic economic and technological forces that cannot

be altered.

Energy costs are only a moderate fraction of the

total costs of transportation, and energy use is

rarely the critical driver of transportation decisions. In recognizing this, the report explores

transportation’s energy conservation potential in

the wider context of the range of problems

associated with the U.S. transportation system

and the various market forces driving transportation decisions.

Given the diversity and complexity of the

transportation sector, this report is not intended to

be a comprehensive and quantitative evaluation of

transportation problems and policy options.

Instead, the report seeks to survey the transportation “landscape,” to integrate the previous transportation energy work of the Office of Technology

Assessment into a common framework, and to

add selected analysis and evaluation of a few critical issues. OTA views this report as an introduction to the issue of transportation energy conservation, placing earlier OTA work in context and

framing key issues that deserve further analysis.
T

Where

We Are,

Where

We’re Going 2

his section describes the current status of the U.S. transportation system and, in so doing, illuminates the “targets” for energy conservation. Although statistics are

used extensively, the reader should note that transportation data are often of relatively poor quality (see box 2-A)_.

A SNAPSHOT OF THE U.S. TRANSPORTATION SYSTEM

Figure 2-1 provides a broad overview of where energy is being

used in U.S. transportation. As shown, light-duty vehicles—automobiles, pickup trucks, utility vehicles, and vans—account for

more than half of all U.S. transportation energy use. They are used

predominantly for passenger travel. Airplanes, also used predominantly for passenger travel, account for 14 percent of U.S. transport energy use. These two components of passenger travel thus

represent a tempting target for energy conservation measures.

Freight trucks are the second largest user of transportation energy, accounting for nearly 23 percent of total U.S. use. Freight

truck energy use, expected to grow substantially during the next

two decades, should thus also be an important focus of attention

for energy conservation. Although other freight modes—pipelines, shipping, and rail (most of rail energy is freight energy)—are important (and rail could attract freight from trucking,

with subsequent energy savings), they are clearly of lesser significance than trucks for national energy savings.

The transportation system in the United States provides U.S.

residents with the highest level of personal mobility—in terms of

vehicle trips made and miles traveled—in the world. The United

States has the world’s highest number of automobiles per capita

I 35
36 I Saving Energy in U.S. Transportation

Data on transportation passenger- and vehicle-miles traveled and energy consumed often are imprecise and apparently contradictory Part of the problem involves differences in assumed boundaries and

definitions Do vmt data for Iight trucks include all trucks less than 10,000 pounds gross vehicle weight, all

trucks judged to be driven for personal use, or all 2-axle 4-tire trucks? Do estimates of energy consumption

for air travel Include fuel purchased by international earners in this country and then consumed outside of

our boundaries? How are the various urban boundaries--central business district, central city, urban area,

suburbs—defined? Where do government and military vehicles fit in? Alternative data sources use different

definitions and boundaries and many do not specify precisely what these are Problems created by different

definitions and boundaries virtually explode when International comparisons are made, because practices

in other countries may be radically different from U S norms

A second problem concerns data collection Critical transportation data often are obtained by extrapolating from limited samples (e g household and mileage data) National data are aggregated from State

data that may not be collected in a uniform manner (e g vmt data sources range from limited survey instruments to odometer readings from annual vehicle Inspections) Fuel use often is estimated by adjusting gasoline sales data, but there are startling differences among areas in the percentage of purchased fuel actually consumed within each area’s boundaries

The result of these problems is that estimates for Important transportation variables may differ substantially among different sources For example measures of energy use in air transport vary significantly between values used by the Energy Information Administration (EIA) in its “Annual Energy Outlook” and those

found in Oak Ridge National Laboratory’s “Transportation Energy Data Book “ The EIA value is 3.21 quads

for 19901, the Oak Ridge value is about 2.55 quads for 1989.2 Since air travel’s energy use has recently

(1982-89) been Increasing at an annual rate of 44 percent,3 the Oak Ridge value adjusted for a year’s

growth is 266 quads—more than half a quad less than the EIA value Both estimates include military air

travel and both Include purchases of domestic fuel by International earners, and there IS no apparent discrepancy in definitions or boundaries

Discrepancies such as these can cause major analytical problems, particularly when values sought are

the differences between two data points that do not come from the same source When seeking the difference between two variables of similar magnitude, relatively small discrepancies in the variables can yield

huge errors in the resulting difference For example, if the result sought is (A-B) where the estimate for A is

200 and the estimate for B is 1.80 a 5 percent uncertainty in A yields a range for (A-B) of O 10-030, that is

(A-B) could be off by as much as 200 percent

SOURCE Otflce of Technology Assessment 1994

1 Energy Information Adminlstrallol~ 7992 Annua/ Energy Ou//ook DOE EIA-0383(92) (Washington, DC January 1992) table

Al 4

2 S C Davis and M D Morris TransporlahonEnergy Da/a Book ed 12 OR NL-671 O (Oak Ridge TN Oak Ridge National Laboratory March 1992) table 27

3 Ibid lable 210
Chapter 2 Where We Are, Where We’re Going 137

—0.575 in 1989.1 In 1990, the United States had

a total population of 250 million, 167 million licensed drivers, and 179 million vehicles operating—l .07 vehicles per licensed driver, or 1.92 vehicles per household.2 The average adult with a

driver’s license travels 30 miles per day of local,

personal travel, and even adults without licenses

manage to travel 10 miles a day.3 In 1990, the average U.S. resident traveled about 13,500 miles—

compared with about 7,800 miles for the average

Frenchman or 6,400 miles for the average Japanese. 4

The overall U.S. transportation system is the

largest user of oil in the U.S. economy and is itself

almost totally dependent on oil. In 1990, 63.6 percent of all U.S. oil use went directly to transportation,5 and much of the remaining oil use (e.g., residual oil) was in byproducts of transportation fuel

production. In the same year, the system was 97.1

percent dependent on oil as a fuel and lubricant.6

Consequently, the U.S. oil import problem is primarily a transportation problem.

The large quantity of oil, and of energy per se,

consumed by U.S. transport may pose a problem

for its global warming potential as well. The

United States is responsible for about 24 percent

of current world emissions of carbon dioxide from

fossil fuel combustion,7 and the transportation

sector emits 22 percent of U.S. fossil fuel carbon

dioxide (almost 30 percent if the entire fuel cycle

is considered).8 As transportation energy use

Quads

\

\

“.

‘ \

‘ \

=. .

- -

“’\,,’ \ ‘ ‘ Marine

1.39

V

,- ,. Pipeline fuel

0.66

SOURCE Energy lnformatlor~ Admlmstrat orl

grows, so will its contribution to worldwide emissions of greenhouse gases.

I Passenger Travel

U.S. passenger travel is dominated by the automobile and the highway system. In 1990, about 86

percent of passenger-miles were auto (and personal light truck) miles, and about 10 of the remaining

‘ S.C. Davis and M.D. M(mis. Transportation .herg] llat~llwk, ed. 12, ORNL-6710 (oak Rdge, TN” ( )ah Rldgc Na[i~mal I.alx N a(f)ry.

March 1992), table 1.3.

~ Ibid., table 4.1. Note that “’~ehicles ” includes trucks and buses.

\A ,T Ren(,, ..pers(~na] Mobility in the United States,

‘“ Transportatitm Research Board, Spcci:il Rcp~rt 220. 1988.

4 Data for 1990 (~btalned fr(ml L. Schipper and N. K]ang, Intemati(mal Energy Studies, La\\ rcncc Berkclc> Lah(mt~wy, ]n :id\:incc ~)l”puhl Icat i( m in the Tran !porraflon Errcrgy IXJIIJ Book, eel. 14 (Oak R id.ge, TN: Oak Ridge Nat i( mal Lab(m]tor>, ftmhcx ml ing ). The Japancw dai:i :irc

tilr 1989.

f D:ik IS and M(wrl$, op. cit., f(xm)te 1. Statistical Summary.

6 Ibid.

7 U.S. C(mgress, Office of Techm)h)gy Assessment, Ch(/n(qin,~t)} De,qrces, SIcp I 7i) Rc(II(( c (;rccnlrou$c (;(I fcf. OTA-()-482 (Wash in.gt(m,

DC LI, S. Gokemnwnt Printing Office, Februar) 1991 ), tigurc 3-3.

x S.C. Davis and S.CJ. Strang, “Transporla(lon h“ner~y Data Il(xjk, cd, 13, ORNL-6743 ( ( )ak Ridge. TN oak R]dgc N’:ltit)nal L:itx mit{)ry.

March 1993). table 3.49.
38 I Saving Energy in U.S. Transportation

14 percent were air miles. Buses and trains accounted for only 4 percent of passenger-miles,

versus 15 to 20 percent in Europe and 38 percent

in Japan.9 Autos and light trucks used for passenger travel accounted for more than 50 percent of

all transportation energy use in 1990,10 and 70

percent of all highway energy use.]

] This dominance is not surprising given a series of U.S. policies strongly favoring the automobile and automobile-oriented development:

low gasoline taxes that allow U.S. gas prices to

stay at about one-third those of most Organization for Economic Cooperation and Development (OECD) nations;

low taxes on autos (average 5 percent in 1992);

treatment of free employee parking as a normal

business cost and a tax-free benefit to employees (and the widespread availability of free

parking as a result);

tax subsidy of homeowner mortgages, promoting single-family home development and

sprawl;

payment of many highway transportation services from general funds rather than gasoline

taxes; and

● remarkably easy availability of driver’s licenses.

l 2

The U.S. highway system consists of about

3,800,000 miles of roadway, including 44,000

miles in the Interstate System,13 260,000 miles in

the Federal-Aid Primary System,t4400,000 miles

in the Federal-Aid Secondary System, 15 125,000

miles in the Federal-Aid Urban System,l6

2,751,000 miles of local roads,17 and 226,000

miles of Federal roads in national forests and

parks and on military and Indian reservations.18

The system also includes nearly 577,000 bridges.

Virtually every local jurisdiction has a large backlog of road and bridge maintenance and repair

needs: more than 10 percent of the Nation’s roads

have enough potholes, cracks, ragged shoulders,

ruts, and washboard ridges to be classified as deficient; and nearly 42 percent of the Nation’s

bridges are rated as unable to handle traffic demand or structurally deficient. 19 In the Nation’s

largest cities, the result of the poor state of repair

of the road system coupled with inadequate peak

capacity results in several billion dollars in congestion costs each year.20

1) Schipper and Kiang, op. cit., ftxmmte 4.

I ~ U.S. Depaflmen[ Of Energy, Energy Information Administration, Annua/ Energy Ourlook f 993, IXWEIA-0383 Washington, ~: JanUary 1993), table A. 14. Note that definitions of total transportation energy use can differ and thus change the percentages of different sectors.

For example, the Oak Ridge Transporwion Energy Dam Book defines “transportation energy use “ in two different ways—with or without

off-road heavy-duty use for construction and farming, and military travel—and thus reports 1990 transportation energy as 23.2 and 21.8 quadrillitm Btu (quads), respectively.

] ] Ibid.

1 z J ~cher, ,. Urban Travel Behavior as [he outcome” ofmb]ic Po]icy: The Example (JfM(~al-Split in western EIINVX ‘d ‘ofih ‘merica$”

Journal oj”lhe American Plannin8 Association, autumn 1988, pp. 509-520.

13 R(,utes that connect Principal metr<)P)litm areas, se~e {he nati(mal defense, or connect with routes of ct~ntinental in~~~flance ‘n ‘exico

or Canada.

14 ]n{erconnecting roads important to interstate, statewide, and regional wave].

Is MaJ{)r ~ra] C{)] lectors that assemble traffic and feed to the ~erials.

lb Urban afierial and collector routes, excluding urban extensions of the nlaJor primq aflerials.

17 Residentla] and ]Wa] streets.

18 u s congress, office ~) fTechno[[)gy Assessnlent, De/ll,erlng the Goods: publi~, works Te~.hno/~gies, ~ana~ement, and Fi~nce, OTA-

. .

SET-477 (Washington, DC: U.S. Government Printing OffIce, April 1991), based on U.S. Department of Transportation data.

19 Ibid.

20 Ibid. Congesti(m cost is the estimated cost of travel delay, excess fuel consumed, and higher insurance premiums paid by residents of

Iargc, c(mgested urban areas. The magnitude of these costs k controversial.
Chapter 2 Where We Are, Where We’re Going 139

Vehicles

Buses

Vans for service to senior citizens and people with disabilities (not public)

Subway cars

Rural service vehicles (primarily vans—public)

Commuter rail cars

Vans

Streetcars and cablecars

Commuter rail locomotives

Others (including ferryboats)

Total

Infrastructure

Miles of commuter rail track

Miles of rapid rail transit track

Commuter rail stations

Rapid rail transit stations

Miles of Iight rail track

Bus Iight maintenance facilities

Demand response service maintenance facilities

Rapid rail transit maintenance facilities

Commuter rail light rail maintenance facilities

Light rail Iight maintenance facilities

Ferryboat light maintenance facilities

52,945

20970

1032 5

10101

4646

2412

940

472

372

103,183

4830

1 744

958

911

687

523

86

43

35

18

4

SOURCE U S Departmen! of Transportation Federal Trans[t Admmlstrallon f’ubllc Transporfaf/on /n rhe L/n/fed

States Performance and Concf/(Ion Report to Congress (Washington, DC June 1992) table 12 p 18

The U.S. transit system consists of an array of

regional and municipal systems, including buses.

light rail, commuter rail, trolleys, and subways, as

well as an array of vehicles providing “paratransit” services--dial-a-ride, van pools, subsidized

taxis, and shared rides in minibuses or vans. The

basic characteristics of U.S. mass transit are presented in table 2-1. Most cities of 20,000 or more

population have bus systems, usually operated by

a municipal transit authority. In fact, buses on established routes with set schedules account for

more than one-half of all public transit passenger

trips, U.S. transit operations are heavily subsidized,

with subsidies paying for about 57 percent of operating costs in 19902 1—probably the highest costper-ride subsidy level among OECD nations.22

Although most cities have some kind of transit

system, most mass transit in the United States is

concentrated in a relatively few cities. In 1991.71

percent of all transit trips were in the 10 cities with

rapid rail systems: New York City, Boston, Philadelphia, San Francisco, Chicago, Washington,

DC, Cleveland, Atlanta, Baltimore, and Miami.23

In fact. in 1990, 35 percent of transit passengers

and 41 percent of transit passenger-miles were in

New York City and its suburbs.24
40 I Saving Energy in U.S. Transportation

The road system in U.S. cities is shaped largely

by the need to offer capacity to satisfy peak traffic

periods. Traditionally, the peaks largely consisted

of worktrips, and these still dominate, although

not as much as before (in metropolitan areas,

worktrips constitute 37 percent of all person trips

in the two peak periods from 6 to 9 a.m. and 4 to 7

p.m.

25). The commute represents 26 percent of the

total household vehicle trips and 20 percent of the

household person trips.

26 A key characteristic of

U.S. commuting patterns is that worktrips generally are relatively short and diffuse in both origin

and destination. The mean worktrip is slightly less

than 10 miles long and takes 20 minutes; more

than half are under 6 miles; and less than 4 percent

are more than 30 miles.27 And although the pattern of workers living in surrounding areas and

commuting to the central business district (CBD)

may once have been true, in 1980 the CBDs

employed only 9 percent of the workers in their total urban areas and 3 percent of workers living outside the central city. Data for the average urban

area in 1980 illustrate the diffusion of worktrips:

37 percent of the workforce lived and worked in

the central city, 36 percent lived and worked in

fringe areas outside the central city, and the remaining 27 percent commuted between central

city and fringe (in both directions) .28 This is not a

commuting pattern that can be well served by transit, or by walking or biking. In fact autos accounted for more than 90 percent of commuting

trips in 1990-a dominance that has been stable

for 20 years .29

As noted above, the diverse commuting patterns of most U.S. cities are not easily served by

mass transit, which depends on large numbers of

travelers having common origin and destination.

Aside from patterns, transit also requires density

of origins and destinations. With a few conspicuous exceptions (e.g., New York City), U.S. cities

have extremely low residential densities, fewer

than eight persons per acre compared with European urban densities 2 to 3 times as high and Asian

densities 10 times higher.30 Further, U.S. cities

are far less centralized than European cities, and

they do not tend to mix residential and commercial development (which might promote walking

and bicycling). Instead, a combination of forces

and circumstances—taxation and other policies discussed above, massive roadbuilding, strong consumer preferences for single-family homes, high

incomes, and the relatively young age of American cities (most either were developed after the beginning of the automobile era or experienced

much of their growth during this era)—have

yielded a U.S. urban development pattern characterized by:

[an] undifferentiated mixture of land uses

and a broad plateau of population density . . .

other central places scattered over the urban

landscape challenge the primacy of the historic

CBD.31

25 H*W. Richtid~on and p. (joryjon,” “New Data and ()]d Mode]~ in urban Economics,”” University of Southern C:il ifomia, preliminary draf[,

December 1992, table 3. The precise character of changes in trip purposes is made uncertain by the manner in which trip purpose data are c(JlIected. A worktrip interrupted by a stop to run an errand w(mld be counted as a shorter worktrip plus am~thcr trip. Because trip “chaining” of

this sort has increased, some of the shift away from worktrips may be an artifact of the data rather than an actuiil shift.

26 Davis and Morns, op. cit., f(x)tnote ], tab]es 4.9 and 4.10. The vehicle load factor for c(mmmtcs is Only 1.2, Wrslrs 1.6 for all trips.

’27 I.S, L)wV, “planning for Urban Sprawl, ” A Lwk Ahead--Year 2020, Transp(wtation Research Board, Special Rqxm 220, 1988. This

pattern of commuting breaks down only in the extremes of urban development-in very small [(wns where R orlwrs may 1 ivc qul[c far ii\vii~,

and in large cities of more than 1.25 million people where the sheer size of the area, and the (h ltlculty t~f (Jptimi~ing l(~zltl(m bccausc so miiny

households have twu or more workers, cause average worktr-ips to be longer.

28 Ibid.

29 Davis ~d M(}~is, op. cit., footnote 1, table 4.11.

30 PG. Newman ~d JR. Kenw(~flhy, C1//e~ and A1(/[~nr~bf/e l~epen~en(e:A ~l{r(eb{)(~k (A]dershot, England GOV cr Publishing co.,

1989).

3 I Lowry, op. cit., footnote 27
In other words, central business districts in

most American cities have neither the preponderance of jobs nor the proximity of residential areas.

Residences are now primarily in the suburbs, and

to a large extent, a significant portion of the business community has followed, to gain access to

suburban labor and (for shipping operations and

manufacturing) to interurban transportation.32

Many of these businesses have coalesced into subcenters. This produces a complex and multidirectional travel pattern.

The result is that in 1990 transit carried a mere

5.5 percent of urban commutes, with an additional

3.1 percent walking or bicycling.33 For overall national travel in 1989, buses (excluding school

buses) accounted for only about 45 billion passenger-miles, and trains for only about 26 billion passenger-miles—l.4 and 0.8 percent, respectively,34 of a total of more than 3 trillion passengermiles for all vehicular modes.

Estimating or comparing the energy intensities

of different passenger travel modes is confusing

and often controversial because much of the collected data are not specific about trip purposes for

each mode, and the different modes often compete

with each other only (or primarily) for specific

types of trips. Also, the energy intensity of the vehicles tells a limited story, since a great deal of energy is embedded in each mode’s capital infrastructure and expended in ancillary activities such

Chapter 2 Where We Are, Where We’re Going 141

as powering stations, repairing roadways and

guideways, and so forth. Further, national averages hide large variations from city to city, because average auto travel speeds vary greatly

among cities, and the service and physical characteristics of public transport systems (especially

rail) vary greatly as well. In the following discussion, only vehicular energy use is considered, and

the focus is on national averages.

In city travel, the energy efficiency of different

passenger travel modes has tended to converge

somewhat over the past few decades, as auto travel

has grown more efficient and public transportation has declined in efficiency. When the same

types of trips are compared, however, transit prob35 In highway or intercity ably still retains an edge.

travel, bus transit, at least, remains substantially

superior to auto. In 1989, the fuel intensity of private autos was 6,095 Btus per vehicle-mile36

(about 20.3 mpg37), or 4,063 Btus per passengermile (p-m) when the load factor of about 1.5 passengers per auto is accounted for. The intensity of

personal light trucks was about 6,605 Btu/p-m in

1989. For city travel, the intensity of autos was

about 4,510 Btu/p-m, and of light trucks, about

7,340 Btu./p-m.38 For worktrips, however, the intensity is higher—about 6,150 and 9,340 Btu/

p-m, respectively (given a load factor of 1.1 ). For

highway travel, auto intensity was about 3,470

Btu/p-m, and light truck intensity about 5,650

~z Rtchardsf)n and G(mhm. op. cit., footnote 25.

~~ Da\ is and Morris, op. c?II,. footno[~ ] , table ~. I ~.

34 lbld., table 2. I 2.

?f How ~~ ~r ~ppr{)prliite ~,)nlparlson t~f the ~nerg} intensities of competing modes requires sophkk=ited evaluation of sPecific tri Ps

discussed In the sectl(m (m publ ic Iransportatltm in ch. 4, these comparisons should account for a variety of factors, includlng trip circuity, travel

condltl{mf, and trai elcr chiir:ictcnstics.

‘c Da~is and florrls, op. cit., f{~(mmte 1. table 2.12.

~7 L[ s, ~.p:irtrllcn[ of En~rg~, Energy 1nfomlation” Adrninistrati(m, Annua/ Energy Re~’ie)t f991, DO~EIA-0384(9 I ) (Washin~ton~ ‘c :

June 1992), table 23.

?R 1 f ~lt}, fuel ~cononl~,” if about 90 ~rcent ,)f the C{)nlblned highway-city Va]ue. This fraction h(~]ds fair]y we]] for new car and ] ight t~ck

. . .

EPA fuel ec(momy values. after adjusting for’ the different factors applied to city and combined fuel ecomwny (0.90 and 0.85, respectively) to

estimate (m-road fuel txxmomy. Based tm Heavenrich ct al., “Light-Duty Aut(ml(~tive Technology and Fuel Ec(m(mly Trends Through 1991 ,“

EPA AA CTAB 9 I -02 (Ann Artx)r, Ml L“.S. Enk lr(mrnental protection” Agency, May 1991), table 1. A p)ssible flaw in this estimate is that it

does not acc(wnt for dlftercnces in l(md fact(w for city and highway travel; presumably, highway load factor will be higher.
42 I Saving Energy in U.S. Transportation

Btu/p-m.39 For long trips with higher load factors,

however, the intensity is lower-perhaps 2,480

for autos (by assuming 2.1 persons per auto).40

For comparison’s sake, the fuel intensity of

transit buses was about 3,711 Btu/p-m, 82 percent

of city auto intensity and 66 percent of city auto

worktrip intensity; the intensity of intercity buses

was 963 Btu/p-m, only 28 percent of highway

auto intensity and perhaps 38 percent of intercity

auto intensity. Rail systems exhibit similar energy

relationships for city travel, but show much less

gain when shifting to intercity travel. Transit and

commuter rail had energy intensities of 3,397 and

3,102 Btu/p-m, 75 and 69 percent of city auto intensity, and 60 and 55 percent of city auto worktrip

intensity, respectively. Intercity rail intensity was

2,731 Btu/p-m, 79 percent of highway auto intensity and 110 percent of intercity auto intensity. Air

passenger travel, comparable with high-load-factor auto highway travel and intercity bus and rail,

had an energy intensity of 4,796 Btu/p-m.41

Although automobiles continue to dominate

U.S. travel, they face severe competition from

commercial aircraft for trips of a few hundred

miles and longer. As noted earlier, air transportation captures about 10 percent of the total passenger-miles traveled—447 billion passenger-miles

for commercial aviation plus 12 billion in general

aviation, in 198942-—and is the most rapidly

growing segment of the U.S. transportation system. In the 1980s air passenger-miles grew at a

rate of more than 7 percent per year.43 Air transportation accounts for about 12.5 percent of total

passenger travel energy use, or 1.74 quadrillion

Btu (quads) .44

The U.S. air travel system is extremely centralized, with most trips starting and finishing at relatively few major airports. In fact, the 10 largest

airports serve 40 percent of all passenger trips, primarily because of widespread use by major air car45 riers of “hub-and-spoke” routes; the top 100

handle 95 percent of all passenger trips. There are,

however, more than 17,000 airports in the United

States, most being public-use general aviation airports owned by municipalities, counties, or private groups, and used primarily by personal and

business aircraft.46

The major airports experience substantial capacity problems and resulting delays, which waste

significant amounts of fuel by idling aircraft on

the runways and keeping arriving planes in holding patterns. Of the 25 airports with the most delays, Chicago’s O’Hare ranks first, with total delays exceeding 100,000 hours per year; two

airports have annual delays between 75,000 and

100,000 hours; two more have delays between

50,000 and 75,000 hours; and the remainder are

between 20,000 and 50,000 hours.47 If no capacity improvements are made or peak shaving measures taken, the Federal Aviation Administration
. . . .

Chapter 2 Where We Are, Where We’re Going 143

Major airports experience substantial capacity problems and resulting delays, which waste significant amounts of fuel by idling

aircraft on the runway and keeping arriving planes in holding patterns

expects 17 airports to move into the 75,000 -hourand-up delay category by 1997.48

1 Freight Transport

The movement of freight—including everything

from basic materials such as coal and grain to final

consumer products such as clothing and computers-consumes about 6 quads of energy per year,

accounting for about 17 percent of total U.S. oil

consumption.

49 The freight system moves about

3.2 trillion ton-miles of freight per year. Trains

and trucks each carry about 30 percent of this,

barges about 24 percent, oil pipelines 16 percent,

and air less than 1 percent. Energy use for freight

shows a very different pattern than ton-miles.

Trucks dominate freight transport energy use,

accounting for more than 80 percent of the total. Trains and barges are far behind, accounting

for 7 and 6 percent, respectively, of freight transport energy use (table 2-2).

Truck Freight

For nonbulk cargo-mail, perishable food, packaged goods, and so forth-trucks are the dominant

transport mode. In 1989, trucks transported about

30 percent of cargo (table 2-2). In contrast, European freight shippers used trucks for about 64 percent of their shipping requirements, primarily because European countries do not produce or ship

volumes of bulk goods comparable with the

United States.

Trucks carry a wide range of goods .50 The cargoes carried by light (less than 5-ton) trucks differ

significantly from those carried by heavy (greater

than 13-ton) trucks. Almost one-third of light

truck miles (excluding passenger only) are for the

movement of craftsman’s equipment; no other

single cargo accounts for more than 10 percent of

light truck miles. Light trucks (excluding passenger only) account for 40 percent of total

w Ibid.

@ Davis and Strang, op. cit., f~x)tnote 8, p. 2-7; also table 2-2.

S0 A “lore de[al]ed dlscu~~l(}n ,)f the trucking indu~tw can ~ found in us, congress, of fIce of Technology” Assessnlent, Gearing Up jtir

SU/e(I, OTA-SET-382 (Washingt(m, DC: U.S. Government Printing Office, September 1988), p. 34.
44 I Saving Energy in U.S. Transportation

Energy use Ton-miles Expenditures Energy Intensity

(percent) (percent) (percent) Btu/ton-mile indexa

Train 7 30 10 427 1 0

Freight truck 83 29 83 4,924 1 1 5

Water (domestic) 6 24 2 403 0 9

Air cargo 1 <1 3 9,548 2 2 4

Oil pipelines 3 16 3 274 0 6

Total 5.9 quads $311 billion

a Intensltles are simply energy use dwlded by ton-males Because cargo carried by the various modes may be very different, m!ensltles are not,

by themselves accurate mdlcators of energy efficiency

NOTE Data are uncertain Excludes hght passenger-only trucks, natural gas and water plpehnes, and International movements

SOURCE Othce of Technology Assessment, 1994

freight truck energy use (table 2-3). These trucks

are typically used for short-distance urban or suburban delivery. The technologies and policies affecting the energy efficiency of these trucks are

quite similar to those for automobiles. For example, most new light trucks are required to meet

Federal fuel efficiency standards.

Significant loads for heavy trucks, in contrast,

include mixed cargo. processed food, and building material. The heaviest class of trucks, with a

(gross vehicle) weight of more than 13 tons, accounts for over half of truck energy use (table 2-3).

Most of these trucks are the familiar 18-wheel

tractor-trailers with a capacity of 40 tons, and typically are driven many miles per year (heavy trucks

driven more than 75,000 miles per year account

for more than half of all heavy truck-miles).51

Most are powered by diesel engines, typically

large (greater than 800-cubic-inch displacement

and 300 horsepower), 6-cylinder units.

Light Medium Heavy

Number of units (1 ,000) 11,760 1,700 1 820

Energy use (percent of total) 40 9 51

Average miles per gallon 148 7 4 5 5

Significant cargo Craftsmen’s Mixed cargo, Mixed cargo,

equipment processed food processed

food,

building

materials

NOTE Excludes trucks used for personal transportation Light - f 10000 pounds, Medium - 10000 to 26000 pounds, Heavy -26,000- pound

SOURCES U S Department of Commerce Bureau of the Census, Truck Inventory arm Use Survey, TC87-T-52 (Washmglon DC August 1990),

and Off Ice of Technology Assessment estimates
Chapter 2 Where We Are, Where We’re Going 145

The penetration of energy-efficient technologies into today’s heavy truck fleet varies.52 Some

technologies, such as demand-actuated cooling

fans and air deflectors, are found in almost all

units. Other technologies, such as trip recorders

and auxiliary cab heaters (to eliminate engine idling), have achieved relatively low penetration—

less than 25 percent. Trucking firms have paid increased attention to improving driver behavior in

recent years. Some firms have instituted programs

to reward drivers for energy efficiency, for example, offering prizes to drivers achieving the highest miles per gallon.53

Rail Freight

The freight railroad industry is dominated by 13

large Class 1 companies, which collectively account for more than 90 percent of railroad freight

revenue.

54 These companies are regulated by the

Interstate Commerce Commission (ICC), and extensive data on their operations and performance

are available. The total revenue of these Class 1

firms in 1991 was $28 billion, Energy accounted

for 7 percent of total operating expenses.55

The railway network consists of 117,000 miles

of track.56 This figure has been dropping steadily,

as little-used tracks are abandoned or sold to nonClass 1 railroads. In comparison, there are more

than 1.7 million miles of heavy-duty (i.e. appropriate for use by trucks) roads in the United

States. 57

Today rolling stock consists of 18,300 operating locomotives, all of which are diesel-electric,

and about 1.2 million freight cars. Locomotives

are typically rebuilt many times and therefore

have very long lives—about one-third of today’s

fleet was built before 1970.58 The relatively slow

turnover of both locomotives and freight cars has

slowed the penetration of energy-efficient

technologies into the railroad system. For example, although since 1985 most new locomotives

have microprocessor controls, improved wheel

slip detectors, and other energy-efficient technologies, they represent only about 4 percent of the

operating fleet.59 Retrofit technologies have

achieved higher penetration-flange lubricators,

for example. are used by most train companies.

Operational improvements such as improved dispatching, pacing, and reduced idling are also becoming more common.

6 0

Coal accounts for the bulk of train movements—at 41 percent of total train tonnage. Other

significant train movements include farm products ( 10 percent), chemicals and chemical products (9 percent), and nonmetallic minerals (7 percent).61 An increasing fraction of train movement

.
46 I Saving Energy in U.S. Transportation

is in the form of trailers or containers (i.e., intermodal shipments, using both train and another

mode), typically carrying manufactured or intermediate goods.62

Waterborne Freight63

The water transport system consists of the inland

waterways, coastal routes, and international

(oceangoing) routes; the system includes about

200 major ports, each handling at least 250,000

tons of cargo annually or having channels deeper

than 20 feet.64 Many of the ports have linkages

with truck, rail, and pipeline operations to provide

integrated freight transport service. Although

deep-water service is critical to handling international cargo operations, barges and tows carrying

bulk commodities on the Nation’s shallow draft

(water depth less than 14 feet) inland and intracoastal waterway system are an important component of the U.S. freight transport system. The bulk

of inland barge movements occurs on the Mississippi River, the Gulf Coast Intracoastal Waterways, and connected waterways. Other significant

inland waterways include the Atlantic Waterway

and the Columbia-Snake Rivers system.

Today’s inland water vessel fleet consists of

about 30,000 barges and 5,000 tugs. Most of these

barges are built for dry cargo and can carry about

1,400 tons apiece. There are also tank barges, with

an average capacity of about 2,700 tons per barge.

The tugs include smaller workboats (typically 500

to 1,000 horsepower) used to maneuver barges

near terminals, and larger line-haul boats (typically 1,500 to 10,000 horsepower) used for long-distance towing of barges.

Products carried by barges are quite similar to

those carried by trains: coal accounts for the bulk

of tonnage (30 percent), followed by petroleum

products (19 percent), farm products (13 percent),

and nonmetallic minerals and products (12 percent). 65

Air Freight

Air movement of freight includes both “belly

freight,” which is cargo carried on passenger

planes, and all-cargo aircraft. In general, only cargo with a very high time value (such as perishables, business documents, and specialized machinery) travels by air. Although air cargo

movements have been growing very rapidly—almost 10 percent per year since 1980—they still account for only about 1 percent of freight transport

energy use. Air cargo is very energy-intensive, requiring about twice the energy of trucks to move

1 ton 1 mile (table 2-2).

Pipelines

Pipelines carry virtually all the natural gas and water consumed in the United States, as well as about

half of oil and oil product ton-miles.66 In the case

of natural gas, the only technical alternative to

movement by pipeline is movement of liquefied

natural gas (LNG) by tanker truck or train, which

is technically feasible but often not cost-effective.

Therefore, pipelines will continue to be the primary carrier of natural gas. Similarly, water will continue to move almost exclusively by pipeline due

to the cost advantage. Oil, however, is moved by

all modes; although in areas where pipelines already exist, they are often the least expensive (and

most energy-efficient) mode.

TRENDS IN U.S. TRANSPORTATION

The previous section presents a snapshot of the

U.S. transportation system. To examine the system further and take the first step in projecting its

62 ]ntem(~al Ass(~ia[icJn of North America, 1992 Intermoda/ /nde.r (Riverdale, MD: ~cenl~r 1992).

63 This discussion draws p~man]y from [he U.S. Army (h-p of Engineers, The /992 In/and Walen$’uYsRel’iew’(Ft. Belvoir, VA: October

1992), pp. ES-5, ES-7, 34-42.

6A Offlce of Technology” Assessment, op. cit., footnote 7.

65 U.S. Amy Corps of Engineers, op. cit., footnote 63, p. 4. Data are for 1~.

66 En(~ Transp)rta[jon Founda[jon,” Inc., Transpor/a/ion in America, 9th ed. (Waldorf, MD: 1991 ), P. 59.
Chapter 2 Where We Are, Where We’re Going 147

future, recent trends in key transportation indicators are discussed briefly here.

The year 1973 was a key turning point for the

U.S. transportation sector. Before 1973, transportation energy use rose strongly and steadily at

about 4.5 percent annually, spurred by strong

growth in travel demand and only modest changes

in efficiency. The great increase in oil prices that

began in 1973, coupled with expectations of very

high future prices, changed the trend line dramatically: after 1973, growth in transportation energy

use dropped sharply, averaging about 1.0 percent

annually between 1973 and 1990.67 Even so,

transport energy use grew far more swiftly than

other sectors of the economy, which either declined (industry) or were relatively stagnant (residential and commercial) after 1973 because of

strong conservation efforts.

1 Passenger Travel

Passenger travel was not a primary cause of the

growth in total transportation energy consumption during the 1973-87 period; its energy use

grew only 9 percent during this time.68 This slow

growth was accomplished despite trends in personal vehicle occupancy, volume of passenger

travel, and air travel that are clearly in an energyintensive direction. For example, during the

1973-87 period, load factors for autos and light

trucks declined from about 2.0 to 1.7, yielding a

15 percent drop in efficiency, all other things being equal. 69 This trend toward lower load factor

was particularly pronounced in commuting; from

1980 through 1990 there was an extraordinary 35

percent increase

work, from about

lion. 70 Although

part to an overall

in drivers traveling alone to

62 million to more than 84 mil -

this rapid increase was due in

increase in employment. much

of it was due to a shift away from carpooling. One

clear reason for this trend was rising vehicle availability, as shown by the growing number of multivehicle households. The percentage of households with more than one vehicle has risen sharply

over time. from 31 percent in 1969 to 57.9 percent

in 1990.71 In fact, the proportion of households

with three or more vehicles rose from 4.6 percent

in 1969 to 19.5 percent in 1990.72

From 1970 through 1987, the total volume of

travel (in passenger-miles) increased by 2.27 percent per year—a higher growth rate than population. 73 As discussed in the next section, this

growth reflects a number of changing demographic

■

m

factors:

an increased percentage of working-age persons (between 1980 and 1990, population increased 9.7 percent, while the working-age

population increased 19.1 percent74);

the rise in female workers:
48 I Saving Energy in U.S. Transportation

~ high rates of household formation (between 1980

and 1988, the number of households rose by 13.9

percent, population by 8.5 percent; 75) and

■ a large increase in the number of automobiles

(from 89 million, or 0.44 per capita, in 1970 to

143 million, or 0.58 per capita, in 198776).

This last factor—rising automobile ownership-is connected, at least in part, to the shifting

form of U.S. cities, which have become increasingly dispersed over the past several decades. For

the last 40 years, 86 percent of U.S. population

growth has been suburban;77 growth in rural and

center-city areas has been slow, and many such

areas have lost population. Similarly, job creation

has been skewed to the suburbs: the percentage of

all jobs located in suburban areas increased from

one-third in 1960 to about one-half in 198078 and

continues to grow. A recent examination of 12 major metropolitan areas shows a striking and consistent loss during the period 1982-87 of centralcity job shares in all employment categories

—manufacturing, retail, wholesale, and services—as well as employment growth rates increasing with distance from the central city in all

79 Thus, during the last sectors but manufacturing.

40 years, the character of U.S. cities changed

markedly: from an employment and residential

pattern focused on the central city and central

business district, to a shift of population out of the

central city and into the suburbs, and to the subsequent movement of employment to the suburbs in

order to gain access to suburban labor and escape

congestion, high land costs, high taxes, and declining services. Richardson and Gordon postulate that the current pattern of suburban businesses

coalescing into subcenters may be only a waystation to an almost totally dispersed land use pattern, as telecommunications reduce the advantages of businesses grouping together even at the

subcenter level.80

This shifting location of residences and jobs

has changed the character of commuting. While

overall rush-hour traffic has been growing because of disproportionate increases in the number

of working-age adults, the pattern of commuting

has shifted from the traditional suburban-to-city

to a suburban-to-suburban commute. This shifting pattern is an important reason why, in the face

of growing numbers of vehicles vying for basically the same road space and indications of increasing average worktrip lengths, average travel time

to work has remained virtually unchanged (in two

surveys of changes in commuting times between

1980 and 1990, one shows an increase, the other a

decrease of less than a minute81).82

Finally, air travel, the most energy-intensive

passenger travel mode, moved from a 4.6 percent

share of passenger-miles in 1977 to 9.9 percent in

1987. 83 Passenger-miles have grown at a rapid

rate over the past two decades, and the rate has accelerated slightly over time. From 1970 to 1989,

the annual growth rate was 6.6 percent, with a 7.3

75 j F Hom~ck ~enlograp~;(.~re~S ~n~ ~ranSpor/a~fon /rrjhs/t-ucrure, 90-551 E (Wash ingtfm, DC: Congressi(mal Research Sc~ ICC,

. . ,

N(Jv. 28, 1990).

76 Davl~ and Morns, op. cit., footnote ], tables 1.1, 1.3.

77 Hom&ck, op. Cit., footnote 75.

78 Ibid.

79 p. Gordon” and H.W. Richardson, University of Southern Callfomla, “L.A. Lost and Found,’” unpublished rqxm, May 1992.

*O Richardson and Gord(m, op. cit., footnote 25.

8 I plsarskl, op. cit., fOOtnOIe 70.

82 Two ~)ther factors are the sheer size of the C[)mmu[lng ~)pulatlon (large [inle delays due to ctmgestit)n-hundreds of roil] i(ms of htmrs

per year--could occur without substantially increasing the m!erage commuting time) and a substantial excess capacit} of roadway that needed

m be worked off bef(we significant congestion began.

*3 Davis and MornS, t)p. cit., footnote ], table 1.1.
Chapter 2 Where We Are, Where We’re Going 149

percent rate for the period 1982-89.84The increase

in actual energy use has been slower, however, because of increased energy efficiencies stemming

from higher load factors, use of larger aircraft,

gradually lengthening trips (the cruise portion of

an aircraft trip is the most energy-efficient part),

and improved technology. During 1970-89, the

annual growth rate of energy use has been only 2.3

percent, less than half the growth rate of passenger-miles.

Most of the effect of the energy-intensifying

changes in passenger travel was nullified by large

increases in vehicle efficiency during the period

1973-87: the automobile fleet improved from

about 13.3 to 19.2 mpg,

85 a 43 percent improvement in efficiency, and the entire light-duty fleet

(autos and personal light trucks) improved from

about 13.0 to 17.5 mpg, a 26 percent increase. 86

The lower figure for the light-duty fleet reflects

the smaller increase in fuel efficiency of light

trucks during this period as well as the growth in

fleet penetration of these lower-efficiency vehicles.

Increasing the modal share of mass transit is a

key component of most strategies to reduce transportation energy use and pollution. Past trends in

transit usage are not, however, encouraging. In the

1950s and 1960s, transit ridership declined to less

than half of pre-World War II levels; virtually no

subsidies were available during this period, however.

87 Although subsidy levels increased 14-fold

in the 1970s, there was little change in ridership.

The number of workers who commute by transit

actually declined between 1980 and 1990 by

about 100,000 riders, or from 6.4 to 5.3 percent of

all workers.

88 However, data from the American

Public Transit Association for all trip purposes indicate a gradual increase in unlinked transit trips

(a complete trip may include a few unlinked trip

segments) from about 1975 to the present—from

7.3 billion to 9.1 billion trips,89 an increase of

about 1.6 percent a year.

90 According to the Nationwide Personal Transportation Survey, however, total transit person trips have been relatively

stagnant over the past two decades, starting at

about 4.9 billion in 1969, reaching a high of about

5.5 billion in 1983, and dropping again to 4.9 billion in 1990.91

Part of this stagnation in mass transit use undoubtedly is due to the sharp rise in multivehicle

households, which discourages transit trips. Also,

the number of households with no vehicles—

prime transit candidates—has declined sharply,

from nearly 13 million, or 20.6 percent, in 1969 to

less than 9 million, or 9.2 percent, in 1990.92

Pucher also attributes this stagnation to the funneling of most subsidy resources to expensive rapid rail systems, which created few new transit

trips 93 and drew most of their ridership from buses.

‘4 Ihld,

x$ Enel{>l In[onllilllon” Adnltnlstra[l[m, op. Cit., ft~)tn(jl~ 37. @

X6 \ChlpF.r ~{ ;I1,, op. LI[., fo{~tn{~tc 68.

X7puchcr, ~ )p. Ll[,, footno[~ 1 ~.

xx plsar+l, op. cit., tootnok 7(J.

89 Arl)cr,can ptlhllc Tr:inslt As5(~latlon, /gy.yl ~j-an.s~f Fmf Book (Washington, m: Septenlber I 990)7 table ] 7“

(){) ~lnfortLJniilcly, ,n[cr[)re[lng lhls ,ncrc. se ,s ~1 fficu]t ~cause ncar]y ha] f of the added Itips were on heavy rail systems. Many heavy rai]

[rlp$ ymcr:itc tl~lllle-t{l-~[:illon and w{)rh-[()-s[at](m bus trips that are not independent transit trips but inflate the selected statistic: many of the

nc’u trlp~ art pr( )habl) sl:illstlcal :irtifacts, i.e., transit users went from (me hmg bus trip (one unlinked transit trip) to a short bus trip to the rail

station and u l{~ng rail Irlp (two unlinked transit trips).

‘)l }{u :ind Young. {)p. ~rt., t(Mlln{)tc 7 I , Iablc I 6.

‘)2 I bid., table 4.

‘)~ f’u(hcr. t)p. cit., fi~{ )tnl)te 12.
50 I Saving Energy in U.S. Transportation

I Freight

Much transportation energy growth after 1973

was due to freight transport energy use, which increased 37 percent between 1973 and 1987; passenger energy use, as noted earlier, grew only 9

percent during this period. The growth in freight

energy use was nearly 2.3 percent per year during

this time, in contrast to a growth in freight volume

of only 1.2 percent annually, much slower than the

rate of economic growth.

Why did freight levels grow more slowly than

the economy? First, the economy has gradually

shifted away from basic materials and toward

greater consumption of services and higher-valueadded goods.

94 Although production of raw materials (such as coal and minerals) has increased,

production of manufactured goods has grown

much faster (table 2-4). And consumption of services—health, legal, amusement, education, and

so on—has grown much more rapidly than consumption of goods. In 1970 goods accounted for

46 percent of the gross domestic product (GDP),

while services accounted for 43 percent; in 1990

these numbers were 39 and51 percent, respective1970 1990

Raw materials

Coal production

Crude 011 production

Minlng

All crops

Primary metals

Manufactured goods

Instruments

Electrical machinery

Rubber and plastic products

100

100

100

100

100

100

100

100

1 55

0 7 6

1 02

1 48

0 9 4

301

2 7 5

2 9 3

SOURCE U S Department of Commerce Bureau of the Census S/ahs//ca/ AbsVact ot (he Umted Sta?es (Washington, D C

1992), pp 563, 657, 745

ly.95 This slowed freight tonnage growth, because

services generate additions to gross national product (GNP) with fewer goods that require shipment; services also make use of higher-value-added goods that weigh far less per dollar of value

than raw materials. Second, increased imports reduced freight because much of the U.S. market is

close to the coasts and to ports of entry, thereby reducing domestic shipping distances.

Changes in the nature of goods being shipped

were reflected in changes in shipping modes. Over

the last 20 years, movements by train and barge,

which typically carry basic commodities (such as

coal, farm products, and chemicals), grew slowly.

Over the same period, truck and air freight movements, which carry greater value-added goods,

grew more rapidly—in excess of GNP growth.

Truck and air generally require more energy than

trains and barges; therefore, these economic shifts

have resulted in relatively rapid growth in freight

transport energy use despite slow growth in total

tonnage.

Other major trends have influenced the form

and energy use of the freight transport system.

Major Federal legislation was passed that partially

deregulated portions of the system and generally

encouraged competition. The Regional Rail Reorganization ( 1973) and Railroad Revitalization and

Regulatory Reform (1976) Acts provided financial support for bankrupt train companies and relaxed some rate regulation by the Interstate Commerce Commission. The Staggers Act ( 1980)

removed regulatory control of markets in which

train companies faced substantial competition,

and streamlined regulations relating to company

mergers and track abandonment. The Motor Carrier Act of 1980 reduced restrictions on entry and

expansion in the trucking industry and relaxed

various regulations related to trucking. The Surface Transportation Assistance Act ( 1982) super-

‘}4 The shift I(I ICSS ma[crial-inkmsli c ct)nsumcr g(}(xk is discussed in R. Williams et al., ‘“Materials, Affluence, and Industrial Energy Use, ”

Annuo/ Relvfw 0/ Ener~l’, t t)]. I 2, I 987.

‘)s The renl~lndcr w as for structures. U.S. Departnwnt of Commerce, Bureau of the Ct!nsus, .$lall.$lif’a/Abslraf’1 q/ lhe L’nlled .$lfJ~c.f ( WashIn:[on, DC 1992), p. 430.
Chapter 2 Where We Are, Where We’re Going 151

sealed certain State requirements on size and

weight limits for trucks. These regulatory changes

have resulted in greater competition, both within

and among modes.

Another major influence on freight transport

has been the growth of intermodal movements. Intermodalism usually refers to the carriage of trailers and containers by trains, with delivery to and

from train terminals by truck, but can also refer to

the use of barges or open ocean ships to transport

containers, which are then moved by train or

truck. Several innovative technologies have been

implemented, including sealed containers that can

be moved by train, barge, or truck; roadrailers

(truck trailers that can ride directly on train

tracks); piggybacking (putting truck trailers on

railcars); and double-stack containers (putting

two levels of truck-size containers onto railcars).

Intermodal loadings on freight trains grew at an

average annual rate of 4.9 percent from 1970 to

1990. 96 By 1991 their movements accounted for

over 10 percent of all freight ton-miles.97

As noted above, freight energy use grew nearly

twice as rapidly as freight volume. An important

factor in the increase in freight energy use over the

past few decades has been the rise in truck use

(since trucks are second only to airfreight in energy intensity). From 1970 to 1990, heavy truck energy use rose at a 4.1 percent annual rate, or 125

percent for the period.98 Heavy trucks began the

period by accounting for 9.8 percent of total transportation energy, and ended it accounting for 15.6

percent. 99 Over these 20 years, there was only a

modest improvement in truck fleet fuel economy

(miles per gallon), with combination trucks improving from 4.8 to 5.5 mpg and larger single-unit

trucks (with more than two axles or four tires) improving from 6.8 to 7.3 mpg. In addition, the fuel

economy of automobiles increased more than

three times as quickly as that of combination

trucks during this period.100 

Countervailing factors yielded small gains in

truck fuel economy during the past two decades.

Factors that contributed to improved fuel economy included technical improvements and increased trip lengths. Technologies implemented

in recent years include electronic engine controls,

demand-actuated cooling fans, intercoolers, aerodynamic improvements, low-profile radial tires,

and multiple trailers. Market penetration of these

technologies varies, although some, such as cabtop air deflectors, are found in almost all heavy

trucks. 101 Increased average trip length—from

263 miles in 1970 to 389 miles in 1989—has also

improved fuel economy due to the inherent efficiency advantage of longer trips.102

Factors hindering increased truck freight fuel

economy included increased highway speeds,

96 Loa(jlngs defined as the number of trai Iers and containers loaded (m trains. Ass(~iatitm of American Railroads, OP. Cl I., footnINC” 54. P.

26,

97 [ntersta[e Commerce Conmllsslon, office of Economics,” Transporf Statisrlcs in (he United SweAa(/roads, I)arl / (Wash lngt(m, DC

1991 ), p. 27.

W? Davis and Strang, op. cit., f(x)tnote 8, p. 2-18. Excludes 2-aXle, 4-tire tmcks

99 Ibid.

1~ That is 22 ~rcen~yr versus 0.7 percen~yr, from Ibid., pp. 3-23, 3-42. Data are for fleet averages. Miles per gallon is not an ideal indlca-

, .

tor of efficiency for trucks because it fails to reflect changes in truck size, loads earned, and other variables. Data (m Btu per t(~n-mile, w hlch

do account for some of these variables, are scarce; however, existing data show much the same pattern as miles per gall(m (l.c.. ~ cry slighl

lmpr(wement over the last 20 years).

1~1 Due In pan t. these technical improvements, Certain classes of trucks showed relatively rapid improvements In fuel efficiency. SW, for

example, Energy and Environmental Analysis, “Analysis of Heavy Duty Truck Fuel Efficiency to 200 1,“ repwt prepared ft~r the L1.S, En~ lr~mrnental Protection Agency, September 1991, p. 2-24.

102 Ml leaOe data from En. Transpofiation” Foundation,” lnc op. cit., footnote 66, p. 7 [. Much of the increase in trl P ‘ength ‘)ccumed ‘r(’r”

a .,

1970 to 1980 and may have been due in part to shifts fr(ml trains; trip length increased little after 1980 due in part to the growth [n Intcml(dal

freight movement.
52 I Saving Energy in U.S. Transportation

changes in the truck fleets, and the long lives of

truck engines. In general, higher speeds are less

efficient due to greater wind resistance. 103 Average vehicle speed on both urban and rural roads

has been steadily increasing. 104 Also, in 1987

States were allowed to increase speed limits to 65

mph on certain highways; since then, many States

have done so. Over the last 20 years, larger trucks

(which use more energy per mile, but less per tonmile) have accounted for a growing fraction of the

total truck fleet. And the average heavy truck engine is rebuilt several times (in contrast to automobile engines, which are rarely rebuilt) and may

travel well over a million miles before being retired. 105 This leads to very slow penetration of

new technologies that cannot easily be retrofit to

existing engines. For example, less than 10 percent of the current truck fleet have electronic engine controls. 106

While truck energy use was rising rapidly, rail

energy use actually declined by 15 percent 107 --despite a 35 percent increase in tonmiles. Three key factors contributing to the gain in

rail efficiency are:

1. Increase in average trip lengths—from 515

miles in 1970 to 751 miles in 1991.108 Longer

trips are more energy efficient due to fewer

stops and greater sustained speeds.109 

2. Operations and communications improvements. Improved routing, scheduling, and

overall operations reduced empty car-miles, allowed for better matching of locomotives and

loads, and minimized stops and starts.

3. Technical improvements, including reduced

locomotive idling speeds, improved sizing of

auxiliary loads, improved wheel-slip detection,

greater use of flange lubricators, weight reduction, and aerodynamic improvements.110 

In addition, the fraction of total railcars occupied by trailers and/or containers (i.e., intermodal

shipments) has grown very rapidly since 1970, but

it is not clear how this has affected the energy efficiency of the rail system.

During the period 1970-90, water-based freight

transport had a moderate growth in ton-miles,

much of it coming from increased movement of

coal, farm products, and chemicals.111 This mode

also showed a small improvement in energy intensity: Btu per ton-mile improved at an average

annual rate of 0.7 percent from 1970 to 1989. Both

technical and operational factors contributed to

this improvement:

● improved engines, with greater use of fuel management computer systems;

■ improved matching of barges and tugs;

■ improved operations aided by computers;

1 (J4 ~] s ~.p;irtlllell[ (~fTr~~[~~pJfl:I[ion, Research and s~cial programs Administration, Nafima/ 7kans/w7atfon .$lali~li(’~, Annua/Re/w-1, .,

DOT-L ’N TSC-RSPA-92- I (Washlngt(m, DC June 1992), p. 62; U.S. Department of Transp(matl(m, Federal Highway Adrninistrati(m, }li~h~~ ay

.StcJI/.~fIci /99/, FHWA-PL-92-025 (Washmg[(m, DC: 1992 ), p. 202.

l~ls H, Sactls t. I ~1., //(’(J\,)TI-14~k FUC/fi’(onom}”(Washington, DC: American C(mncil for an Energy -Efficknt Economy, Januab’ 1992),

P J

I(M Based on a \illllp]e of n]cdil]n- and hca~y-dut} truck ftccts. Abacus Technology” Corp., op. cit., f(x)lnote 52, p. ~-~.

I 07 D:ik ,s ;in~ S[r:lng, {)p. c 1[., footnote ~, p. ~-~~.

I ox ,4ss{)cltitl(ln of Anl~I ic~n R:il]rf)ads, t)p. cit., footnote 54, p. 36. one c(mtributi(m tt) this increase was the ch)sing of smalkr and ICSS

utill~cd Slil[l{)nS.

l@ With Illost ]ongcr [rips. ;1 sl)]ii]]~r pcrccn[agc of the trip w ill be under c(mgesled urban conditions that degrade energy CffiCknCy.
Chapter 2 Where We Are, Where We’re Going 153

■ improved channels and locks; and

■ use of larger barges and tugs.

Final] y, air freight has grown rapid] y during the

past two decades, yet still accounts for a very

small fraction of total freight ton-miles and total

freight energy use. By one estimate, the energy efficiency of commercial aircraft (predominantly

passenger transport, but including freight transport) has doubled since the early 1970s. Technical

and operational factors contributing to this include improved aerodynamics. more efficient engines, and reduced aircraft weight.112

FORECASTING TRANSPORTATION

ENERGY CONSUMPTION

Projections of future transportation energy consumption can play a powerful role in shaping

policy by identifying emerging problems, pinpointing areas for energy savings, and providing

a context within which to judge alternative policy

options. For example, forecasts of continued rapid

growth in travel demand, showing that reasonable

levels of mobility cannot be maintained by “business as usual, ” could provide an impetus for radical transportation policies that involve increasing

urban residential densities and otherwise reversing the decline of central cities, On the other hand,

forecasts that travel growth will slow drastically

from previous levels would allow policymakers to

proceed comfortably with technology-based solutions to urban congestion and pollution, and to

avoid considering more drastic solutions.

This section examines the factors that will affect transportation energy consumption and describes some existing forecasts of transportation

energy use. The basic focus is on energy use under

normal market conditions (e.g., without major

new government programs or changes in the underlying regulatory structure).

1 General Considerations—

Factors That Will Affect Transportation

Energy Consumption

Light-Duty Vehicles–Travel Demand

Both components of light-duty vehicle energy

use—travel demand, measured as vehicle-miles

traveled (vmt ). and energy efficiency, meusured as

vehicle fuel economy in miles per gallon-have

grown robustly during the past 15 years, largely

canceling each other out in terms of changes in

overall fuel use. Over the next few decades, the

rate of change of both factors is likely to decrease.

Light-duty vmt is widely expected to continue

to rise. though not as rapidly as before. The rate of

increase in light-duty passenger vmt between

1970 and 1990 was very large—about 3.3 percent

per year. with auto travel growing at a somewhat

slower rate (2.6 percent per year) and light truck

travel growing at a much higher rate (6.9 percent

per year).

113 (This represents all 2-axle, 4-tire

trucks. not just trucks for personal use; for 1989,

such trucks totaled 457 billion miles traveled,

whereas personal trucks were only 290 bill ion

miles. )114 And the rate of increase in total lightduty travel became higher during 1982 -88—3.9

percent per year.

As shown in figure 2-2, the rise in vmt over the

past several decades has been almost constant, because expected “saturation points” in auto ownership and travel demand did not occur. Initial assumptions that vehicle saturation would occur at

one vehicle per household were surpassed in the

United States in the 1930s. Then, a proposed satu-
54 I Saving Energy in U.S. Transportation

, ~00 Billions of vehicle-miles traveled

1935 1945 1955 1965 1975 1985

Calendar year

1,200

900

600

300

0 ) , 1 1 I 1 1 r 1 1 I I I I I 1 1 I I I 1 1 I 1 ) 1 1 1 I I I I

SOURCE Office of Highway Information Management

ration point of one vehicle per worker was surpassed in the mid-1960s. Expected saturation of

one vehicle for each licensed driver was surpassed

in 1983.5 And for the past 30 years, vmt per vehicle has remained at about 10,000 per year. driving total U.S. vmt upward at the rate of expansion

of the fleet.116 The year-by-year increase in travel

faltered only twice, and then for very brief periods

when gasoline supply problems were coupled

with very sharp price increases.

More than half of the increase in vmt over the

past 15 years can be attributed to an increase in the

number of adults of driving age. The remainder

was due to increased driving per licensed driver

and a greater proportion of licensed drivers in the

population (the latter due largely to the increased

number of women in the workforce).

As noted, the future growth rate for vmt is

widely expected to be lower—and possibly much

lower—than the 3.3 percent per year rate of the

1970-90 period. Although the Office of Technology Assessment agrees that a decreased growth rate

does appear to be likely, there is considerable

room for argument about the extent and likelihood

of the decrease. On the one hand, the stability of

vehicle mileage trends in the past argues for caution in projecting a significant decrease; on the

other hand, demographic factors do seem to argue

for such a decrease. Some factors that will affect

future vmt are discussed below.

Women in the workforce

During the past few decades, the growing share of

women working, and therefore needing to commute, has contributed significantly to rising levels

of light-duty vehicle travel. The percentage of

adult working women rose from 37 in 1969, to 48

in 1983, and to 56 in 1990.117 Of those working,

the percentage with driver’s licenses rose from 74

in 1969 to 91 in 1983. By 1990, women made up

46 percent of the total workforce, up from 27 percent in 1947.1 Further increases in the share of

women working will continue to affect the demand for transportation services during the next

few decades, but probably at a slower rate because

the current percentage of working women is high.

However, fully 74 percent of adult males are

employed, 119 compared with 56 percent of adult

females. Although it is hard to foresee the proportion of women working soon reaching 74 percent,

the gap in employment rates between men and

women of 18 percent does indicate a potential for

continuation of the past trend.

I I ~ p.D, pa[[erson, ‘“Anal~slS of Future Trans~)rtati{m Ptmdeurn Demand and Efficiency lmpr(wements, ” paper presented at the IEA Energy Demand Analysis Synlpt)siunl, Paris, France, Oet. 12-14, 1987.

116 Ibki.

1 17 Hu ~~ ~roung, op. Clt,, f(wtn(m! 71, table 1.

118 c A 

. .La\ e, “Future Gr(~w th of Auto Tra\cl in the U. S.: A Non-problem, ” Ener~-y and Eniironrnent In (he 2 Ist Century, paper presented

at the Massachusetts Institute tjf Techmd(gy C(mference, Mar. 26-28, 1990.

119 Hu and }’oung, op. cit., f{)otnote” 7 ] , table 1.
Chapter 2 Where We Are, Where We’re Going 155

The fact that women, working or not, still do

not drive nearly as much as men (9,500 miles

annually per licensed female versus 16,500 miles

per year per licensed male 120) appears to leave

open the possibility that future shifts in lifestyles

among women could drive vmt at a higher rate

than predicted. However, a substantial part of the

vmt gap between men and women appears to be

caused by the social custom of men being the primary drivers for recreation, family, and social

travel.121 Were this custom to change. vmt would

be redistributed but not increased. A further examination of the reasons for the vmt gap between

men and women drivers would be useful in illuminating the potential for closing this gap. One interesting area for examination is that women incomes are still significantly lower than men’s, and

travel increases with income,122 which implies

that if women’s incomes rise in comparison with

men's, their travel will increase. Also, it is likely

that a higher percentage of women than men work

in nonspecialized service jobs relatively close to

home, with correspondingly shorter commuting

trip lengths. In 1990, women commuting in urban

areas traveled an average of 8.35 miles in autos

and 7.38 miles in passenger vans, versus 10.79

and 13.11 miles, respectively. for men.123 Over

time. if the status of women’s jobs becomes closer

to that of men, women commuting trips should

grow longer.

Number of adults

The growth rate in adults of driving age will slow

as the baby boom passes. After 2010, however. the

rate of increase will depend on future birth rates,

which are uncertain. A recent surge in birth rates

points out the danger in assuming that trends will

continue. Also, potential fluctuation in immigration rates introduces an important uncertainty.

To compare expected growth rates of drivingage adults with former rates of growth, the number

of driving-age adults grew at 1.7 percent a year

from 1970 to 1986, and the average 1988-2010

rate expected by the Bureau of Census is 0.7 percent per year.

124 Given the importance of the increase in number of driving-age adults to past vmt

increases, this expected decline in the growth rate

of adult drivers is probably the largest single factor in predictions of lower vmt growth rates.

The aging of the population has an effect on

vmt as well. The ratio of young drivers to those of

retirement age is expected to decline by 23 percent from 1991 to 2010,125 yielding a 3 percent

decline in vmt according to Energy Information

Administration projections. However, it seems

unlikely that drivers of retirement age in 2010 will

exhibit the same travel behavior relative to younger drivers as today do because they will have

grown up accustomed to high (auto) mobility; so

this expected drag on vmt growth is probably

overstated.

Vehicle load factor

A substantial portion of previous increases in vmt

can be attributed to the increased number of

households with multiple vehicles (in 1969, 31

percent of households had two or more autos; in
56 I Saving Energy in U.S. Transportation

1990, 58 percent did126) and the consequent decrease in trip sharing among household members.

According to the National Personal Transportation Survey, the load factor for passenger cars was

1.9 in 1969 and 1.6 in 1990. Thus, the 1969-90 decrease in load factor by itself accounted for a 16

percent increase in vmt during this period. Although vehicle load factor could continue to decline, the rate of decline is likely to be less since

, , . . . . . .

Availability of vehicles

Since the lack of access to a

constrains personal travel in

his could slow the

vehicle strongly

most areas. vmt

growth is fed by increases in vehicle availability.

Because many adults own multiple vehicles, the

near unit y of the ratio of personal vehicles to driving-age adults 127 does not imply that all drivingage adults have access to a vehicle; many adults

remain whose personal vmt would increase if they

obtained such access. Nevertheless, the fraction of

potential drivers without access to vehicles is

much smaller now than 20 years ago, and the potential for growth in vehicle access—and increased vmt from this growth-is thus much lower. Also, an unknown fraction of these "no-vehicle” adults cannot drive (because of illness or disability) or, perhaps because they live in high-density inner cities, have little need of a vehicle. On

the other hand, although data are lacking, there

likely are many vehicles whose condition does not

allow them to provide a full measure of mobility

to their owners; if these vehicles were replaced

with newer, more reliable ones, the vmt of their

owners might increase.

Possible driving time saturation

among high-mileage drivers

Employed men between 25 and 54 years of age

drive more than any other large group--about

, ~~ Hu and yOung, ‘)P” cit., ft)t)tn(lte 71, table 5.

18,000 miles per year. This represents an average

of 1.5 hours per day spent driving. Although

“common sense” about saturation of driving has

been wrong before, it is at least possible that this

group may be nearing saturation. One important

area of uncertainty is whether a recent trend in

auto design, making the vehicle interior a more

hospitable environment (comfortable seating, excellent climate control, superb music systems,

availability of telephone communication, etc.),

will increase the likelihood of drivers’ spending

more time on the road. Another uncertainty is

whether predicted increases in traffic congestion

(see below) will outweigh possible continued increases in average (uncontested) speeds. If congestion finally begins to drive average speeds

down, this will increase the amount of time required to drive a constant vmt. This implies that

the already large amount of time spent on driving

will have to increase just to maintain current levels of vmt and that large increases in vmt would

put extraordinary time pressure on drivers. On the

other hand, continued increases in average speeds

will have the opposite effect.

Changing economic structure

The growth in part-time work and shift of the

economy toward more services may lead to increased driving by bringing more individuals into

the workplace and increasing delivery requirements. The potential for delivering certain types

of services, especially information, electronically

may eventually substitute for some transportation, but thus far such trends have not been observed.

Traffic congestion

The increasing congestion of metropolitan areas

will alter travel patterns, Congestion will decrease

the fuel efficiency of those trips that are made; discourage other trips (or shift them to public transportation or to the electronic media where pos1 ~7According [() La\w (c. ‘[l”C, Uni\ ersit~ (JfC’allfcJrnia, lr~ Ine, ‘The Spread of the Automobile” Demon Wha[ Can Wc Dt)’?”” unpublished

report, 1992), the ratio was 0.95 in 1989.
Chapter 2 Where We Are, Where We’re Going 157

sible); encourage some people to work closer to

home or move closer to work; and encourage businesses to move to the less congested fringes, increasing travel requirements. The net effect on

fuel demand is unpredictable, although growing

congestion is likely to act as a brake on vmt

growth.

Development patterns

There is a strong correlation between vmt and development patterns, particularly urban density:

residents of dense inner cores, for example, tend

to drive and travel less than residents of low-density fringe areas. Although increasing traffic congestion might promote some movement of residences and businesses as noted above, few

analysts expect important national changes in the

current suburban pattern of U.S. development.128

One important development pattern to watch is

the potential for persons working in the suburbs to

move into rural areas, with substantial increases in

commute distances as well as longer trips to shopping and other services.

Conclusion

In OTA’s judgment, the most predictable aspects

of the above factors affecting future light-duty

vmt are as follows: the lower number of persons

reaching driving age (although high immigration

rates could offset somewhat the passage of the

baby boom), the likely slowdown of the effects of

women entering the workforce and adults of driving age gaining new access to vehicles, the likelihood that vehicle load factor will not decrease as

rapidly as it has in the past, and the continuing

spread of suburban development. The first three

factors act to slow vmt growth, although the effect

of a slowdown in women entering the work force

is uncertain; there is still room for the character

of women’s jobs to change substantially. with the

potential for significant increases in the length of

their commuting trips. The last factor will contribute to vmt growth. Claims that the number of vehicles per driving-age adult is close to saturation

should be viewed with some skepticism in light of

the fate of past claims of vehicle saturation and uncertainty about the ability of many registered vehicles to deliver full accessibility y to driving (especially given the aging of the fleet). Further, many

determinants of transportation demand (e.g., gasoline prices, personal income, vehicle characteristics) are likely to change in hard-to-predict ways

over the next few decades, and we do not fully understand how demand will respond to changes in

these determinants.129 

The uncertainty associated with the various

factors affecting travel demand probably allows a

range of feasible vmt growth rates of 1.5 to 3 percent, without considering the potential for future

oil price shocks. An unexpected large increase in

gasoline costs, or supply problems. could cause

the growth in personal travel demand to fall below

these levels or even to become negative for a time.

A period of price stability and continuation of improvements in vehicle designs would make the

high end of the range more plausible. Although

OTA believes that this is a lower-probability outcome, the 3.3 percent increase in total vehicular

traffic between July 1991 and July 1992,130 which

followed a year of vmt stagnation (perhaps recession-driven), forces caution in predicting that the

long-term trend in vmt growth, which had been

stable so long, will now turn downward.

Light Duty Vehicles—Fuel Economy

As discussed earlier, the fuel economy of the

light-duty fleet has grown substantially, slowed

only by a shift in consumer preference for light
58 I Saving Energy in U.S. Transportation

trucks, which are less fuel-efficient than automobiles. New auto fuel economy grew 5.3 percent

annually from 1974 to 1988, from about 14 to 28

mpg (U.S. Environmental Protection Agency rating). New light-truck fuel economy grew more

slowly, from 18.2 mpg in 1979 to 21.3 mpg in

1988. 131 The on-road fuel economy of the total

fleet grew from 13.1 mpg in 1974 to about 18.4

mpg in 1988. 132

As discussed in Improving Automobile Fuel

Economy: New Standards, New Approaches,133

future market-driven fuel economy is not likely to

grow rapidly despite the continuing spread of

technologies that could allow substantial improvements (see box 2-B for a brief description of

the available technologies). The primary cause of

reduced potential for rapid increases in fleet fuel

Weight reduction Includes three strategies—substitution of Iighter-weight materials (e g , aluminum or

plastic for steel), Improvement of packaging efficiency (i e , redesign of drivetrain or Interior to eliminate

wasted space) and technological change that eliminates the need for certain types of equipment or reduces the size of equipment

Aerodynamic drag reduction primarily Involves reducing the drag coefficient by smoothing out the baSIC shape of the vehicle, raking the windshield, eliminating unnecessary protrusions, controlling airflow under the vehicle (and smoothing out the underside), reducing frontal area, and so forth

Front-wheel drive IS now in wide use. Shifting from rear-to front-wheel drive allows mounting engines

transversely reducing the length of the engine compartment, eliminating the transmission tunnel, which

provides Important packaging efficiency gains in the passenger compartment, and eliminating the weight

of the propeller shaft and rear differential and drive axle

Overhead cam (OHC) engines are more efficient than their predecessor pushrod (overhead valve,

OHV) engines through their lower weight, higher output per unit displacement, lower engine friction, and

improved placement of intake and exhaust ports

Four-valve-per-cylinder engines, by adding two extra valves to each cylinder, improve an engine’s

ability to feed air and fuel to the cylinder and discharge exhaust, increasing horsepower per unit displacement Higher fuel economy is achieved by downsizing the engine, the greater valve area also reduces

pumping losses, and the more compact combustion chamber geometry and central spark plug location

allow an increase in compression ratio

Intake valve control involves a shift from fixed-tnterval intake valve opening and closing to variable timing based on engine operating conditions, to yield improved air and fuel feed to cylinders and reduced

pumping loss at low engine loads

Torque converter lockup eliminates losses due to slippage in the fluid coupling between engine and

transmission

(continued)
Chapter 2 Where We Are, Where We’re Going [59

Accessory improvements Include adding a two-speed accessory drive to more closely match engine

output to accessory power requirements plus design Improvements for power-steering pump alternator

and water pump

Four- and five-speed automatic transmissions, and continuously variable transmissions by adding extra gears to the automatic transmission Increase fuel economy because engine efficiency drops off

when the operating speed moves away from its optimum and the added gears allow the transmission to

keep the engine closer to optimal speed

Electronic transmission controls to measure vehicle and engine speed and other operating conditions allow the transmission to optimize gear selection and timing, keeping the engine closer to optimal

conditions (for either fuel economy or power) than IS possible with hydraulic controls

Throttle body and multipoint fuel injection which are in wide use offer Improved control of the air-fuel

mixture and allow the engine to continually adjust this mixture for changing engine conditions Multipoint

also reduces fuel distribution problems

Roller cam followers by shifting to a rolling mechanism, reduce friction losses (Most current valve lift

mechanisms are designed to slide along the camshaft )

Low-friction pistons and rings decrease friction losses by improving manufacturing control of tolerances reducing ring tension and improving piston skirt design

Improved tires and lubricants represent a continuation of longstanding t rends toward improved oil and

tires with lower rolling resistance

Advanced engine friction reduction includes the use of Ilght-weight reciprocating components (tltamum or ceramic valves composite connecting rods, aluminum lifters, composite fiber-renforced magnesium pistons) and improved manufacturing tolerances to allow better fit of moving parts

Electric power steering iS used primarily for cars in the minicompact, subcompact and compact

classes

Lean burn Improves an engine’s thermodynamic efficiency and decreases pumping losses This requires a new generation of catalysts that can reduce nitrogen oxide in a “lean’ environment

Two-stroke engines unlike conventional engines have a power stroke for every ascent and descent of

the piston thus offering a significantly higher output per unit of engine displacement reduced pumping

loss smooth operation and high torque at low speeds and allowing engine downsizing fewer cylinders

(reduced friction losses) and significant weight reduction Also they operate very lean with substantial

efficiency benefits (if nitrogen oxide problems are solved) Compliance with stringent emissions standards

IS unproven

Diesel engines (compression-ignition engines) are a proven technology and are significantly more efficient than gasoline two-valve engines even at constant performance new direct Inject Ion turbocharged

diesels offer a large fuel savings Although the baseline gasoline engine will Improve in the future a portion

of the Improvements especially engine friction reduction may be used beneficially for diesels as well Use

may be strongly limited by emission regulations and consumer reluctance

Electric hybrids involve combining an electric motor and battery with another power source in one of

multiple combinations Examples Include using a constant-speed engine (Internal combustion or turbine)

as a generator to recharge the battery during longer trips with electric motors driving the wheels and the

battery providing all power for shorter trips and a fuel cell or engine/generator to provide power for the electric motors with a battery that allows temporary boosts for acceleration or hill climbing (to reduce the required size of the fuel cell or engine)

SOURCE Of flc e of Technology Assessment 1994
60 I Saving Energy in U.S. Transportation

60

50

40

30

20

10

0

2ents per mile (1986 dollars) ——

~ Fuel costs

T-

- All other costs

—

r— l--r- l n .

I n

n

r--l

n

1975 77 79 80 81 82 83 84 85 86 87 88 89 90 91

SOURCE Oak Fldge National Laboratory

efficiency is lack of strong market pressure for

such increases. With lower gasoline prices (and

lower expectations for price increases), relatively

high nonfuel vehicle operating costs, and the average fuel economy of most new vehicles already in

the 20 to 35 mpg range. fuel costs have become a

smaller fraction of total costs (figure 2-3) and fuel

efficiency has declined dramatically in importance as a factor in choosing a new vehicle. If costeffective efficiency improvements are available,

the overall cost savings over vehicle lifetimes of

any efficiency gain will be a small fraction of the

total costs of ownership and operation.134

Other factors likely to restrain increases in fleet

fuel efficiency include the following:

■ Growth in the use of light trucks for passenger travel. Light-truck vmt grew at a rate that

was more than five times that of autos between

■

■

m

1970 and 1985; during this period, auto vmt

grew 38 percent while light truck vmt

tripled. 135 (As noted earlier, this seems to be total 2-axle, 4-tire truck travel, not personal light

truck travel).

A growing attraction among purchasers of

new automobiles to more powerful (and thus

less fuel-efficient) automobiles. An important

consequence of this consumer preference has

been that drivetrain improvements (such as engines with four valves per cylinder and turbochargers), with the potential to either increase

fuel efficiency (at least in part by reducing engine displacement) or boost horsepower from

previous levels, have been introduced in configurations that emphasize power increases

rather than fuel savings. The performance increases of the 1980s, signified by a reduction in

0- to 60-mph acceleration time of 2.3 seconds

from 1982 to 1990, have caused a more than 8

percent decline in fuel economy-more than 2

mpg—from what it would have been at

1982-level performance. 136

Additional luxury and safety equipment on

new cars. Equipment such as power seats, sunroofs, and power locks and windows may gain

additional market share and can add significant

weight to the vehicle. Four-wheel drive may

add 150 to 200 pounds per vehicle and decrease

fuel economy by 12 to 15 percent. Safety

equipment such as air bags (30 to 45 pounds)

and antilock brakes (30 to 45 pounds) add further weight.

More stringent emission standards, especially for nitrogen oxides. Meeting the new Tier

1 Federal standards on exhaust and evaporative

hydrocarbons and nitrogen oxides may create

a fuel economy penalty, although there is controversy about the likelihood of such a penalty.

The California Air Resources Board claims
Chapter 2 Where We Are, Where We’re Going 161

●

m

that the new Federal standards, and even more

stringent California standards, can be met with

no reduction in fuel economy.137 In contrast,

Energy and Environmental Analysis, Inc.,

which has extensive experience in fuel economy analysis, projects an average 1 percent fuel

economy penalty from Tier 1 standards. 138

Slower replacement of the automobile fleet,

so that technological improvements introduced into the new fleet will take longer to

diffuse into the total fleet. Whereas in 1969

autos more than 10 years old accounted for only

about 7 percent of vmt and fuel consumed, by

1977 these older vehicles accounted for about

13 percent of vmt and fuel, and by 1983 for almost 20 percent of vmt and 23 percent of

fuel. 139 Continuation of this trend will slow

fuel economy improvements in the fleet.

Changes in levels of congestion, highway

speeds, and the share of urban driving, all of

which impact on-road fuel economy. Estimates of future fuel use must account for the

gap between fuel economy as tested by the U.S.

Environmental Protection Agency (EPA) and

the actual fuel economy obtained during driving. EPA adjusts its new auto test values down-

.

ward by 15 percent to account for this gap—reflecting an assumed 55 to 45 percent split

between urban and highway driving, a 10 percent gap between tested and actual city fuel

economy. and a 22 percent gap between tested

and actual highway fuel economy.

Recent work by a U.S. Department of Energy

contractor estimates the actual gap for the entire

on-road fleet to be about 15.2 percent for automobiles and 24.5 percent for light trucks.1 40 All else

equal, increased levels of congestion, an increasing share of urban travel. and higher highway

speeds would cause this gap to increase.141 Trends

in congestion and urban-rural travel clearly imply

that the first two conditions will occur; and recent

trends toward a higher percentage of vehicles traveling at more than 55 mph and a relatively shortterm upward trend of average highway speed may

indicate a future increase in this latter variable.

The contractor projected a minimum gap of 21.2

percent for automobiles and 29.5 percent for light

trucks by 2010, with substantial potential for a

much larger gap in this time frame with slightly

different assumptions.

142 These estimates should

be treated with caution, however. Much of the new

“urban” travel will likely occur in less congested

suburbs. and ““city” fuel efficiencies may not apply. Further. EPA regulations requiring on-board

diagnostics, cold temperature carbon monoxide

controls, and improved evaporative emission controls will tend to reduce the tested and on-road

gap.

143

. .

Air Passenger Travel

Passenger travel in commercial aircraft has been

the United States most rapidly growing transport

mode, with revenue passenger-miles increasing at

the very high rate of 6.47 percent a year between
62 I Saving Energy in U.S. Transportation

1970 and 1985.’44 At the same time, however, a

combination of improved technical efficiency and

advances in operations essentially doubled overall efficiency (measured in Btu per revenue passenger-mile) during the same period, so that actual

energy use rose only at 1.68 percent per year. During the past few decades, commercial aviation has

captured a growing share of intercity travel, primarily from automobiles, and it is likely to continue to do so even in relatively short hauls of a few

hundred miles unless major new competitive systems (e.g., high-speed rail) are initiated.

In the past, the amount of air travel has appeared to be extremely sensitive to overall economic conditions and ticket prices. High economic growth rates appear to accelerate air travel; thus

travel forecasts will vary depending on assumptions about GNP growth rate. If historic trends

continue, any increase in growth of GNP will be

accompanied by an increase in air travel that is

about twice as large, in percentage terms. Similarly, an increase in ticket prices will be met by a decrease in travel demand on the order of half as

large. Although ticket prices vary for many reasons, the price of jet fuel is a major influence, so

travel demand will be sensitive to oil prices.

The second component of aviation energy use,

fuel efficiency, will continue to increase. Most airlines are renewing their fleets (although the financial difficulties experienced recently by many airlines will slow the rate of renewal), and the new

airplanes are substantially more efficient. Nearterm technologies used to enhance fuel efficiency

include advanced electronic controls, higher pressure ratios and turbine entry temperatures for engines, and use of composite materials that reduce

airframe weight. Future technologies include continuing improvements in compressor and turbine

efficiency, more extensive use of composites and

other advanced materials, use of new engines such

as the ultrahigh bypass turbofan and the propfan,

and use of active controls for aerodynamic surfaces, to minimize drag.

145 Because fuel prices

have been relatively low, there is some doubt

about the likely speed of introduction of some new

technologies (e.g., the propfan). Box 2-C provides

a more complete description of available aircraft

fuel efficiency technologies.

Aside from buying aircraft with greater technical efficiency, airlines can improve overall fuel efficiency by improving operations and continuing

current trends toward larger aircraft. Relieving

airport congestion is a major concern. Although

some new airports will be built, expansion of airport capacity is not expected to be a primary strategy for relieving congestion over the next few decades.

146 Instead, most attention will go to

operational modifications; for example, improvements in air traffic control systems can allow reduced spacing of takeoffs and landings and increased use of parallel runways.

An important determinant of fuel efficiency

will be the distribution of aircraft trip lengths.

Limitations on airport construction and forecasts

of growing air traffic congestion may lead to efforts to substitute other modes-such as highspeed trains—for shorter trips. However, the recent history of commercial aviation has seen the

industry capturing market share in shorter-length

trips, and it is virtually unchallenged in trips of

longer length (more than 500 miles). Shorter trips

decrease efficiency by increasing the percentage

of fuel used for taxiing, idling, and takeoff and

landing, activities whose fuel use is independent

of travel distance; preventing the use of larger,

1 ~ M M. . Min[~ and A,D. ~{yas, ~-orc<as[ (>! ~~cln.vl)or[(i[l(in L’ncrgb L)cmlind TArou~/] !ht’ Yew 2010, ANL ESD-9 (Arg(mne, IL: Arg(mnc

Na[itmal Lah)ratt)ry, revised April 1991).

I 45 ]bid.

1 w Ibid.
Chapter 2 Where We Are, Where We’re Going 163

I

Advanced engine types. The current-generation engine penetrating the fleet today IS the high-bypass

turbofan, with heat-resistant materials that allow high turbine relet temperatures and new compressors that

allow higher pressure. Ducted ultrahigh-bypass (UHB) turbofans yield efficiency Improvements of 10 to 20

percent Propfan engines deliver an additional 10 percent Improvement over UHB turbofans

Lightweight composite materials. With the exception of a few new business jets, commercial aircraft

use new composite materials sparingly Extensive use of these materials can reduce airframe weight up to

30 percent without sacrificing structural strength

Advanced aerodynamics. This involves optimization of airflow using a combination of computer-designed changes in wing shapes, ultrasmooth surfaces, and “active” flow control concepts that suck air into

the wings Other concepts use variable wing shapes and new fuselage designs

I SOURCE D L Greene, “Energy Efflclency Improvement of Commercial Aircraft Ar?nua/Review of fnergyand (he Enwronmen( VOI

I 17 1992 pp 537-573

more efficient aircraft; and generally preventing

the attainment of high load factors because high

trip frequency is necessary to compete successfully with other modes. ’ 47

Freight Transport

The production and consumption of goods determines the demand for freight transport services,

and indirectly the energy needs of the freight

transport system. Although it is very difficult to

forecast production and consumption, most analysts predict relatively slow growth for basic commodities. For example, coal production, which accounts for the bulk of both train and barge

movements, is projected to grow at only 1.3 percent per year. On the other hand, higher-valueadded goods, such as construction materials and

processed foods, are expected to grow more rapidly—l.5 to 4 percent per year (table 2-5), A separate analysis predicted little or no growth for basic

materials production in the United States through

the year 2000.48

These projected trends—slow growth in commodities, more rapid growth in higher-value-added goods-suggest that in the future, as in the past.

demand for train and barge freight movements

will grow slowly, whereas demand for truck and

air freight movements will grow more rapidly.

However, even with extremely rapid growth of 10

percent per year for airfreight, the energy required

for air freight movements will still be a fraction of

that required by trucks. Trucks will be the dominant freight transport energy consumer in the

next 20 years.

Commercial trucking

In 1989, trucks accounted for 29 percent of freight

movements (measured in ton-miles) and used 83

percent of the energy expended for these freight

shipments (table 2-2). Although the former percentage is low by European standards, the large

U.S. land mass and extensive long-distance shipment of raw materials (coal, iron ore, grains) by

unit trains and barges signify that truck transport

actually competes very well in the interstate

freight arena. Trucking dominates local distribution, of course.

The reasons for this competitiveness include

the dispersed and shifting location of many products that require long-distance shipping (e. g.,
64 I Saving Energy in U.S. Transportation

Commoditiesa Goods b

Coal production 1 3 Construction materials 3-4

Crude 011 production - 1 0 Appliances 2

Oil products consumption 1 0 Processed foods

Agriculture production 1 8 Fruits and vegetables 2

Chemical production 3 1 Bakery items 15-2

Mining production -01 Candy 2-35

a For 1990 to 2010 Coal and 011 are [n E3tu per year Agriculture chemicals and mmmg are m constant dollars U S Department

of Energy, Energy Information Admlmstrahon Annual Energy Out/ook 7993, DOE ‘E IA-0383(93) (Washington DC January

1993), p 81, U S Department of Energy, Energy information Admlnlslrallon Energy Consurnp[Ion and Conserva(/on F’o(ent/a/ Suppormg Arra/ys/s for (he Nahona/ Energy S(ra(egy SRINES/90-02 (Washington DC December 1990) p 126

b For 1993 [0 1997.9[] u S Department of Commerc:e International Trade Adrnlnlstratlon U S Mu.S(f/a/ Olftlook 7993 (Washington DC 1993), /arlous pages

wood), the dispersed locations to which the products (farm products) are shipped, and established

truck-oriented distribution systems (petroleum

products, processed foods). Trucking also benefits from an infrastructure built largely with

money collected from automobile fuel taxes; although trucks pay fuel and use taxes, these taxes

do not cover their proportional share of infrastructure costs.149 Nevertheless, there is room for future shifts in freight modes, stemming from competition with more efficient rail operations that

integrate with local trucking systems or from

changes in the basic economics of trucking operations (higher fuel prices, higher road taxes to account for actual infrastructure maintenance costs).

On the other hand, continued shifts in the U.S.

economy toward service industries and highervalue-added products, with more focus on just-intime distribution systems, may favor the flexibility of trucking over other freight transport modes

and add to its share of overall freight shipment.

However, at the same time these shifts in the economy may cut down the total volume of freight

shipment (light engineering is less freight intensive than steel and auto manufacturing, and services are generally less freight intensive than

manufacturing).

Generally, future growth in truck transport levels is expected to follow trends in economic activity, and forecasts attempt to match estimates of

truck ton-miles carried to estimates of the growth

of specific portions of the U.S. economy. If the

U.S. economy continues its shift toward less

heavy manufacturing and more services, with resulting overall freight volumes growing more

slowly than the rate of GNP growth, trucking volumes may still keep pace with GNP, at the expense

of other modes.

The overall energy efficiency of truck shipping

depends heavily on factor-s besides simply the

technical efficiency of the vehicles. These include

load factors (including the incidence of empty

backhauls); driver behavior; road congestion;

changing speed limits, especially on rural interstate; and shifting truck mixes, including use of

tandems.

Freight truck fuel efficiency, as measured in

miles per gallon. has improved only gradually

during the past few decades: at an annual rate of

0.4 percent per year for single-unit trucks and 0.7

percent per year for combination trucks. Furthermore, efficiency growth stagnated during the

1980s—for the period 1982-90. single-unit truck
efficiency grew at only 0.3 percent per year, and

heavy truck efficiency at 0.5 percent per year.150 

As discussed above, these aggregate efficiency indicators reflect a number of factors, including

shifts in average truck size, changes in types of

freight moved, and increased speed limits.

The range of factors both hindering and promoting freight truck fuel efficiency, discussed earlier, will likely continue to yield slow improvement. Commercially available technologies, such

as aerodynamic improvements and electronic engine controls, will gradually increase their market

penetration. Improved operations, aided by better

communications between trucks and their headquarters, could increase load factors and allow

more efficient routing. On the other hand, as long

as fuel prices are low, trucks will likely find time

savings from higher speeds out weighing the energy penalty; average highway speeds may continue to climb. Also, some projections of increases in urban congestion have been startling; if

these projections are correct. future congestion

could have a substantial negative impact on efficiency. 151

It is important to note that although truck fuel

efficiency is expected to improve quite slowly, a

number of technological and operational improvements are available that could yield dramatic improvements in efficiency (see boxes 2-D and

2-E). The combined effects of some of these options can be estimated through the performance of

trucks that use these technologies. Several

manufacturers have used long-distance demonstration runs to both test and demonstrate new energy-efficient technologies. These demonstration

runs combine improved technologies, highly

Chapter 2 Where We Are, Where We’re

trained drivers, and optimal running

Going 165

conditions

(such as maintaining 55 mph). The results, summarized in table 2-6, show that commercially

available trucks obtained energy efficiency 50 to

70 percent above that of the current fleet, while

prototype technologies achieved efficiencies over

twice that of the current fleet. These results must

be applied with caution; they do not measure what

could be obtained from technological improvements alone. Nevertheless. they do provide a useful upper bound for the savings potential. If all

heavy trucks were able to achieve the level of energy efficiency obtained from these tests of the

best commercially available technologies, energy

use would drop by about 0.9 quads. or 15 percent

of total freight transport energy use.152 Achieving

the energy-efficiency level of the prototype truck

would be quite difficult on today roads, as it

makes use of spoilers with very little ground clearance.

1 Alternative Forecasts

This section presents and discusses the forecasts

of the Energy Information Administration (EIA)

for the period 1990-2010, from its “’ 1993 Annual

Energy Outlook, ”153 as well as alternative forecasts from other organizations when they present

significantly different projections of energy consumption or other variables affecting c(msump-

(ion.

The 1993 Annual Energy Outlook (AEO93)

examines seven scenarios of the future: a baseline

scenario, two scenarios examining the effects of

higher and lower oil prices ($38 and $18 per barrel, respectively, in 2010 versus the baseline of

$29 per barrel (bbl)—all in 1991 dollars), two
66 I Saving Energy in U.S. Transportation

Aerodynamics. Modifying the shape of the truck and trailer can yield significant reductions in energy

use by reducing air resistance. The primary aerodynamic improvement used on heavy trucks today is the

cab-mounted air deflector, which began to be installed in the 1970s. Since then, a number of improved aerodynamic devices have been used, including various devices to seal the space between the truck and the

trailer, front air dams, and improved rooftop fairings. The simpler devices can often be retrofit to existing

trucks and, according to one analysis, offer rapid (less than 2-year) paybacks. ’ Aerodynamic improvements to trailers include side skirts to minimize turbulence underneath the trailer and rear “boattails” to

smooth airflow behind the trailer The energy savings of these devices are difficult to measure, since airflow

IS difficult to model accurately and field tests are complicated by the need to measure small effects while

controlling for confounding factors such as wind speed, temperature, and driver behavior, Aerodynamic

Improvements to tractor-trailers are also Iimited by the need to connect quickly and simply to trailers of different designs and sizes, to tolerate road surface uncertainties, and to meet size regulations,

Improved tires. Radial tires have largely replaced bias-ply tires, except for special applications such as

off-road use (bias-ply tires have stronger sidewalls and are thus more resistant to puncture). By one estimate, replacing all 18 bias-ply tires on a full-size tractor-trailer with radials results in a 10 percent reduction in

fuel use in miles per gallon 2 A more recent tire innovation is “low-profile” radial tires, which weigh less than

standard radials and thereby save energy, Just now becoming commercially available are “low rolling resistance” tires, which use new compounds and designs to reduce rolling resistance. These new tires are

claimed to offer a potential energy savings of 4 percent relative to low-profile tires3 and 75 percent relative

to conventional radials 4 Finally, fuel savings can be achieved by tailoring tires to specific types of service,

powertrains, and roads, including the use of smaller-diameter tires for low-density cargo

(continued)

1 H Sachs et al , Heavy Truck Fue/Economy (Washington, DC American Council for an Energy -Efficient Economy, January 1992),

p 16

2 Brldgestone Tire Co., Gude (o Lsrrge Truck Fuel Economy for the 90S (Nashwlle, TN 1992), p 7

3 “Tomorrow’s Tire Today, ” F/eet Owner, September 1991, P 4f3

4 Kenneth Farber, represenhng Mlchelm Personal Transportation Vehicle Workshop, presentatlonto White House Conference on

Global Climate Change, Washington, DC, JUIY 1,1993 Current market share of Iowrolling resistance radlalswassaidto be5percent

scenarios examining the effects of higher or lower

economic growth rates (2.4 and 1.6 percent per

year, respectively, versus the baseline of 2.0 percent per year), and two scenarios examining the

effects of high or low domestic gas and oil recovery (40.2 versus 31.9 quads recovered, respectively, compared with 33.8 quads in the baseline scenario). 154 None of the scenarios is policy-driven

in the sense that all assume that little change will

occur in government policy to affect energy supply and demand. That is, the scenarios assume no

major new conservation initiatives, such as more

stringent fuel economy standards or tax incentives

for purchase of fuel-efficient autos, and no important changes in access to energy supplies. (A modest exception is assumed passage of licensing reform legislation for new nuclear reactors in the

high-economic-growth case.)

154 HI Oh and I(JW ~ecovew rates are based on the pri)babi]ity distribution of technically recoverable oi] and gas reSerVe$ in the United States

e

as estimated by the U.S. Geological Survey. The baseline case is the median of the distribution, whereas the high and low cases are based on

the 5th and 95th percentiles, respectively.
—

Chapter 2 Where We Are, Where We’re Going 167

and of very wide single tires to replace dual tires. However truck tires, unlike automobile tires are often recapped when worn low-profile and low rolling resistance technologies which cannot be Incorporated into

recapped tires will largely be limited to sales of new tires

Improved transmissions. Electronic transmission controls measure vehicle and engine speed and other operating conditions allowing the transmission to optimize gear selection and timing thus keeping the

engine closer to optimal conditions for either fuel economy or power than is possible with hydraulic controls

SOURCE M M Mlr]lz arKj A D Vyas Forec, ast of lrar~sportztlon Fnerqy Denlancj Tl]rougt~ ttIe Ye,ir 2010 Argonne hatlon:~l ~ :Ih(>r:i

tory Reporl ANL F SD-9 revlswl April 1991

‘R Kamo Adlabatc Diesel-Englrw Tm:hnology(n Future Transportation ff’~rgy vOI 12 NO 10 11 1987 pD 1073 1080 cItPd

(n D L Grecr I(I et :il Tr.ins[)ortall )n Erif:rgv fo the Year 2020 A Look Alm?d Y(Jar 2020 Transportation Rese, ircPi BoardSpec I,i I

Report 220 (Wastllnqton DC NaI(J)ol Acad(r-)y Pres:, 1 %8J

ideas about oil prices and economic growth. First,

the scenario assumes that a combination of plentiful oil supply, gradually increasing world demand, and Saudi restraint will maintain prices in

the $20/bbl range for a few years and then gradually push prices upward, to $29/bbl ( 1991 dollar-s)

by 2010, with a gradual increase in gasoline retail

costs. Second, it assumes that slower growth in

the U.S. labor force for the next few decades (a

2.1 percent annually from 1970 to 1 990) will restrain the growth in real output of goods and services, but that the U.S. economy will remain suffi -

ciently competitive in world markets to keep

growing at the moderate rate of 2.0 percent per

year. The alternative price scenarios reflect. on

the low side, a combination of aggressive conservation, significant competition among Organization of Petroleum Exporting Countries
68 I Saving Energy in U.S. Transportation

Speed. Several studies have examined the effects of higher speed on energy consumption One field

test found a fuel efficiency penalty of 22 percent from increasing speeds from 55 to 65 mph.1 Other costs

associated with increased speed were reported as well, including a 10 percent decrease in miles to engine

overhaul These costs, however, must be traded off against time savings For a 1,000-mile trip, traveling 55

instead of 65 mph in a new tractor-trailer will save 278 gallons of fuel but will take an extra 28 hours At $1 25

per gallon the fuel savings are equivalent to a time cost of $12.40 per hour If driver salaries or the time value

of the cargo exceed this, then it may be financially prudent to drive 65 mph 2

Idling. Truck drivers often idle their engines for long periods—to supply heat or air conditioning for the

cab, to keep fuel heated and free-flowing, to avoid starting difficulties, and because starting IS thought to be

hard on the engine Fuel consumption at idle varies, but a typical rate IS O 5 gallons per hour.3 In addition

there are other detrimental side effects of idling, including oil degradation and Increased engine wear due to

water condensation.4 The technical alternatives to idling include using auxiliary cab heaters and air conditioners, fueled by diesel or electricity, and fuel and engine block heaters, which are also available at low

cost 5 Concerns over starting are certainly valid, however, if batteries are in good condition a truck should

have no difficulty starting Claims that starting IS hard on the engine are unproven and have no apparent

engineering basis Unfortunately there are no reliable estimates of total fuel consumed by excess Idling, so

savings potential is unknown

Routing and operations. Advanced communication and computer technologies have already improved truck operations, and further Improvements are Iikely Some truck fleet operators are using commercially available software packages to determine optimal Ioading and routing.6 A few large fleets are using

onboard computers and/or satellite communications to track fleets and provide up-to-date information to

drivers. 7 As the costs of such systems decline and customers increasingly require up-to-date information

(continued)

I American Trucking Associahons, The Mamtenanc:e Council 55 vs 65 An Equ{pment Operating Costs Comparison (Alexandra

VA 1987), p 7

Z ASSUrnlng6 44 mpg at 55 mph and 546 mpg at 65 mph as found by [bid Extend[ng the analySISto Include effects on en91neIlfe

has httleeffect on the results Many drwers are paid by the mtle and not by the hour, m these cases Ihetlme penalty for slower speeds

IS paid by the driver (who must work longer hours for the same pay) and not by the owner

3 “Electronic Dlesels and Other Ways to Improve Fuel Economy, Cornrnerc{a/ Carrier Journal, April 1993, p 96

A Argonne National La~ratory, “Don t Idle Your Profits Away’ october f 986. P 3

5 Ibid

6 Abacus Technology Corp , “Rail vs Truck Fuel Efflclency, ’ report for the Federal Railroad Admlnlstratlor] April 1991 p 2-12

7 R Schneldermann “Tracking Trucks by Satelllte “ High Technology EIusmess, May 1989 p 24

.....-.. 1

(OPEC) members to expand production capacity, supply. The alternative-economic-growth scenarand high non-OPEC production, perhaps because ios reflect differing assumptions about the rate of

of a revival of production capacity in the former labor force growth and productivity: 1.2 percent

Soviet Union.

155 On the high side, the alternative annual growth in the labor force and 1.2 percent

price scenarios reflect more global economic annual productivity growth (versus a baseline of 1

growth and less conservation than expected percent product iv it y growth) for the high econom-

(boosting world oil demand), coupled with lower ic growth scenario, and 0.8 percent labor force

I SS Given [he Continuing ~)lltlca] turnlol] in the ctmfcderatl(~n of Independent SI:it~s (Cl S ), the DR ] ft~l~~’:i~t c~~>~ts CIS productl(m lo

be significantly delayed by negotiations and startup problems.
Chapter 2 Where We Are, Where We’re Going 169

on the status and Iocation of their goods, these systems will become more prevalent The energy savings

will come from Improved routing reduced empty or partially filled truckloads due to better Information on

availability of loads and trucks, and more efficient operations at transfer points

Reduced empty backhauls. Although the data are uncertain, about 10 percent of Iong-distance truckmiles are empty 8 Reasons for empty backhauls Include equipment limitations (e g , an automobile carrier

cannot carry other cargo) and natural traffic Imbalances (e g , urban areas consume more than they produce) Regulatory restrictions once prohibited private companies from carrying cargo for others, however,

many of these restrictions were removed by the Motor Carrier Act of 1980 It may be possible for Improved

communication and information tools to allow for better matching of loads and trucks, thereby further reducing empty backhauls

Increased size and weight. Allowable truck size and weight are controlled by both State and Federal

law The Surface Transportation Assistance Act (1 982) prohibits States from setting a maximum gross

weight of less than 80,000 pounds for travel on or near interstate highways. In addition, States are required

to allow trailers 48 feet long, or double trailers 28 feet long and 102 inches wide The Intermodal Surface

Transportation Efficiency Act of 1991 prohibits States that do not already do so from allowing longer trucks

on or near Interstate highways Currently some but not all States allow longer trucks, however, the variations

in State rules make it difficult for longer trucks to operate on Interstate long-haul routes

SOURCE Off Ice of Technology Assessment 1994

8 Est Irnale by OTA staff based on various sources

growth and 0.8 percent productivity growth for

the low-economic-growth case. The gas and oil

supply scenarios have little effect on the rate of

economic growth or energy use from 1990to2010

compared with the base case.156 

Other forecasts predict moderate growth in the

economy and world oil prices similar to the

AEO93 baseline scenario. The annual rate of

change in GDP for the Gas Research Institute

Baseline Projection 1993 (GRI93)157 is identical

to the AEO93 (2 percent) whereas the DRI/

-1

McGraw Hill Spring/Summer Energy Forecast

(DRI) 158 assumes a 2.2 percent GDP growth rate.

The Argonne National Laboratory’s Transportation Energy and Emissions Modeling System

(TEEMS)159 uses the DRI macroeconomic submodel for its forecast, so assumptions are similar. 160 

AEO93 projects moderate but steady growth in

transportation energy use across all scenarios:

baseline growth is 1.26 percent a year, with a

range of 0.9 to 1.6 percent annually for the other

I $6 HOW,e\er [here, $ a ] o ~,rcen[ increase in inlPJ~ed Pctr{l]eunl ( 1.26 million barrels a day, mmbd) in the IOW ();] and gas r~c~)vW scenario

and an I I percent dccr~ti~e m Impmed pcw)leum ( 1.35 mmbd) in the high oil and gas recovev scenario. Total consumptwn of energy differs

by 0.5 quadrlllitm Biu (quads) bww ecn the high iind low rec(n ery scenarios and the reference case, or less than 0.5 percent of total c(msumpti(m.

I <l p D H()][k.ru et ~1, BfiYcIlrle ProJccllon” DOIa Book: GRI Baseline Projection oj’U.S. Energy Supply and Denland 102010, vol. 1 (wash-

.

Ingt(m, DC. Gas lle~earch Ins[ltute, 1993).

I $8 DRI McGraw .HII], fi”ncrx) ReI (CM ( Le~tngt(m, MA” spring/sunlmer 1993).

170 Mlnt~ and k’] as, op. c](., ft}(~mtm 144.

’60 I bid., pp. 8-9.
70 I Saving Energy in U.S. Transportation

Fuel economy

Truck Gross weight (Ibs.) Mpg Percent over existing fleet

Existing fleet 33,000 and over 5 3 —

Kenworth T600A 72,400 8 0 51

Peterbilt 377A/E 76700 9 1 72

Kenworth prototype 72050 114 115

SOURCES Exlst[ng fleet average from S C Davis and M D Morris, Transpor@?/on Ene(gy Data Book, ed 12,

ORNL-671 O (Oak Ridge TN Oak Ridge Natlcmal Laboratory, March 1992), p 3-46 Truck efftclencles based

on cross-counrty demonstration runs using trained drivers See J McNamara, “Kenworth Road Test Raises

Fuel Economy Tarqet, ” Transport TOPICS , Dec 10, 1990, p 12, and T Moore, “Peterb[lt Introduces Aero Conventional, ” F/ee/ O-wrier November 1991 p 10

scenarios. Over the 20-year forecast period, this

means that transportation energy use will grow

from the 1990 level of 22.50 quads. slightly more

than 10.5 million barrels per day (mmbd), to 26,86

to 31 quads, about 12.9 to 14.9 mmbd (a 19.0 to

37.8 percent increase) by 2010. The baseline2010

figures are 28.93 quads ( 13.9 mmbd) total, a 28.5

percent increase (see figure 2-4161).

Quadrillion BTU

30

25

20

15

10

5

0

0 DRI It AEO93

+ GR I x Historical

“ TEEMS

1970 1975 1980 1985 1990 1995 2000 2005 2010

SOURCE Off Ice of Technology Assessment b,lsed on Energy lntormahon Adminlstratlon historical data and various forecasts

DRI forecasts growth in energy use almost

identical to the AEO93 baseline case (i.e., 1.2 percent per year to 28.22 quads, or 13.3 mmbd, in

20 10-or an increase of 27 percent). However, its

components (types of fuels, vehicle-miles traveled, and fuel efficiency) are at different levels of

growth. DRI forecasts a higher annual total energy

growth rate in the second 10 years than AEO93

( 1.30 versus 1.09 percent) despite a decrease in the

growth rate of highway motor fuel use. AEO93

forecasts a higher energy growth rate than DRI in

the first 10 years ( 1.35 versus 1.18 percent) with a

similar decline in highway fuel use. GDP and total

vmt projections are similar in the two forecasts.

with much of the difference coming from

AEO93’s more optimistic forecasts of fuel efficiencies.

GRI forecasts a low growth rate in energy use at

0.68 percent a year. The total transportation sector

energy use in 2010 is 25.46 quads ( 11.86 mmbd),

a 14.5 percent increase from 1990 and 12 percent

less than the AEO93 forecast. Much of this difference comes from a projected decrease in motor

gasoline consumption over the next 20 years despite a robust growth in motor vehicle vmt. Assumed fuel efficiency ratings are higher not only

for passenger cars, but also for light-duty trucks,

whose use all models project will continue to

grow at a faster rate than passenger car use, with

lower fuel efficiency gains.
TEEMS forecasts a total energy annual growth

rate of less than 1 percent, with a sharp decrease in

the second decade of the projection (1.15 to 0.67

percent). Total transportation energy use increases

from 21.86 to 26.19 quads (1 2.2 mmbd), an increase of slightly less than 20 percent from 1990

and 9.5 percent lower than AEO93’s 2010 total.

Part of this 9.5 percent difference can be explained

by EIA’s higher 1990 estimate of energy consumed by heavy-duty trucks. Another important

reason is a lower expected growth rate in air transportation for the TEEMS model (1 .05 percent)

than for the AEO93 model (1.9 percent).

In the AEO93 forecast, motor gasoline remains

the dominant fuel, but its use increases far more

slowly than diesel fuel, predominantly for freight

trucks, and jet fuel for aircraft. In 1990, motor gasoline, diesel fuel, and jet fuel made up 91 percent

of transportation energy. The projected baseline

growth for transport use of these fuels from 1990

to 2010 is 0.8, 1.7, and 1.9 percent per year, respectively, so that diesel share grows from 17 to

18.7 percent, a gain of 1.59 quad (0.74 mmbd). Jet

fuel grows from 14 to 15.8 percent, a gain of 1.44

quad (0.67 mmbd), whereas gasoline’s share decreases from 60.3 to 55 percent, although it gains

2.33 quads ( 1.08 mmbd). These differences in

growth occur primarily because AEO93 foresees a

decrease in the annual rate of vmt growth for lightduty highway vehicles, a modest but steady increase in fuel efficiency for these vehicles, a sharp

increase in the annual growth rate for air passenger

travel and freight shipments, and brisk growth in

truck freight transport.

Vehicle-Miles Traveled and Fuel Efficiency

Due to light-duty vehicles’ large share of energy

use in the transportation sector, forecasting vmt is

an important component in forecasting the total

Chapter 2 Where We Are, Where We’re Going 171

Billion vehicle-miles traveled

4,000

3,000

2,000

1,000

0

* DRI ~– TEEMS

+ GRI + AEO93

1990 1995 2000 2005 2010

SOURCE Office of Technology Assessment, based on American Automobile Manufacturers’ Assoclatlon data and various forecasts

sectoral energy use in 2010. In 1990, light-duty

vehicles made up about 34 percent of total U.S.

petroleum consumption and 14 percent of the entire energy consumed by the United States.162 

In the AEO93 baseline scenario, travel for

light-duty highway vehicles grows at a much

slower pace than in the past, about 1.7 percent per

year (see figure 2-5), whereas the fuel efficiency

of the light-duty fleet163 grows at about 0.7 percent annually, compensating for less than half of

the growth in travel demand (see figure 2-6). This

yields a 1 percent annual growth in energy consumption over the next 20 years compared with

1.36 percent over the last 20 years. These parameters do not change much in the other scenarios: for

162 M()~()r Vehlc]c Mmufacturers Ass~)ciatifm, Facls and Figures ’92 (Detroit, Ml 1‘2). P. 82.

163 ~1~ ~,a]ue is an ~,[,n,ate~ ay,erage ~)n.{he-roa~ ~~clency ra[lng for a]] cars and ] ighl tmcks. me EpA rating ft~r projected mpg for new

cars IS ad]us[ed according t{) assumptions (ct)efficients) in each model for projected changes in fuel prices (e.g., AE093 estimates that a 10

pcrcen[ Increase In fuel prices yields a 6 percent improvement in fuel efficiency over time due U) manufacturer product changes and c(msumer

rcsp)nsc ) tind Incffic iencles such as mcreascd congestion.
72 I Saving Energy in U.S. Transportation

Miles per gallon (historical: passenger autos only)

30 ~

I I

I

20

I

10Y

I r I

I 1 ~ GRI % Historical I

I

I *- TEEMS I

I 0! I 1 1970 1975 1980 1985 1990 1995 2000 2005 2010

SOURCE Off Ice of Technology Assessment based on Oak f;ldge Nat Ional Laboratory hlslorlcal data and various forecasfs

example, in the high economic growth scenario,

light-duty travel grows at a pace of only 1.9 percent per year, still well below historic levels. The

largest variation in fuel use occurs with low oil

prices, with a 1.8 percent annual growth in travel

and only a 0.5 percent annual compensating increase in fleet fuel efficiency; in this scenario,

transportation use of gasoline grows at 1.3 percent

a year, leading to an increase of 1.82 mmbd by

2010, a 50 percent gain from the baseline case.

Several of the alternative forecasts looked at

both total and personal vehicle vmt (see figure

2-7). The forecasts rely on economic choice calculations based on fuel efficiency, real costs per

mile, and real disposable income. Predictive variables come from either fleet-based or driver-based

characteristics.

DRI

The DRI forecast uses a fleet-based model to calculate vmt. The mode] uses projected vehicle purchases and scrappage-rate assumptions, based on

projected real costs per mile and real disposable

income, to obtain a vehicle mix for the light-duty

fleet in nine census-defined regions of the United

States. The DRI total highway vmt forecast is almost identical to AEO93. The average annual vmt

growth rate is 1.7 percent, but the total is higher

due to a difference in definition of light-duty vehicles. The AEO93 model forecasts a decrease in

the annual light-duty vmt growth rate in the second decade of the forecast, presumably due to a

drop in the U.S. economy’s growth rate (an important predictor of vmt growth in all of the models)

and increased oil prices. The DRI model forecasts

an increased vmt growth (1.84 percent) in the

years 2000-10 despite a forecasted decrease in

economic growth. Projected fuel efficiency increases by 0.9 percent a year with a slight decrease

in the second decade. This results in a slightly

lower motor fuel consumption in 2010 than projected in the AEO93 forecast.

Billion vehicle-miles traveled

4’000~

—

3,000

2,000

1,000

0,E

—

D DRI tt AE093

~ GRI \ Hlstorlcal

* TEEM S

I I

1970 1975 1980 1985 1990 1995 2000 2005 2010

SOURCE Off Ice of Technology Assessment based on American Automobile Manufacturers Assoc[atlon historical data and various forecasts
Chapter 2 Where We Are, Where We’re Going 173

Gas Research Institute

The GRI forecast uses the DRI base vmt model

and adjusts some of the coefficients to reflect differing assumptions (mostly in the area of fuel efficiency and natural gas-fueled vehicle share). GRI

forecasts higher fuel efficiency and one of the

highest increases in total highway vmt of any of

the models. The total highway vmt is expected to

grow an average of 2.28 percent per year over the

next 20 years to 3,288 billion vmt. Total fleet mix

is expected to be 30 percent light-duty trucks, accounting for 35 percent of the total vmt in 2010.

The vmt for light-duty vehicles is expected to

grow at a slightly lower rate of 2.12 percent annually. Most of the excess increase in vmt (compared

with other models) is offset by the higher projected increase in light duty vehicle fuel efficiency.

which is expected to grow by 1.79 percent annually, from 19.2 to 27.4 mpg, or slightly less than a

43 percent increase. Given the physical limits of

efficiency improvements for present-day automobile engine configurations and even conservative

estimates of increased congestion, most of this increase must come from changes in consumer preference. With the moderate consumer reaction to

fuel price increases in the last 20 years, the trend

toward a higher percentage of older vehicles in the

fleet mix, and projected moderate fuel prices,164 

it would appear difficult for the vehicle fleet to

achieve this great an increase in fuel efficiency

over such a short time frame. GRI projects transportation use of natural gas to increase at 3.6 percent a year, from 0.7 to 1.4 quads.165 This represents a slightly more than 28 percent increase in

natural gas vehicle use to almost 0.5 quad between

1990 and 2010. The AEO93 projects an increase

in vehicle gas use from negligible to 0.15 quad

during the same period.

Transportation Energy and Emissions

Modeling System

TEEMS combines fleet-based and driver-based

models. It uses changes in disaggregate household vmt data (driver-base) to project fleet mix by

vehicle usage and scrappage rates (fleetbase) similar to the DRI model. Economic and fuel price

variables are based on the DRI macromodel of the

U.S. economy. TEEMS projects the lowest annual

growth in total highway vmt of the forecasts examined, 1.55 percent. The model forecasts a lower

annual growth rate in the second 10 years than in

the first 10, in conjunction with a decrease in the

annual growth rate of GDP from 2.6 to 1.93 percent. The 20- year annual growth rate of light-duty

vmt is also the lowest of models at 1.49 percent,

or 20 percent less than the AEO93 model growth

rate. The model predicts that most of the fuel efficiency (and emissions) gains of highway vehicles

will be offset by increased congestion and the

large number of older, less efficient vehicles that

remain on the road. Fuel efficiency increases at an

annual rate of only 0.56 percent in the first decade

and 1.43 percent in the second166 for a 20-year

annual rate of slightly less than 1 percent, from

19.2 to 23.4 mpg.

Air Travel

AEO93 projects that travel for air passengers and

freight combined will grow much faster than any

other mode, and much faster than the growth rate

of the economy—at 3.9 percent per year for the

baseline, and as much as 4.8 percent annually for
74 I Saving Energy in U.S. Transportation

the high-economic-growth case. Aircraft efficiency will also increase at a brisk pace—1.5 percent

per year (in terms of Btu per passenger) in all of

the scenarios—but not nearly fast enough to offset

the growth in travel demand.

Transportation Energy and Emissions

Modeling System

The TEEMS model projects a similar annual rate

of increase in revenue passenger miles—3.37 percent, but greater aircraft efficiencies than the

AEO93 projection, for an overall increase in jet

fuel demand of 1.05 percent per year or about a 23

percent increase over the 20 years.

DRI

DRI projects the highest annual rate of increase in

revenue passenger-miles for commercial jets167

(3.82 percent per year) and lower efficiency gains

(1. 15 percent per year), for an overall increase in

jet fuel demand of 1.42 percent a year or about a

32.5 percent increase over the 20-year period.168 

Rapid fuel efficiency gains are likely through

lighter composite materials, advanced electronic

controls to optimize fuel burn under given flight

conditions, and an increase in the number of seats

per aircraft.169 However, even at a rapid rate of

growth, air transport will make up a relatively

small portion of the transportation sector’s energy

use.

Discussion and Analysis

There is a remarkable unanimity among the various models that highway vmt will increase at a

much lower rate during the period 1990-2010 than

during the previous decades; all models use vmt

rates of less than 2 percent per year. As noted, the

most important factor behind these projections is

the forecasted decline in growth of driving-age

adults as the baby boom passes. This factor alone

represents more than half of the decline in growth

rate in the EIA forecast and presumably is equally

critical in the alternative forecasts. There is less

unanimity about efficiency increases, although

the majority of the forecasts are relatively optimistic about fuel economy, with the GRI forecast

being remarkably optimistic. Similarly, all forecasts project growth in air travel at levels considerably lower than the recent 6 to 7 percent annual

rate, with EIA projecting 4.8 percent for the higheconomic-growth scenario, and less than 4 percent for the baseline scenario. All of these factors

tend to push passenger transportation energy

consumption growth in the same direction, to lower-than-historic levels.

OTA considers the EIA projection of transportation energy growth—a baseline increase of

about 29 percent over 1990 levels by 2010-as

likely to be an underestimate, if there are no

changes in energy policy. In particular, OTA is

skeptical that vmt growth will fall below 2 percent

a year for the period and that light-duty fleet fuel

economy will increase as much as EIA projects.

Freight

There have been several efforts to forecast freight

transport energy use. The results of three models

are presented, one of which is a very simple extrapolation of past trends used to pinpoint key

areas of disagreement.

Argonne National Laboratory provides forecasts of energy use through 2010 for both freight

and passenger transport. Results of the Argonne

model show freight transport energy use growing

by 2.3 quads from 1990 to 2010-with 1.8 of

these due to increased consumption by trucks and

0.4 due to trains (table 2-7). This model projects

very rapid (3.3 percent) annual growth in train

1ST Includes freight and passenger demand.

168 DRI a]so starts off with a higher baseline level of jet fuel demand (0.6 quad) than TEEMS.

169 However, there are physical limitations to aircraft size due to current airport configurations. The lack of completely new air~)rts ctm~-

pleted or in the final permitting process in the past 10 years (Stapleton being the exception) will limit the size of aircraft over the next 20 years.
.

Chapter 2 Where We Are, Where We’re Going 175

ton-miles, more than double the historic

( 1970-90) growth rate.170 The model also projects

moderate ( 1 percent) annual average improvements in freight truck intensity--even though historical improvements, as discussed above, were

considerably smaller.

The AEO93 forecast shows a 2.4-quad increase

in freight transport energy use ( 1990-20 10), with

1.5 of this from trucks and 0.6 from marine (table

2-8). (The EIA model, unlike the Argonne model,

includes international movements under “Marine.” ) The increased demand for freight truck

movement is relatively modest in this mode]- 1.9

percent per year, compared with 2.5 percent for

the Argonne model. Other researchers have noted

that EIA’s growth rate for freight truck travel is

surprisingly low, whereas truck efficiency improvement is rapid.171 The EIA analysis also

implies that oil prices have little or no effect on

freight transport energy use. The projected improvement in freight truck energy intensity, for

example, is the same at a 2010 oil price of $18 per

barrel as at $38 per barrel ( 1991 dollars).172 

Change

Mode 1990 2010 (percent per year)

Truck 5 2 5 7 0 7 1 5

Train 0 5 3 0 9 5 3 0

Marine 0 3 4 0 3 8 0 6

Air freight 0 0 5 0 0 6 1 6

Pipeline 0 6 8 0 7 0 0 3

Total 6.84 9.15 1.5

SOURCE Argonne National Laboratory, Forecast of Trans

port~tlon Energy Demand Throughout the Year 2010 A N L

ESD-9 (Argonne IL November 1990 rewsed April 1991) p 3

Mode 1990

Change

2010 (percent per year)

Freight 5 0 6 6 5 7 1 3

Rail 0 4 9 0 5 9 0 9

Marine 1 39 2 0 2 1 9

Pipelines 0 6 8 081 0 9

Total 7.62 9.99 1.0

SOURCE U S Department of Energy Energy lnformaton Adm[mstratlon Annua/ Energy Ouf/ook 1993 DOE EIA-0383(93)

(Washington DC January 1993) p 96

The assumptions and results of the Argonne and

EIA models can be examined by comparing them

with the results of a simple extrapolation of past

trends. As discussed above, it seems likely that

past trends (notably increasing demand for highervalue-added goods, moderate growth in basic

commodity” movements, and continued moderate

penetration of energy-efficient technologies) will

continue. Therefore a simple extrapolation of past

trends is a useful reference case.

The results of such an extrapolation are shown

in table 2-9. This calculation uses historical trends

in demand (ton-miles per year) and energy intensity (Btu per ton-mile) to forecast energy use. For

example, to calculate train energy use in 2010. demand for train movements and train energy intensity in 2010 are calculated first by assuming that

historical (1970-90) rates of change continue in

the future ( 1990-2010). Demand and intensity in

2010 are then multiplied to yield energy use.

This simple extrapolation. in comparison with

the Argonne and EIA models, shows much higher

growth in freight truck energy use—3.4 percent

.-

annually versus 1.5 and 1.3 percent annually, This
Energy use (Quads/yr) Growth

76 I Saving Energy in U.S. Transportation

Percent Quads

Mode 1989 2010 per year (1989-2010)

Truck 4.9 9 8 +3 4 4 9

Rail 0.4 0 3 - 1 2 -01

Water 0 3 0 4 +1 4 0 1

Air 01 0 2 +4 5 0 1

Pipeline 0 3 0 4 +2 1 0 1

Total 5.9 11.1 +3.0 5.1

SOURCE. Off Ice of Technology Assessment, 1994

is due in part to the extrapolation of past trends in One can, however, be reasonably confident about

truck freight energy intensity, which was relative- major trends shown by all three efforts-that truck

ly flat from 1970 to 1990.173 In the absence of ma- energy use will continue to be much higher than

jor technological or policy changes, there is little that of the other modes, and that air freight will

reason to expect past trends to change. continue to be a trivial energy consumer despite

Given the uncertainty both in the historical data the rapid growth in demand for air freight moveand in future economic conditions and oil prices, ments that is forecasted. 174

these forecasts should be interpreted with care.

173 AS dlScuSSed a~)ve, truck energy efl;(,jenc.y (miles per gallon) improved very S]owly In the past ZO years. Data ~m ln~cn.flf~’ (Btu per

ton-mile) are uncertain, but show a similar pattern. In addition to the factors discussed abo~e-such as increased highv :iy speeds—-intensity

was probably influenced by decreases in cargo density, which led to trucks filling up their cargo areas bef(m reaching (heir weight I imils. This

w(mld increase intensity, as measured by Btu per ton-mile, but is not a decrease in et%c iency.

174 A fou~h analy5i5, not discussed here, a]so found that truck energy will continue tt) dominate freight transpwt energy use and that air

freight will c(mtinue to bea small energy user. See Union of C(mcemed Scientists, An~erica’. rEnergy Chmtes (Cambridge, MA: 1992), technical

appendix, p. D- 10.
Is the

U.S. System

Energy-Efficient?

A Comparison

With Europe 3

I

n arguing about the potential for improving U.S. transportation energy efficiency, it is tempting to point to Western Europe as a model. Although average Western European “per

capita” income levels are similar to those in the United

States, the average citizen of a European OECD (Organization for

Economic Cooperation and Development) country uses far less

energy for travel than an average U.S. citizen. In 1990, citizens of

Great Britain, West Germany, France, and the Scandinavian

countries used about 30 to 40 percent as much and the average

Italian citizen about one-fourth as much energy as U.S. citizen s.]

This large disparity may not seem surprising given the similar (although inverted) disparity in energy prices-in 1990, European

gasoline prices averaged about three times those in the United

States, and Italian prices four times as much—but there may be

additional reasons for the energy use differential.

US. POTENTIAL TO MOVE TOWARD EUROPEAN

TRANSPORT ENERGY LEVELS

The large differences between European and U.S. per capita transport ation energy use raise two obvious questions. First, do the differences reflect primarily differences in efficiency; that is, are the

Europeans just doing a better job than Americans are of supplying

the same basic transportation services? In other words, should we

be trying to emulate the European model? Second, to the extent

I 77
78 I Saving

that energy

Energy in U.S. Transportation

use differences reflect differences in

efficiency, would shifts in U.S. energy and transportation policy toward European norms--e.g.,

high taxes on fuels and vehicles, and zoning restrictions designed to maintain high residential

densities—lead to significant reductions in U.S.

energy consumption toward European levels?

These questions are sometimes answered in the

affirmative without any analysis to back them up.

For a number of reasons, the correct answer might

be “no” or “not entirely,” and these reasons must

be thoroughly explored before a definitive answer

is given. As an example, for the first question, the

differences in energy use could represent in part

differences between Europe and the United States

in geography and demography or in the quality

and quantity of transportation services each supplies to its residents. It is well known that levels of

energy consumption in less-developed countries

are well below those of the United States, but the

reasons have everything to do with the level of services and nothing to do with efficiency (the efficiency of systems in less-developed countries is

generally far less than that of the United States).

As for the second question, matching policies may

not yield matching results. The extensive transportation infrastructure of the United States may

create a status quo that limits the shifts in energy

consumption achievable with feasible policies.

Also, some of the differences between the United

States and Europe may be caused less by policy

differences than by differences in history and culture, and so cannot be undone by policy. For example, most European cities are substantially older than U.S. cities, and built for foot and animal

traffic rather than for automobiles. Their greater

residential density and lower travel requirements

are due at least in part to this history. In fact, some

analysts claim that European transportation is

moving inexorably toward the U.S. model, despite the great differences in policy.

This chapter addresses the questions raised

above, drawing on the work of several researchers

who have examined and compared U.S. and European energy use. In doing so, the differences between U.S. and European energy use today are addressed, and the trends examined; the latter

examination adds a critical dimension to the discussion.

The analysis is preliminary and exploratory,

not definitive. The very critical question of comparative mobility is not addressed. Even though

Europeans use far less energy for travel, do they

still enjoy mobility—measured not in miles or kilometers per year but in the ability to access recreational, social, cultural, and employment opportunities—at levels similar to those enjoyed by

Americans? Although this question is at the core

of a fair energy comparison, any quantitative analysis would be extremely subjective, and adequate

data are lacking. Nor can the relative roles of governmental policies and other influences in shaping

transportation energy use be distinguished clearly,

because of the great complexity of the systems involved and the lack of “controls” in evaluating

the effects of changes in policies.

In this brief examination, comparisons with

various countries are made, because the sources

consulted do not all use the same ones. However,

all comparisons include West Germany, the

United Kingdom, France, and Italy, which together account for a major share of European transportation demand and energy consumption.2

PASSENGER TRANSPORT ENERGY IN

THE U.S. AND EUROPE TODAY

Table 3-1 presents some basic statistics comparing passenger transportation energy use values

and indicators for five European countries and the

United States. As noted above, U.S. per capita

transportation energy consumption is far higher

2 For example, amtmg I I Eurl~pean cxmn[ries-Austria, Belgium, Denmark, Finland, France, West Gcmmy, Italy, the Netherlands, Spain,

SW eden, and the Llnitcd Kin@tm-France, West Germany, Ital}, and the United K ingdom acc(mnted ft~r 78 pcrctmt of passenger veh icle travel

in 1985, :it-xmt 636 bI I II(m Y chicle-mi Ies (NII of a total t)f 819 hil I i(m mi Ics. Source” J. Darmstadter and A. J(mes, ‘‘1%-(~spects for Reduced C02

Enlissi(ms in Aut(m~(~tlJc Transpwt, ” Rm(~urccs for the Future, ENR90- 15, August 1990, table 6.
a l~l~es light trucks used for PerSOWil trawl.

bus. filronment~ Protection 4enq test @UeS or equivalent

C 1~dab

d Incl&s domestic fllghts only, so European values are mlficlal~ 1~

s

CD

u:

is3

SOURCE Lawrence Berkeley Laboratory

=-.s
80 I Saving Energy in U.S. Transportation

than that in European countries-n average,

about three times higher. As demonstrated by the

table, differences in per capita travel account for

the major share of the overall energy differences:

Europeans travel a bit more than half as much (in

distance) as Americans do each year, and this difference accounts for about one-half of the per capita difference in energy use. The remainder of the

energy difference is accounted for by differences

in the relative share of different modes of transportation, load factor, and vehicle efficiency.

Americans travel somewhat more in private autos,

and far more in energy-intensive airplanes, than

do Europeans, who make far greater use of buses

and trains. Mass transit has about a 15 percent

modal share—measured as a percentage of passenger-miles-in Europe versus about 3 percent

in the United States.3 European automobile fleets

are more efficient than the U.S. fleet, partly because Americans purchase large numbers of light

trucks for personal travel, and partly because

American automobiles are larger than their European counterparts. 4 These differences do yield important differences in the energy efficiency of U.S.

and European travel—Americans use about 4,000

Btu/passenger-mile versus about 2,100 Btu/passenger-mile in France, 1,900 in Italy, 2,700 in

Sweden and the United Kingdom, and 3,000 in

West Germany.

One interesting and perhaps surprising conclusion that can be drawn from table 3-1 is that despite the huge disparities in total energy use, European travel is nearly as automobile-dominated as

U.S. travel—in both regions, the great majority of

passenger travel is by automobile. However, statistics for total travel mask somewhat the automobile’s utter dominance in the United States for

trips of a few hundred miles or less, where its share

is in the middle 90s compared with the European

auto share of about 80 percent.

Also, the statistics in table 3-1, which are exclusively in terms of total travel distance, mask

the role of bicycling and walking in European

travel. In urban settings, where the European cities’ high densities place work, services, and recreational activities within close reach of residential areas, and where careful attention has been

paid to nurturing these modes, bicycling and

walking play an important role in total tripmaking. Table 3-2 presents somewhat dated but still

revealing estimates of modal split for the United

States, Canada, and Western Europe, with shares

measured as a percentage of total trips.5 Whereas

bicycling and walking accounted for only 11.4

percent of U.S. urban trips in 1978, these modes

typically accounted for 30 to 50 percent of urban

trips in Western Europe around the same time.

Presumably, many of these trips, if they were being made in U.S. cities, would be longer in distance and would be made by auto.

Further insight can be gained by focusing specifically on auto owners in the United States and

Europe. U.S. and European auto owners are far

3 L. Schippcr and S. Meyers, with R. Howarth and R. Steiner, Energy Efficiency and Human Acriviry: Past Trends, Future Prospects (Cambridge, United Kingdom: Cambridge University Press, 1992).

.l W/lth the ~loba] nlarket in au[onlobiles,” there are few technological differences in automobiles in Europe and the United States; efficiency

differences are due primarily to differences in average size and power, with emissions, safety equipment, and luxury features (power accessories, four-wheel drive) playing a role as well. One exception is the important role of diesel engines in Europe.

5 J. Pucher, ” Urban Travel Behavior as the outcome of Public Policy: The Example of Modal-Split in Western Europe and North America, ”

Journa/ oj’lhe Amer~can Planning A.wc~alion, autumn 1988, table 1. Data on total travel are difficult to obtain and are viewed with suspicion by

s(mw analysts (Lee Schippcr, Lawrcncc Berkeley Laboratory, personal communication).
Chapter 3 ls the U.S. System Energy-Efficient? A Comparison With Europe 181

Public Motorcycle

Country Year Auto transport Bicycle Walking + moped Others—

United States 1978 82.3 3.4 .7 10.7 0.5 2.4

Austria 1983 3 8 5 128 8 5 3 1 2 3 7 5 3

Canada 1980 7 4 0 150 < 110 ->

Denmark 1981 4 2 0 140 2 0 0 2 1 0 3 0

France 1978 4 7 0 110 5 0 3 0 0 6 0 1 0

Great Britain 1978 4 5 0 190 4 0 2 9 0 2 0 1 0

Italy 1981 3 0 6 260 4 4 3 4 ●

Netherlands 1984 4 5 2 4 8 2 9 4 184 1 3 1 0

Sweden 1978 3 6 0 110 100 3 9 0 2 0 2 0

Switzerland 1980 3 8 2 198 9 8 2 9 0 1 3 1 9

West Germany 1978 4 7 6 114 9 6 3 0 3 0 9 11

SOURCE J Pucher Urban Travel Behawor as Ihe Outcome of Publlc POIICV The Examole of Modal -SDllf In Western EuroDe and North Amerk

ca American Planning AssocjaOon Journal autumn 1988

closer to each other than are U.S. and European

citizens in general: European auto owners travel

by auto 60 to 80 percent as much as Americans,6

versus about 48 percent for all citizens.7

If the reasons for the substantial disparities between travel volumes and energy use in the United

States and in Europe were fully understood, one

could better identify policy prescriptions that

might move U.S. transportation toward the European model. Unfortunately, there are too many interrelated variables to construct a precise model

relating transportation outcomes to country

conditions, and logic and qualitative examination

of the data must suffice. For example, it seems

clear that the disparity in gasoline prices must be a

major factor in the different driving propensities

of U.S. and European auto owners, but it is equally clear that other factors play an important role as

well. Among these are differences in the physical

system, for example, the amounts of parking

space and roadway and the speeds possible on

these roads. The United States has two to four

times as much road per capita as Europe; 80 per- 8

cent more parking spaces per 1,000 workers than

Europe: 9

and traffic speeds in major urban areas

that average about 27 mph versus only about 19

mph for major European cities.10 Thus, for urban

driving, European drivers can go only 70 percent

as far as American drivers in the same amount of

time.

The reasons the United States has a more automobile-oriented physical system are complex. In

part, this is due to the following:

■ specific U.S. policy decisions to set up a dedicated gasoline sales tax for road construction

(whereas the higher European taxes are earmarked largely for the general treasury) and to

construct the Interstate Highway System;
82 I Saving Energy in U.S. Transportation

m

■

■

a U.S. tax code that encourages single-family

home ownership and suburban sprawl through

mortgage interest deductions,11 and that defines the provision of free employee parking as

a deductible business expense (more than 80

percent of U.S. work parking is free, a major

subsidy of automobile usel2);

a U.S. approach to zoning that often favors lowdensity development; and

a failure to subsidize mass transit during the

1950s and 1960s, when U.S. transit ridership

fell to less than half its pre-World War II level.

13

As Pucher has pointed out, even the huge subsidies of the 1970s failed to substantially boost

mass transit ridership, at least in part because most

of the capital subsidies went toward building a

few new and very expensive rapid rail systems

that did little to boost nationwide transit growth. 14

Another reason is the U.S. decision to keep

taxes on gasoline very low in comparison with European levels. The availability of inexpensive fuel

has promoted a rapid increase in auto use that has

continually pushed expansion of the highway system, while providing little incentive to use mass

transit and thus little incentive to expand transit

services.

The auto orientation of most American cities

also has quite a bit to do with simple timing:

Many American cities evolved in a twentiethcentury, postautomotive period where a combination of abundant land, a new transport mode, and

cheap fuels all pointed to unique patterns of living

and transport. By contrast, the concentrated urban configuration of many European cities was

firmly locked into place many years--if not centuries---earlier It seems no accident that those

American cities---namely the older ones along the

Eastern seaboard, like Boston, New York, and

Philadelphia-which most closely resemble European cities are also the ones in which public

transportation survives as an enduring tradition. 15

The importance of timing in determining urban

form ought not to be taken as absolute, however.

As Pucher points out, many American cities were

densely developed and massively dependent on

mass transit during the early part of this century,

and then underwent a loss in density and a shift to

auto orientation and suburbanization that accelerated after 1945.16 Further, some European cities

(Rotterdam, Nuremburg, Frankfurt) were extensively rebuilt after World War II, and others have

large sections that were incorporated into their urban areas and built up during the automobile era.

Two prominent differences between the U.S.

and Europe that might affect travel are the marked

differences in residential density characteristic of

U.S. and European cities and the very large U.S.

land mass. Intuitively, a large land mass may be

thought to signal a likelihood of high travel rates;

actually, however, the data for countries of different size seem not to bear this out. 17 On the other

hand, high densities do appear to depress travel

rates, probably because they allow potential destinations-cultural, recreational, employment,

I I It is inlp)flant t{) n{)tc here that the f(~ml of encouragement is less an actual jinw-ing of single-family homes over other forms than the

general lessening of costs for all housing, which then allows personal preferences for single-family housing 10 more easily outweigh cost considerations in h(msing decisions.

12 Pucher, op. c‘II .,footnote 5.

13 Ibid.

14 Ibid.

15 j, Dam)Stadt~r et a] R~SourC~S for [he Future, }fo}+ lndus(rja/ !hcie~ies Use Energy: A Cwnparali\)e AmI/YSiS (Baltinlt)re, Mll: Johns .,

Hopkins University Press, 1977).

16 ~cher, op. Cit., footnote 5.

I T Damls[ad[~r c[ a]., op. Cit., fo(~[no[e” 15.
Chapter 3 Is the U.S. System Energy-Efficient? A Comparison With Europe 183

and so forth-to be within easy reach. 18 Also, as

discussed in chapter 5, high residential densities

are more easily served by public transportation,

and the characteristically low U.S. urban densities

(generally less than 8 per acre, compared to about

20 per acre in Europe19) make dependence on the

auto virtually certain.

Another factor that may influence automobile

use is the relative ease with which driving-age

adults can gain access to a vehicle. The United

States makes it far easier, in both a financial and an

administrative sense, to gain such access. State

governments levy only an average 5 percent tax on

new autos (in 1982), versus from 14 percent (Germany) to 186 percent (Denmark) in Europe, and

U.S. requirements for obtaining driver’s licenses

are minimal compared with the stringent (and expensive in terms of training) requirements

throughout Europe .20

Differences in demographic characteristics between the United States and Europe are also important to differences in travel characteristics. As

discussed in chapter 2, characteristics such as age

distribution, number of women in the workforce,

and so forth are important determinants of U.S.

travel volumes. For example, high participation of

women in the workforce has driven up U.S. passenger travel both by necessitating more worktrips and by giving more women financial access

to automobiles. To the extent that women workforce participation may be higher in the United

States than in Europe, this would contribute to the

disparity in per capita travel distances. Although

this topic is not pursued further here, it deserves a

closer look.

High residential densities of European cities promote walking,

bicycling, and transit use and reduce travel distances

Because of its continuing influx of immigrants,

the United States has a lower proportion of its

population over age 65 than do Western European

countries.21 This difference may explain at least a

small part of the lower European annual personmiles of travel, because the over-65 population

travels less than any other age group. For the

United States, males over 65 take about 2.2 trips

per day versus 3.5 for males ages 20 to 29 and 3.3

trips for males ages 30 to 39.22

Other factors that may contribute to Western

Europe’s lower tripmaking propensity are as follows:

■ its greater degree of urbanization than the

United States (in 1985,92 percent of the United

Kingdom’s population was urban, and most

other Western European countries had more

1~ Ibid, Ne~man and Kmw(mthy, Op. C](.. f(~@lf~te 9.

‘9 Ibid.

20 Pucher, op. c[t., footnote 5. Since data on European rates of Ilcensing have not been obtained, we cannot assert that the differences in

licensing procedures and costs actually reduce these rates.

‘1 U.S. Department (If Transportati(m, h’atlona/ 7hm!pw-lafwn .$waleg~c P/mnln~ SrudJI (Washingt(m, DC: March 1990), ch. 6.

‘z A.E, Pisarski, Tra\’e/ BektiorIssues In the 90’s (Washington, DC’: Federal Highway Adrninistrati(m, Jul} 1992), fig. 27.
84 [ Saving Energy in U.S. Transportation

●

●

than 85 percent of their populations in urban

areas; in contrast, 74 percent of the U.S. population lived in urban areas23);

its tendency to have a larger share of total country population in a single major city;24 and

the tendency of its populations to be less mobile

in their decisions about where to live (many

long-distance personal trips in the United

States are made to visit distant family members). The importance of these factors deserves

further examination.

As might be expected, the pattern of higher automobile orientation in the United States

compared with Europe is not absolute. One anomaly in the pattern is the widespread European practice of awarding company cars to employees.

About one-third of all new cars in West Germany

and Sweden, for example, are company cars, as

are more than half of the new cars in the United

Kingdom.25 Also, commuting costs are tax deductible in many European countries,26 cutting

drastically the real costs of driving. The existence

in Europe of these market incentives in favor of

auto travel may be part of the reason some transportation energy trends in Europe are beginning to

converge with those in the United States.

For intercity travel, U.S. travelers use airplanes

far more than Europeans do, and they use far less

rail. There are a number of reasons for this: deliberate European policies to limit the number of

flights and keep fares high; the more favorable

geographic distribution of major European cities

for rail travel (i.e., they tend to be a few hundred

miles apart—far enough to discourage many drivers but short enough to allow high-speed rail to

compete with air in door-to-door travel time); and

European support for a network of efficient and

high-speed rail systems.

TRENDS IN U.S. AND EUROPEAN

PASSENGER TRANSPORT ENERGY

It is clear from the above discussion that, in many

respects, the current European passenger transportation system is an attractive model for the

United States to emulate if reducing energy intensity is a high-value goal. One potential counterargument to this conclusion is that European mobility may be lower than that in the United States. If

it is, emulating the European model either will fail

to reduce energy use as much as expected, if current levels of mobility are maintained, or will

create an unacceptable decline in the average U.S.

resident mobility and quality of life. This argument is not addressed here, except to note that it

is unwise to assume that the lower level of European travel necessarily translates into a similarly

lower level of European mobility (i.e., access to

social, economic, recreational, and cultural opportunities). Another counterargument is that examining European transportation during one brief

interval misses an important dynamic: Europe is

rapidly becoming more like the United States in

its auto orientation,

27 despite its high gasoline

prices, dense cities, and superb transit, so that

emulating its example will result in few energy

savings. This thesis is examined here.

A comparison of changes in transportation energy use over time in the United States and Western Europe yields results that, at first glance, appear to support the proposition that the U.S. and

European transportation systems are converging.

Despite a lower population growth rate than in the

United States, total European transport energy

23 U.S. Department t~f Transp)rtatl(m. op. cit., f(xm)te 21,

24 Ibid.

2S L. Schipper et al., “Fuel Pnccs, Aut{mlobilc Fuel Ecommly, and Fuel USC for Land Tratcl Preliminary Findings From an lntema(i(mal

Comparistm, ” Transpor/ Po/Ity, vol. 1, N(). 1, 1993.

26 L. Schipper and G. Erichsstm, “T:ixati{m Policies Affecting Automobile” Characteristics and Use in Western Europe, Japan, and the

United States, ” f(wthc(mllng, proceedings of the Asihmlar Workshop (m Sustainable Transp(mtati(m, University of California-Davis, 1993.

~’ See, for example, C. La~e, “Cars and Demographics, “ At(e.Ts, ~~nlvcrsitj of California at Berkeley, fall 1992.
Chapter 3 Is the U.S. System Energy-Efficient? A Comparison With Europe 185

growth over the past few decades has been much

faster than U.S. growth: from 1973 to 1988, U.S.

transportation energy grew by 13 percent, while

Western Europe’s grew by 55 percent. 28 A good

portion of this differential, however, is due to the

rapid improvement of U.S. automobile fuel economy during this period. European cars, in contrast, improved technologically but not in terms of

fuel economy 29 because they became larger and

more powerful. Also, Europe is starting from a

much lower base of transportation energy use, so

its higher growth rates are less impressive.

Because the primary reason for the U.S.-European differential transportation energy use is the

difference in total travel per capita, rather than differences in mode or efficiency, the critical values

for examining a potential U.S.-European convergence in per capita transportation energy consumption are changes in the travel per capita over

time. Of the major European nations, most show

growth rates of passenger travel per capita significantly higher than those in the United States. For

example, for 1970 to 1987, passenger-miles per

capita (p-m/c) grew by 53 percent in France, 61

percent in Italy, 41 percent in Sweden, 49 percent

in the United Kingdom, and 40 percent in West

Germany-a weighted average of 47 percent—

versus 22 percent in the United States.30 Even

with per capita annual travel distances so much

lower in Europe than in the United States, the difference in the European and U.S. rates of more

than two to one is significant,

Focusing specifically on automobile travel reveals an even stronger gap in travel growth between the United States and Europe. From 1970 to

1987, per capita passenger travel by auto grew by

57 percent in France, 69 percent in Italy, 37 percent in Sweden, 67 percent in the United Kingdom, and 50 percent in West Germany-an average of 59 percent—versus only 16 percent in the

United States.31 What is happening here is that

while auto travel is growing considerably more

rapidly in Europe than in the United States (again,

this is made less surprising by Europe’s much

lower starting level), U.S. air travel is growing so

rapidly (over 7 percent per year for 1982 to 1989)

that it is pulling up total U.S. passenger travel

growth rates closer to Western European levels.

Much of the rapid growth in auto travel in Western Europe is due to high growth rates of vehicle

ownership. In the 13 Northern and Western European nations,32 per capita auto ownership increased 6.4 percent per year during the period

1965-75 and 3.2 percent per year during the

1975-87 period, whereas U.S. growth rates were

2.5 and 1.0 percent per year, respectively.33

Another trend that is important to the future

U.S.-European transportation energy differential

is the change in public transport (rail and bus, not

counting school buses) usage. Between 1965 and

28 Schlpper and Meyers, t~p. cit., ftjt)tnt)te 3.

‘q S.C, Da\is and M.D. Morris. 7}~insporlalion L“ner,gy fXIra Book, cd. 12, ORNL-6710 (Oak Ridge, TN: Oak Ridge National Laboratory,

March 1992). table 1.7.

3(J L. Schlppcr CI al., “Energy, Use In Passenger Transp(mt in OECD C{mntries, Changes Between 1970 and 1987, ” Trmsportarlon, the lntt’rn[]llonal Journal, Apr~l 1992.

3’ lbl(i.

32 Austria, BelgIun~, Denmark, Finland, France, West German}, Ireland, Italy, Netherlands, Norway, Spain, Sweden, and the United Kingd(ml.

~ ~ J Da~~~stadt~r and A, Jt~ncs, Rcv)urccs for tk Future, ‘“ Prc)spects for Reduced C02 Emlssi{ms in Automotive Transport, ” ENR90- 15,

August 1990,
86 I Saving Energy in U.S. Transportation

1985, U.S. passenger use of public transport fell

from 4.7 to 1.2 percent of total passenger-miles,34

whereas the public transport share of a sample of

European nations fell from 26.6 to 17 percent.35 In

terms of actual passenger-miles, U.S. public

transport ridership was fairly stable:

●

■

Rail transit36 ridership has fluctuated by about

20 percent over the past two decades, but was

virtually identical in both 1970 and 1989 at

12.3 and 12.5 billion passenger-miles, respectively. 37 It has been rising over the past few

years.

Both transit and intercity bus ridership has been

stable, with a combined total passenger-miles

of 43.4 billion in 1970 and 44.8 billion in

1987.38

On the other hand, although it has decreased in

modal share, European mass transit increased its

ridership substantially during the same period.

According to Lave, 39 during the 1965-87 period,

bus and trolley travel in the European OECD nations increased by about 60 percent, and rail travel

increased by more than 20 percent (although automobile travel increased by more than 160 percent

in the same period, thus greatly increasing its

modal share).

Thus, European mass transit, which started

from a much higher per capita passenger base than

the United States, continues to increase its ridership whereas U.S. mass transit has essentially

stagnated (see chapter 2); the European lead in per

capita ridership is growing. Although European

transit may appear to be converging with the U.S.

situation from the perspective of modal share, it

appears extremely unlikely to “bottom out” at a

share similar to that in the United States. Even at

some theoretical “travel saturation” point, if it is

ever reached and if there is no change in relative

U.S.-European transportation policies, European

transit should still have substantially higher per

capita passenger-mile ridership than U.S. transit.

In addition, total per capita travel should be substantially lower, because of the much higher density of European cities (see discussion on effects

of urban form in chapter 5) and the higher costs of

travel. Thus, the Office of Technology Assessment concludes that future mass transit operations

in Europe will likely maintain a much higher modal share than in the United States, although the gap

between the two will shrink somewhat.

For intercity travel, although rail retains a much

higher modal share in Western Europe than in the

United States, air has gained at the expense of rail.

For example, in 1975, rail and air had equal shares

of Western Europe’s intercity passenger market;

in 1986, rail share was half that of air.40 Continuing growth of air travel in Europe would bring intercity energy efficiencies closer to those in the

United States. However, the new and expanding

high-speed rail network in Europe could change

the trend toward air.

U.S. AND EUROPEAN FREIGHT

TRANSPORT ENERGY USE

Freight transport is heavily influenced by the nature of countries’ economies (i.e., what they produce, and where they produce and consume it), as

well as their size and physical geography. Because

the United States and Western Europe are quite

dissimilar in size, geography, and production

M ]bld me ~s[illlated share of public transPJ~a[ion varies frt)m source tt) source. Note, for example, that the estimated 1989 share of bus

and rail, not c(mnting school” bus rides, is 2.2 percent in S.C. Da~is and M.D. Morris, op. cit., f(l(mwte 29, table 2.12, versus the 1.2 percent cited

In Dam~stadter.

35 ]bld. The nations included are Be]ulum &>nmark, Finland, France, West Gemlany, Italy, Norway, and the United Kingdom. a?

M N,)t inc]udlng conlnluter and intercity rail.

37 Davis and Morris, op. cit., footnote 29, table 6. I ~.

38 Ibid., table 3.30.

39 Lave, op. cit., footnote 27.

40 us, ~.paflnlcnt of Transp(~rtati(m, op. Cit., footnote 21.
Chapter 3 Is the U.S. System Energy-Efficient? A Comparison With Europe [87

characteristics, their freight systems have many

differences over and above those that result from

different policy choices.

The United States has more than five times the

land area of six Western European nations (the former West German y, United Kingdom, France, Italy, Sweden, and Norway) and produces large

quantities (relative to total production) of bulk

commodities that must be shipped long distances,

both to internal markets and to coastal ports for export. As a result, the volume of freight hauling

(measured in ton-miles) in the United States, relative to the size of its economy, is three times that of

Western Europe.

41 Note, however, that this result

leaves out “foreign” shipments between individual European countries and thus ignores shipments of longer lengths (and some that are quite

short) that would be included in U.S. data.

U.S. shipping of bulk commodities over long

distances allows heavy use of highly efficient

pipeline, rail, and ship modes, as opposed to Europe’s heavy dependence on trucking. In 1989, rail

accounted for 32 percent of total U.S. shipping, or

40 percent of all nonpipelined shipping; ships for

26 percent of total, and 32 percent of nonpipelined

shipping; and trucks for only 23 percent of total,

and 28 percent of nonpipelined shipping.42 Pipe-. 

line shipping itself accounted for 19 percent of the

total. In sharp contrast, in 1988, trucks accounted

for 63 percent of nonpipelined shipping in Western Europe, rail only 18 percent, and ships 19 percent. 43 And trucks’ domination of European

freight shipments is increasing over time, up from

54 percent in 1973, with rail absorbing the loss of

modal share. This increase is due to a combina- 44 

tion of adoption in Europe (and the United States)

of Japanese-style “just-in-time” delivery of materials and components for manufacturing, greater

—

production of high-value-added products that require fast and flexible delivery, and growth of the

European road network as auto usage grows.

The combination of the large differences in

modes and some differences in the energy intensity of each mode leaves the United States with a

(nonpipeline) freight energy intensity about 40

. percent lower than Europe's45 ---due primarily to

the relatively high intensity on a Btu per ton-mile

basis of truck shipment. Although European

trucking is less energy intensive than U.S. trucking, by about 15 percent, trucking in general is

several times more energy intensive than other

freight modes. For example, in the United States,

not counting differences in types of cargo carried,

trucking is almost nine times more energy intensive than shipping, and about eight times more intensive than railroads.46

CONCLUSIONS

The United States uses three to four times the

transportation energy per capita used by Western

European nations, primarily because Europeans

travel less, choose more efficient modes, and

maintain higher efficiencies in each of the modes.

Several factors likely influence European travel

rates, which average half as much as U.S. travel

rates on a per capita basis:

■

●

■

■

lower private vehicle ownership (influenced by

very high vehicle purchase prices because of

taxes, fewer roads, and other factors, but also

affected by the later start of Europe auto “explosion”);

high fuel costs:

much greater urban density and centralization;

a better mix of residential and housing development than U.S. cities; and
88 I Saving Energy in U.S. Transportation

■ demographic factors such as the percentage of

women in the workplace, age distribution, and

family mobility.

Europeans choose mass transit more consistently than people in the United States both because European cities tend to have good systems

and because lack of parking, high fuel costs. high

residential density, and a road system that is somewhat sparse by U.S. standards make transit look

more attractive. Finally, European automobiles

are more efficient than U.S. autos, primarily because they are smaller and have fewer luxury features (e.g., air conditioning, power windows, automatic transmission).

Travel and energy trends in Europe show some

convergence with conditions in the United States,

and some analysts claim that Europeans will

eventually catch up to Americans in their travel

and energy use. They contend that automobile

dominance is so powerful a force that it will tend

to overwhelm differences in fuel costs and other

factors between the United States and Europe.

Certainly, part of the U.S.-European difference in

auto travel reflects the fact that Europeans started

their period of rapid growth in auto ownership later than the United States. There are strong reasons

to believe, however, that European and U.S.

“equilibrium points ’’-conditions when travel

and energy use remain stable over time—are not

identical, and that Europeans will continue to

travel less and use less energy than Americans, although the difference between the two systems

certainly will narrow. One reason for this belief is

that arguments that Europe simply is at an earlier

stage than the United States in growth in auto

dominance ignore the differences in travel and energy that appear among alternative conditions of

urban development within the United States. As

long as European cities are more dense than U.S.

cities, and less “auto-oriented” (e.g., have fewer

miles of roadway per capita), they will continue to

have fewer trips made and a higher reliance on

public transportation. Another reason is that European growth in auto ownership and auto travel in

general is a less impressive refutation of the importance of high travel costs in affecting energy

use than it appears. Namely, this is because some

of this growth is associated with European subsidy

of auto travel in the form of large-scale use of company cars and tax deductions for commuting, and

Europe starts with a much lower base so higher

growth rates translate into much lower absolute

values of growth. Part of the difference in travel

volumes and energy use is due to differences in

demographic factors; it is not clear to what extent

these factors might converge or diverge in the future.

To a large extent, what this argument boils

down to is whether the differences in U.S. and European travel patterns are due more to differences

in policy or differences in history, geography, income (both now and over the past few decades),

and demographics. If policy is the dominant determinant, then shifting U.S. policy toward European-style high gasoline prices, land use controls,

etc., could move the United States toward European-style transportation patterns. However, an

important caveat is that much of our transportation and land use infrastructure is in place and mature, so that moving toward European norms will

be slow. If factors other than policy are more important, massive policy shifts may be somewhat

futile, and European travel patterns may also

move gradually in the U.S. direction. Questions

such as this can sometimes be resolved by statistical analysis, investigating which variables are

more significant determinants of the energy outcomes under investigation. Pucher, for example,

claims that relative gasoline and transit price differences among Nations-which are primarily determined by policy—are better statistical determinants of auto ownership and urban auto-transit

modal shares than are differences in income .47

A7 J ~cher .. Capl[a] isnl S(xla] ism, and Urban ‘rrmsp(~rtation: P(~llcies and Travel Behavior in the EaSI and West, ” American pk?nnrn~

As.~ociafion Journa/, summer 1990.
Chapter 3 Is the U.S. System Energy-Efficient? A Comparison With Europe 189

However, Pucher readily admits that the combination of data problems, multicollinearity between

variables, and a limited sample size makes statistical analysis suspect in this case.48 Further, his

analysis does not examine a host of other potentially significant variables that deserve close examination. Nevertheless, he is convinced that the

data are strong enough to show that differences in

transportation prices are indeed a strong determinant of travel behavior.

To sum up, it appears that if the United States

were to make a concerted effort to copy the European model but without some of its auto-subsidizing features, it would stand a good chance of substantially improving overall travel efficiency and

reducing travel volume from levels that would

otherwise be achieved. But the United States is

unlikely to match current European levels of energy use.

European freight transportation, unlike personal travel, is not more efficient than its U.S. counterpart, although its volume in ton-miles in proportion to total economic activity is much lower

than in the United States. The types of goods

transported and the physical conditions are sufficiently different from those in the United States

that there seem to be few lessons easily extracted

from a comparison of the two systems.

w Ibid.
Why Intervene?

Externalities,

Unpriced Inputs,

Problems Needing

Solutions 4

I

n a “pure” free market economy, decisions about resource

use and conservation are left to market forces, with resource

price being the signal that guides production and consumption decisions. In the transportation sector, for example, oil

price is a critical determinant of the number and type of trips that

consumers make and the efficiency of vehicles that automakers

produce and consumers buy.

WHY GOVERNMENTS MIGHT WANT

TO ACTIVELY PROMOTE ENERGY

CONSERVATION IN TRANSPORTATION

However, a completely free market economy does not exist in

transportation. Instead, governments throughout the world intervene—and intervene strongly—in consumer and manufacturer

decisions about the use of oil in transportation. Generally, governments throughout the world have chosen to control provision

of the basic infrastructure for transportation—roads, bridges, tunnels, airports, and so forth. Although some basic infrastructure is

allowed to be private (some airports, occasional private toll roads,

and some railroads), this is more the exception than the rule. In

addition, governments intervene directly in transportation markets. For example, some governments have chosen to restrict the

purchase of private automobiles, generally because they consider

their countries too poor to afford to import gasoline. With the notable exception of the United States, most countries in the Organization for Economic Cooperation and Development

(OECD)—which includes Western European nations, Japan,

Australia, New Zealand, Canada, and the United States—have

I 91
92 I Saving Energy in U.S. Transportation

chosen to levy high taxes on gasoline, raising its

price to several times the “free market” price. ’ In

the United States, government intervention in

transportation oil use includes:

1.

2.

3. .

4.

moderate fuel taxes, primarily to finance road

construction and capital subsidies of transit

systems;

fuel economy standards for automobiles;

disincentives to auto use (including parking restrictions, high-occupancy vehicle lanes, etc.)

in State air quality implementation plans; and

operating subsidies for public transit.

U.S. government interventions are defended on

a number of grounds. First and most widely accepted is the argument that some interventions

(e.g., taxes on gasoline, which fund roadway

construction) merely constitute user charges.

Other grounds for existing and possibly increased

intervention include:

1. correction for existing subsidies and pricing,

and

2. external costs.

~ Correction for an Existing Network of

Subsidies and Inefficient Pricing

Government intervention in the current market

may be promoted as a correction to a web of past

and ongoing subsidies and inefficient pricing

mechanisms that have distorted the U.S. transportation market. Both public and private travel

are subsidized. For example, on a percentage basis, U.S. operating subsidies for transit are among

the highest in the developed nations at about 57

percent, 2 and capital subsidies for some systems

are 100 percent. The United States also provides

direct subsidies to private automobiles through

payments for some roadway capital construction

and maintenance from general funds, tax treatment of parking expenses that promotes free or

low-cost parking for many workers and shoppers,

and other means. In addition, some analysts claim

that the Federal tax exemption for mortgage interest promotes low-density development patterns

that favor private vehicles over public transit.3

And U.S. tax policy creates cross-subsidies between different modes; for example, automobiles

and light trucks pay a large share of the costs of

highway repair through fuel taxes, whereas heavy

trucks cause most of the damage.4

Aside from subsidies, inefficient pricing also

distorts transportation decisions. For example, retail establishments commonly absorb the price of

parking into their business costs, rather than

charging customers--even though the customers

eventually “pay” through higher prices.5 Consequently, the apparent cost of transportation is reduced, encouraging more tripmaking than if travelers had to account for the full costs of their

travel.

I Externalities

Intervention may also be justified by the argument

that transportation users are imposing costs on

others that they do not consider in their travel decisions, and therefore travel more than is optimal for

society. Theoretically, if these external costs ("ex1 OECD tax policy on gasoline and veh iclcs tippcars to be prinlarily a matter of gt~~ ernnwnts view ing these products as an excellent source

of rewmuc for a broad range of societal functi(ms, with a desire tt) restrain oil usc and tr:if!lc c(mgcstl(m also a factor.

‘American Public Transit Associati(m, 1990 Transif Fatt Book (Washingt(m, DC: September 1990).

~Note however, tha( the n)ort~a~e ln(~r~s( &~ucllonapp] ]es to a]] rcs]ckmtia] properties, including rentals (lowering costs ft~r ~)~~ ncrs, alk)wing hwer rents). It “’promotes” lower dtmslty development (rely I() the cx[cnt that by l(wcring C(M[S of housing generally, It alhms a greater

choice of h(msmg to the a~ erage citizen; the km-density opti(m must bc preferred for it to bc promoted” by greater choice.

5 paradox ica] ]Y, Prlccs at large suburban stores with fr~~ parking ma} bc l~)wcr than :it urban st(wcs that rcqu ire m) special parking facll II ics,

because of the ec(m(mlws of scale and wide market reach of the suburbim stores, As discussed in the follow” in: sec[ion, this is a benefit of au[()-

oriented tray el not often c(msidered in e~ aluating the so~iiil cost pr]c]ng of trii\~l.
. .

Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 193

ternalities”) could be added to the price of travel,

travelers would make more economically efficient choices.

Some analysts define externalities as costs that

are caused by a class of activity, such as all motor

vehicle travel or all auto travel, and imposed on

everybody else or on society as a whole. This is

useful in examining the costs and benefits of motor vehicle or auto travel, but it is too narrow a definition if the concern is whether such travel is

overused because drivers are not accounting for

the costs they impose on others. For the latter concern, externalities also include costs that individual drivers impose on others and do not account for,

even if the others are also drivers. Thus, drivers

deciding to travel during peak periods may recognize clearly the congestion costs they incur, but

they do not take account of the costs they impose

on other drivers. Were they forced to, some might

choose to drive lessor to drive at nonpeak periods.

Some critical transportation externalities are:

1.

2.

Environmental and safety impacts. Federal requirements for emission controls on new automobiles, inspection and maintenance requirements on the entire fleet, and other pollution

control measures have reduced the potential air

pollution impacts of oil use in transportation.

There remain, however, substantial environmental impacts whose costs are not included in

the price of gasoline and diesel fuel, in vehicle

prices, or elsewhere in the market price of

transportation. These impacts stem from remaining air emissions, including emissions of

carbon dioxide and other “greenhouse” gases,

as well as from oil leaks and spills, sprawling

patterns of development associated with auto

dependence, and other sources. The existence

of these externalities and others, such as vibration damage to roadside structures and safety

risks to pedestrians, implies that oil consumers

do not pay the full societal cost of their oil use

and thus consume too much—potentially justifying governmental action to raise oil prices or

otherwise reduce consumption.

Energy and economic security. A substantial

portion of the world’s oil production and export

3.

occurs in unstable areas and is managed

(though with intermittent success) by a cartellike organization, and the U.S. transportation

system combines near-total dependence on oil

with an inability to rapidly substitute alternative fuels. U.S. dependence on imports for half

of its oil supply therefore creates a risk to the

U.S. economy from supply disruptions. Current oil prices do not include the cost of U.S.

military expenditures to protect the oil supply

in politically unstable areas or other security

costs. To the extent that energy security would

improve (and security costs decrease) if U.S.

oil imports declined, government measures to

reduce consumption (and increase domestic

supply) can be justified. However, an important

caveat is that any effect of oil use reductions on

energy security will be highly nonlinear--

small reductions are unlikely to have any effect

on energy security. As a result, charging a premium on oil prices for energy security effects

will yield the desired decrease in security costs

only if oil use is reduced enough to make a real

difference in U.S. energy security and military

strategy.

Another societal effect of U.S. transportation dependence on petroleum-not a true security effect—is the extent to which this oil use

affects world oil prices. A large drop in U.S. oil

consumption would lower world oil prices,

yielding a strong benefit to the U.S. economy

and to individual consumers, but this effect is

not considered in individual oil use decisions.

Congestion. As noted above, congestion costs

can be considered an externality to the extent

that drivers during congested periods impose

costs on all other drivers sharing the road but do

not account for these costs in their decisions to

drive. Congestion also adds to environmental

and energy security external costs, because

stop-and-go driving both wastes fuel and generates more pollution per mile than free-flowing driving.

Society’s beliefs about these problems and externalities. and policy makers’ understanding of

them, are critical to formulating and initiating suc-
94 I Saving Energy in U.S. Transportation

cessful policy intervention in the transportation

system. Unless there is a strong consensus that the

problems faced by the U.S. transportation system

are truly critical and must be solved, and that externalities and inefficient pricing will prevent the

market from solving them, the U.S. public is unlikely to support much additional intervention—

because the transportation system is so crucial to

quality of life, and because many proposed policy

interventions seek significant changes (either in

cost or in system structure) in an automobile-oriented system that is firmly entrenched in American society. Further, selecting optimal intervention mechanisms is unlikely unless policy makers

understand the complex and varied interactions

between different policy instruments and the full

range of problems and externalities.

Policy makers must recognize also that the automobile may offer society external benefits that

ought to be considered in any attempt to adjust the

market. The economies of scale achieved by autooriented superstores, the social integration and

mobility offered by widespread automobile availability, and the special mobility offered in rural

areas all have societal benefits (and perhaps costs)

as well as private benefits. Unfortunately, there is

little understanding of such potential benefits of

the private automobile; as a result, attempts to

evaluate and redress problems with auto externalities have tended to focus exclusively on costs.

Finally, policy makers who wish to “correct”

the amount of transportation demanded by travelers and shippers by accounting for inefficient pricing, subsidies, and externalities should remember

that the other “goods” in consumers’ market baskets—housing, food, entertainment, education,

and so forth-do not operate in a free market environment either and, to differing degrees, share the

transportation sector’s pricing and subsidy distortions and also generate externalities. It maybe that

all forms of consumption are somewhat underpriced in the U.S. economic system. Correcting

transportation prices—presumably by raising

them, if transportation’s combination of external

costs, subsidies, and inefficient pricing mechanisms outweighs any external benefits-should

improve the efficiency of the allocation of transportation demand among competing modes and

move overall transportation demand closer to an

economically efficient level. Failure to correct

pricing in the other sectors may, however, compromise some of the efficiency gains that would

otherwise flow from correcting transport pricing.

This chapter describes and evaluates the various externalities, pricing inefficiencies, and embedded subsidies that distort the market for transportation energy. It also--qualitatively and

tentatively-describes some potential benefits of

today’s auto-dominated system. Analysis of these

issues is relatively new, data are scarce, and there

is no consensus in the scientific community about

the magnitude of transportation externalities and

subsidies. In spite of this lack of consensus, however, the United States has spent many billions of

dollars in subsidies to various transportation systems and is preparing to spend many additional

billions of dollars during the next few decades,

based on the supposition that free market forces

will not by themselves create a satisfactory transportation system. It seems obvious that a better

understanding of the externalities, inefficient

pricing systems, and embedded subsidies would

be valuable to the process of designing U.S. transportation policy.

AUTO BENEFITS

Critics of the U.S. automobile-dominated transportation system generally try to explain the

strong preference for autos as a natural response

to a system of skewed incentives—government

subsidies of many auto costs, widespread provision of free parking (and government tax policy

that rewards such provision), failure to incorporate “external” costs (air pollution, noise, etc.)

into fuel prices, and land use policies and tax incentives that favor single-family home ownership

and low-density development. Some cite additional causes such as the alleged auto and oil industry sabotage of public transportation systems

and relentless advertising of the joys of auto ownership.

These forces no doubt do play an important role

in the strong dominance of automobiles in the
Chapter 4 Why lntervene? Externalities,

U.S. transportation system, but they do not constitute the whole story. Many of the incentives probably should be viewed not only as causes of U.S.

auto orientation but also as results of it: they are a

natural response of voters and voter-responsive

legislatures to the public’s desire to accommodate

an automobile-oriented system. More important,

the European example. discussed in chapter 3,

demonstrates that the combination of an incentive

system that taxes gasoline very highly (enough to

incorporate at least a significant portion of external costs), a set of land use policies that favor-s urban over suburban development, and the nurturing of an extensive system of public transportation

still does not prevent the automobile from becoming the dominant transportation mode. Something

else besides monetary and land use incentives appears to be propelling the automobile’s dominance

of personal travel. In other words, automobile use

clearly is perceived by many as having real benefits other than those created by artificial incentives in comparison to the use of alternative modes

or to the option of not traveling. These benefits are

primarily “internal” or private benefits that accrue

directly to drivers and passengers (e.g., low doorto-door travel time, comfort, flexibility) and “external”’ benefits that accrue to society as a whole or

groups other than drivers (e.g., more locational

options for owners of small businesses).

Many proposals for reducing transport energy

use and environmental damage involve reducing

the automobile's share of personal travel or reducing the total volume of travel. Effective strategies

cannot be devised, however, without understanding the nature of the attachment that Americans

have to their cars. Such understanding might help

identify ways to weaken the attachment in the future. Further, understanding the broader societal

benefits of automobile use is essential for policymakers who wish to incorporate full social costs

and benefits into transportation decisionmaking,

perhaps by folding these costs and benefits into

the market price of travel (through charges on gasUnpriced Inputs, Problems Needing Solutions 195

oline, vehicles, vehicle-miles traveled, or other

measures). This section discusses available research about U.S. attitudes toward automobiles

and the private benefits associated with the automobile orientation of the U.S. transportation system. Unfortunately, our understanding of the external benefits of automobile use is extremely

weak, because judgments about the value of the

factors that generate these benefits—such as differences in urban structure and retail store location

and character —are highly subjective in nature.

9 Attitudes Toward Automobiles

Research by J.D. Power and Associates can help

illuminate the character of Americans attachment

to their automobiles. In its survey research, Power

has determined that U.S. car drivers can be broken

down into six attitudinal groups (their shares of all

drivers are in parentheses):

1.

2.

. . 3

4.

5.

6.

functionalists, who want sensible, fuel-efficient transportation ( 11.8 percent);

gearheads, who are car lovers and true enthusiasts ( 16.7 percent);

negatives, who view cars as necessary evils that

they would love to do without (15.8 percent);

epicures, who want stylish, elegant automobiles (25.9 percent);

purists, who like cars but are very skeptical of

all claims (4.2 percent ); and

road haters, who are fearful of anything but normal driving (25.5 percent).6

An interesting conclusion from this list is that if

functionalists are included, 53.1 percent of drivers

(functionalists, negatives, and road haters) appear

to be amenable to giving up their vehicles or greatly reducing their driving if a viable alternative is

offered. Of course, the important question left unanswered by this survey is, what constitutes a viable alternative for those who are not attached to

their autos. The perceived advantages of automobiles—such as virtually door-to-door service,

generally shorter travel times, privacy. and com-
96 I Saving Energy in U.S. Transportation

fort—present a formidable challenge to potential

alternatives unless auto users begin to perceive

important disadvantages in the use of their vehicles.

1 “Internal” or Private Benefits

Autos are the overwhelming choice of short-distance travelers in the United States because of a

number of advantages over their transit competition. In particular, automobiles generally provide

faster service than mass transit, primarily because

they offer virtually door-to-door service, whereas

transit requires multiple links. A typical autobased trip involves a short access walk, no waiting

to transfer to the auto, a relatively direct trip, and

a short access walk at one’s destination. In contrast, atypical transit-based trip may involve a significant walk or drive to reach a bus stop or train

station; a wait of at least a few minutes; quite

often, more than one transit trip interspersed with

waiting periods (and the total transit phase may include two or more transit modes); and a walk or

drive to reach the destination. When transfers are

involved, the transit route is quite often more circuitous than an auto route (although a rapid rail

route occasionally will be less circuitous than a

highway route).

In addition to time savings, autos generally offer better protection from the elements, greater

comfort (especially during peak periods when

transit seats are at a premium), and greater protection from crime (although certainly not better

overall safety). Autos also offer freight-carrying

capacity, which allows consolidation of shopping

trips that would be difficult or impossible by mass

transit as well as access to stores that, by combining many services into one location, allow great

time savings (especially for the frequent chore of

food shopping). Further, automobiles offer travel

flexibility (in terms of choice of time of day and

destination) that would be extremely difficult to

obtain in a transit-oriented system, thus expanding the universe of social, cultural, and recreational opportunities.

Automobiles also offer longer-distance family

travel, especially for larger families, that is less

expensive than public transportation and far more

flexible in choice of destination, time of travel,

and ability to change routes and destinations.

An automobile-oriented transportation system

allows low-density residential development patterns that are often criticized as wasteful of land,

inefficient in their use of energy, and sterile in

their access to cultural opportunities and their segregation by economic class. However, the residents of these developments, who must be heavy

users of the automobile system, may reap substantial benefits from these patterns. Cul-de-sac development may guarantee inaccessibility to efficient

transit services and inefficient road use when measured simply as the length of road needed to provide access to services, but it offers a low-speed

and lightly traveled environment in the immediate

area. Moreover, although separation of commercial and residential development demands longer

trips and the use of automobiles, whereas mixed

development could allow walking and bicycling

as substitutes, it also avoids the traffic concentration and aesthetic intrusion that commercial development may make on residential areas. Although there may be a heavy price to pay for these

amenities, policy makers cannot ignore the reality

that they are highly valued.

1 Benefits to Society

Automobile use has created many problems for

modern society, and these problems form the core

subject of attempts to understand and measure

auto “externalities.” It is unlikely, however, that

the type of mobility the automobile offers, and the

land use patterns that heavy reliance on autos

tends to engender, yield only costs to society, Although the American “love affair” with the auto is

now generally the subject of derision, use of the

7 Food shopping still c(msumes a grcm deal of time in some industrialized countries where {he retail nctwtwh consists nuunly of small specialty shops.
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems bleeding Solutions 197

automobile offers benefits to society that must be

considered in any “full cost accounting” that seeks

(o fold the external effects of a technology (environmental, social, etc. ) into its market costs. The

brief discussion that follows is not meant to extol

the virtues of the automobile, but instead to suggest that as a transportation tool, the automobile

"ain’t all bad. ”

Many of the external costs of automobiles, although sometimes hard to measure quantitatively,

are quite easy to describe and understand qualitatively—air pollution and its health, ecosystem,

and material impacts; noise pollution; land use

preemption; and so forth. Benefits tend to be more

subjective. For example, the ready availability of

automobiles, and of an extensive road and parking

network, allows remarkable travel flexibility at

any time of day or night. Perhaps a transit-oriented

system could approach this flexibility by combining fixed route transit with demand-based service

.

available in nonpeak hours, but this has not been

demonstrated. Such flexibility allows a degree of

spontaneity in tripmaking that is a strong private

benefit but must also be of value to society. Further, increased access to a range of cultural, recreational, and educational opportunities represents

both a private (as noted above) and a public benefit: the social and economic integration promoted

by this access.

The retail shopping and service base that develops in an automobile-oriented system is different

from what would develop in a transit-oriented

one. So-called superstores that attain considerable

economic benefits from their large scale—and

pass these benefits on to customers-cannot exist

unless they can draw from a wide geographic

area.

8 Further, these stores depend on shoppers

who can make a shopping trip a major purchasing

expedition, which would be impractical without

private “freight transport” home, especially for

larger items, Such superstores would be much less

feasible with a transit-oriented transportation systern. Their economic efficiency benefits society,

although the existence of these stores may influence factors other than efficiency, such as the general availability of a diversity of products and services, that also bear on their net value to society.

The move to an automobile-dominated transportation system has been synonymous with a societal movement away from the home (and family) as the focus of social interaction. The extent to

which the auto has been the major cause, partial

contributor/enabler, or innocent bystander to this

movement is unclear, but it seems likely to have

played a significant role. It is normal in our society, for example, for both children and adults to

use evenings for education, exercise at clubs, and

numerous other activities outside the home that

would be more difficult without auto mobility,

even with the higher density of a transit-based area

(given the reality of urban safety, how many children would be allowed to visit friends at night if

mass transit, walking, and a wait at a bus stop were

necessary?). Whether the movement from the

home as center of social interaction should be

viewed as a cost or benefit to society is a philosophical question, but it is clear that some will

consider it a positive contribution to personal

growth and social integration and well-being,

whereas others will feel it has had a strong negative influence on family values.

Automobile transportation provides special

benefits in rural areas, where mass transit services

are impractical. It allows social interaction that

would be impossible without private transport and

(coupled with truck freight services) enables the

employment in light industry that has allowed

large numbers of Americans to live outside cities,

despite the vast decline in agricultural employment.

Note that the major differences in mobility between auto- and transit-dominated systems undoubtedly occur during off-peak times, when transit cannot maintain high-frequency service and

8 Although hlghcr resldcntlal durslthx iisst)cvakxl w lth a transit-( ~rkmted area allow more custtwners to be a~ ail able to a store w ithln a set

radlu~ {~r :irca. this 1~ unl]kcl~ to umlpcnsa[c for the market afforded by an auto-oriented suburban Iocalhm.
98 I Saving Energy in U.S. Transportation

the time advantage of autos becomes particularly

large. Aside from the expansion of nighttime nonwork activities engendered by the temporal flexibility of an auto-oriented system, flexibility in

work schedules has been promoted: second and

third shifts may be more practical in such a system. This has both private and social benefits: private in terms of obtaining employment that better

fits people’s schedules, and public in terms of increased economic productivity. It also has costs:

not all employees take second- or third-shift jobs

voluntarily, and the ability to schedule multiple

shifts might alter the balance of jobs away from

daytime and toward nighttime in ways that could

be efficient for employers but destructive for private and societal values.

Critics of the automobile tend to portray the

low-density land use patterns that have accompanied automobile growth as uniformly negative in

terms of their public impacts: in other words, they

argue that suburban or exurban development occurs only because it yields some direct benefits to

those who live there, and that this type of land use

exacts high costs from society in general. The idea

that these land uses are a legitimate alternative,

that society may benefit from the availability of

suburbs as one option available among choices of

lifestyle, is rejected. Instead, suburban development is regarded by its critics as a despoiler of urban life and a primary cause of the inner-city

decay and loss of tax base affecting so many U.S.

cities.

There obviously is much that is subjective in

such an evaluation. Although low-density, suburban development clearly has important negative

environmental and social impacts, it is worth asking whether limiting future development to higher

densities will really yield large benefits. The answer undoubtedly lies in the extent to which suburban development can be tied to the problems of

today’s cities. If this development is a cause of

current urban problems, and if a radical shift to

higher density development and strict limits on

suburban growth would clearly improve centralcity life, then perhaps the critics are right and suburbs offer no benefits to society other than those

reaped by their inhabitants. If the current problems of the cities have other causes, however—-if

suburban development is not really the proximate

cause—then the availability of a low-density option increases the diversity of choice and provides

benefits to society, which then must be balanced

against the costs.9

INEFFICIENT PRICING: SUBSIDIES,

EXTERNALITIES, HIDDEN COSTS

How does one go about evaluating the magnitude

of subsidies, hidden costs, and external costs

associated with transportation? This section presents a framework for examining these costs and a

series of estimates for most categories of costs.

9 Introduction and Viewpoint

A number of studies have attempted to estimate

the “total costs” or “full social costs” of motor vehicle travel or of transportation in general, in order

to explore the extent to which drivers may fail to

pay such costs and, in response, “consume” too

much travel. Most of these studies conclude that

motor vehicle travel is substantially underpriced

in the sense that drivers are paying considerably

less than the total costs of their driving:

Commuters going to work in major central

business districts in the United States in their

own motor vehicles directly pay for only about

25 percent of the total cost of their transport. The

other 75 percent is typically borne by their employers (e.g., in providing “free” parking), by

other users (in increased congestion, reduced

safety, etc.), by fellow workers or residents (in

air or noise ‘pollution,” etc. ) and by governments (passed on to the taxpayers of one genera-
. . . .. .

Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 199

 tion or another in ways that usually bear no relationship to auto use). ’”

However, these studies use a variety of accounting

systems to identify unpaid costs, and it is difficult

to compare their results.

The Office of Technology Assessment (OTA)

asked Mark DeLuchi of the Institute of Transportation Studies, University of California at Davis, to evaluate the social costs of motor vehicle

use and how they are paid, focusing particularly

on those costs that have market prices or, if unpriced (e.g., free parking at shopping malls), that

can be priced by comparing them to similar priced

costs. 11 Although part of the reason for the automobile’s dominance of U.S. transportation results

from past subsidies, this study focuses on 1990

costs, since new policy initiatives must take the

current transportation infrastructure as a starting

point.

Evaluating the full social costs of motor vehicle

travel is a relatively new and contentious field of

analysis. DeLuchi’s work, which follows and

builds on earlier studies, will not be the last word

on this issue. Further, several of the cost areas, for

example, potential damages from global warming

and national security costs, remain highly uncertain. Thus, OTA presents DeLuchi’s work as a

valuable contribution to the field, but does not endorse the specific values in each cost category. On

the other hand, we believe the work to be sufficiently robust to endorse DeLuchi conclusion

that a significant fraction of social costs is not efficiently paid by motor vehicle users. Inclusion of

these costs into motor vehicle charges, and restructuring of payments so that those who incur

the costs take them fully into account in their travel decisions, would likely reduce the total amount

of motor vehicle travel and shift some of it to other

times or locations.

There are, of course, other, competing evaluations of both the total social costs and specific external costs of transportation. Some of these evaluations, e.g., those of the Congressional Research

Service, are discussed briefly in the other sections

of this chapter. A variety of studies are discussed

by Hanson.12 OTA will soon publish a study reviewing different estimates of the environmental

externalities of electricity generation.

The definition of a particular cost of driving as

paid or unpaid, or as efficiently or inefficiently

priced, has much to do with the purpose of the accounting. Analysts concerned primarily with ensuring that automobile users pay for the costs of

auto use, to avoid subsidizing automobiles, focus

their analysis on whether auto users as a class pay

their full costs. For example, although congestion

causes some societal costs (more pollution, lost

productivity), its primary cost is lost time, and this

is borne primarily by the drivers and passengers

on congested roads (although it also impacts

freight costs). Thus, in terms of equity among

such alternative travel modes as auto, rail, and air,

road congestion is largely an internal cost of auto

travel. In contrast, when police services on highways are paid out of a community’s general funds

while the rail transit system pays for transit police

and charges a higher fare as a result, auto users receive an inequitable subsidy.13

In terms of economic efficiency, to ensure that a

good is not under-or overconsumed, it is more important to worry about an individual decisionmaker (i.e., potential purchaser), not a class; what matters is whether or not individual decisionmakers

recognize and pay an appropriate price for what

10 E,v, JohnS[)n, .. Tanllng ~hc car ~n~ ][s USer: shou]~ we D() Both?’” Aspen Ql(~r[er/~,, autumn 1992, based on a presmlatlol’1 t)y J. Meyer,

Harvard Un]kersl[y.

I I ~Luchl,~ repofl ~111 ~. ~~allab]e separately, but the kcy results me Summarized here.

I ~ M E, Han~on .. ReSult$ ,)f Lllcratur~ survey and summary of Findings. The Nature and Magnitude of Social C(MtS of ‘rbm ‘oadW ay

Use,” Pap.r prepared for U.S. D~pafinlent of Transportati(m, Federal Highway Administratitm, 1992.

11 T,, ~onlpllcate [hl~ issue further, h(lwc~~r, rail transit systems obtain much of their revenues fr(~n~ public ‘Unds.
100 I Saving Energy in U.S. Transportation

they receive. In the case of congestion, each new

driver who enters a busy road is delayed and thus

pays a price in lost time, but also inflicts costs on

drivers already on the road, costs that the new

driver does not bear.

14 That new driver is paying

average costs rather than marginal costs. This is

very similar to new customers on an intensively

used electrical grid that must add expensive new

capacity to accommodate them; although the new

capacity may be more expensive than the older

part of the system, thus raising costs for all users,

new users make their decision to use electricity by

accounting only for a fraction of the additional

costs that they create. 15 In other words, the “appropriate price” from an efficiency standpoint is

marginal cost, not average cost.

Aside from paying the wrong price (e.g., equal

to average rather than marginal costs),16 auto users may not recognize the price they are paying because it is hidden. Free parking at shopping malls

is not really “free” because its costs are included in

the price of goods at the mall. Thus, drivers may

pay much of the cost of this parking, but they are

unlikely to take account of it in deciding whether

to visit the mall. Free parking for shopping is also

an example of a societal subsidy of automobile

travel, because everybody who shops at the malls

bears part of the parking costs even if they walk or

use transit.

Also, individual auto users may not be paying

the right price because they create nonmarket

costs that they do not fully bear: air pollution,

global warming, loss of energy security through

their oil use, pain and suffering inflicted on others

from accidents, and congestion delay costs. These

are the so-called externalities--nonmonetary

damages inflicted by auto users on others and not

considered in driving decisions.

In summary, to ensure efficient use, individual

drivers must pay and account for the marginal

costs to society that they create when they choose

to drive. Problems arise when others—including

other drivers—pay these costs; when drivers pay

the costs but not in a way that they recognize and

account for in their decisionmaking; when the

price is not the marginal price, so drivers do not

realize the full impact of their decision; or when

those who pay the costs cannot choose the amount

of good or service that they pay for and consume.

Table 4-1 provides a classification of the different costs of motor vehicle use, according to basic

cost categories, whether (or not) they are monetary costs, whether they are paid for by those who

cause them, and so forth. In essence, the classification scheme focuses on whether, or to what extent, an item is efficiently priced at the marginal

social cost of supply. The sum of all of the costs in

table 4-1 represents the social cost, or total resource (welfare) cost, of motor vehicle use.

Another way to put this is that the social cost of

motor vehicle use is what would not have been incurred had there been no motor vehicle use. Only

the costs in the first column of the table are efficiently priced; all others are priced either inefficiently, indirectly, or not at all.

The logic behind this classification scheme, or

behind any other, does not work well with every

type of cost, and users of this analysis will argue

with the placement of some costs, For example,

there is room for argument about the extent to

which motor vehicle users actually account for

some costs (e.g., their probability of getting into

an accident and being injured or killed) in their

travel decisions. Also, because some types of

costs have components that are paid by users and

other components paid by nonusers (or efficient] y

14 ]n [hls sense tr~ffic ~on~es[lon” is ;In ~x[em:i]l[y, at ]~as[ frc)nl the standp)lnt of the individua] driver,

I $ ~ls ~rohlenl has bcc{)nle ]e~s ~orlli,lon” thm it ~ as, ~cause p)llutit)n controls” ha~e raised the ct~st of e]ec[rlcity fr(~nl many older plWerplants. and new capacity using natural gas is relativel} inexpensive.

16 in [he ~a~e ~)f conOes[l{)n c(,~ts, ~lccs of ~)th~r tra~~l g~}{)ds and s~riices nlay & wr(mg k>cause they are p)or]y related to marginal C(l\l$ @ .

in s(mw other manner (e. g., the price ma} h’ subsidized).
Efficiently allocated Not efficiently allocated Efficiently allocated

Items accounted for by us- Items not accounted for by users In MV ownership and use declslons Items accounted for by

ers m MV ownership and

use decisions

users Ir7 MV ownership

and use decls[ons

Efflclently priced Items Inefflclently pr[ced Items Implicitly, Inefflclently or Indirectly priced items nonus- Unpnced [terns Price IS r70t relevant,

each user and no nonus- each user and no nonus- ers as well as users pay, and the MV cost IS burled In because there IS no

er IS charged, and price er IS charged but price tax or price of other commodities transaction (but marginal

probably equals margln- probably does not equal value = marginal cost)

al cost marginal cost

■ Those who pay for these Items choose the amount ■ Those who pay for these Items cannot (or can but do not) choose the amount of the ● Accounted for and borne

that they pay for and consume Item that they pay for and consume entirely by MV users

~ If you do not own and use MVS, you do not pay these ● Even if you don t own and use MVS, you still might pay these costs

MV costs ■ The party responsible for the cost often pays I lttle or none of It

■ The party responsible for the cost always pays all of It

Monetary costs

—-. ——.

Nonmonetary costsa “

1 Motor veh/c/es, fue/, 2 Publlc Infrastructure and 3 “H[dden” private-sector 4 Publlc infrastructure and 5 “Class/ca/’” externalmes 6 Personal nonrnarket

parts, and service, ex- serwces covered by the costs serwces, not fu//y cov- costs of using MVst)

cludmg taxes and fees following use charges ● AI r pollution

ered by charges m co/-

Usually included In estl- (see column 4 for I[st of : :::;;::::sa;::v:;edor

■ Global warming umns 1 or 2

■ Travel time (exclud Ing

costs) ● Water pol Iutlon delay Imposed by othmates of the cost of own- pald for by the prwate ■ Highway construction, ■ Sohd waste ers, column 5)

Ing and operating MVS Usually Included m estl- sector, and Included In maintenance admlnls- ■ Nose and wbratlon in- ■ Personal time spent

■ New and used MVS (ex- mates of the cost of own- the price of structures or tratlon fllcted on others working on vehtcles and

eluding sales taxes and Ing and operating MVS services ■ Pollee protection ■ Social and aesthetrc lm - garages

charges on producers) ■ FHWA-classified road- ■ Acctdent costsk paid for ■ Fire protection pacts fl Prwacy, comfort, conve-

■ Interest payments for user taxes and fees fuel by those not responsible 8 Judlctal and legal ser- ■ 011-price shocks nlence, safety while drwMVS taxes, road tolls h com- and not covered by any vices ■ Traffic congestion ln - Ing (combine with travel

s Fuel and oil (excluding merclal road-user fees auto Insurance lost pro- ■ Correctional system fllcted on others time to make general attaxes and fees) vehicle registration fees, ductiwtyd medical, legal, ■ Environmental regulation ● Pain and suffering and tribute actwitles fore1 Maintenance, repair, drwer’s license fees (ex- property damagec and protection deaths infhcted on oth- gone while drwing)

washing, renting stor- cludes fees dedicated ● Monopsony price effects = Energy and technology ers from accidents m

■ Pam and suffering and

age, towing for nonhlghway pur- of using 011 ‘ research and develop- death from accidents

■ Parts, tires, tubes, ac- poses) ment (excludlng that inflicted

cessorles ■ PortIons of fuel tax dedl- ● Mllltary defense of oil by others, column 5)

■ Automobile Insurance cated to nonhlghway supphes ■ Noise and wbratlon (ex-

● Parkl ng away from home purposes ■ Strategic Petroleum Re -

(excludmg parking tax)

cludlng that Inflrcted by

~ Investment Income from serve others, column 5)

Usually not Included the Highway Trust Fund ● Payment of costs of ac -

B Vehicle safety and smog ■ Charges levied on pro- cldents lost product wInspectlon c ducers and included In Ity medical, legal, propB Accident costs paid for selling price of goods erty damage e

by responsible party but (e g , for vehicle certh- ● Other social serwces

not covered by auto ln- catlon tests, Superfund ■ Free or underpriced musurance lost product lv- cleanup, and ollsptll nlclpal parking

Ity,d medical, legal, pmp- cleanup) ■ Dlfferentlal tax treatment

erty damagee

■ Sales taxes ‘ of energy producers (tax

subsldles or penaltles)

g

E

-.

0

3

m

A

o
A: A \</ ● c o 0 - 0 0 0 0 ~“ “ . 0 0

● Home garages and other

residential parking,t,9

Usually not included:

● Air-quality fees (paid

with registration).

■ In-1ieu property taxes

(paid with registration)

● Traffic fines.

● Parking fines,

■ Parking taxes,

a Note that an externality IS not defmecf as any nonmonetary (or nonmarket) damage, rather, an externality IS one kmct of nonmonetarydamage All nonmonetarydamages can be classified mto three mutually excluswe and

exhaustwe categories relevant to pohcymaklng Ftrst are exfernahtles, those damages (air pollutlon, global warmmg, pam and suftenrg, etc ) Inflicted by motor vehicle user A on party B and not accounted for byA These

are the “classcal- exfernahtles of thm table, and as indicated m table 5-9 the prescription for them IS a dynamic Pgouvlan tax on the perpetrator wth no direct ccrnpensat!on of the wctlm The second category IS those

damages Infhcted by motor vehicle user A on party B but accounted for by A as margmal cost of motor vehicle use These are appropriately mternahzed nonmoney damages, when an externally is properly taxed, It

becomes this second type of damage (mternahzed) If there were any such mternahzed (tormeriy nonmonehzed) damages, theywould be classlfwt as user payments m columns 1 or2. However, the Un@d States does

not levy any “externahty adders” or mternalizatlon taxes for nonmonetav damages of motor vehicle use (Note that m adding up the sooal cost, one would count either the mternallzatlon charge or the actual damage

estimate-they represent the same thing-not both.). The thrd category IS self -mfhcted damages or costs by a motor vehicle user, for example, the nsk of hurting oneself m an accdent of one’s own causing These are the

“personal” nonmonehzed costs of column 6

b Personal costs—travel Wne, comfort, safety, and privacy whle dnvmg (actwtles foregone vhle dnwng), the nsk of pam and suffering and death, and pollutlon and ncxse (excluding ttwse costs Imposed by others) are

included because they are consdered “costs” In lay terms However, If one categorized these Wms m strict econormc terms, with respect to supply and demand curves, then they most naturally are demand-side

(use-value) rather than supply-sIde Items, and therefore econorruc “benefits” rather than costs In any event, the notion of price, or efficient market allocation of resources, is not relevant, because these terns are not

exchanged, or traded In markets, they are “Imposed” by users dmxtly on themselves The only economically relevant concern IS that each user accurately assess these self-generated costs to himself Note that these

same sorts of costs Imposed on others do Involve mteractlons, they are externalities (If unaccounted for) and theoretically should be priced or taxed Externahtles are included m column 5

c Includes only those payments made for inspections at privately run stations, not payments for government-admmstered programs, because the latter presumably are included m the Federal Highway Admmlstratlon’s

reported receipts from Imposts on highway users (column 2) Privately run InspectIon programs presumably charge margmal costs, whereas government programs may not

d Lost productwitycan bedsaggregated mto the porhon that the indwldual keeps (net wages) and the porlon that the government keeps as mcometaxes. This seems like a conceptually unnecessary comphcatlon. the loss

IS the total productwty of the mdwldual, the dwposltlon of the Income IS (usually assumed to be) Irrelevant In a cost-benefit analysw

e Excludes the cost of repamng and replaclng vehicles or roads because all of those costs, whether caused by accidents or not, are classified as expenditures on vehicles (column 1 ) or highways (columns 2 and 4) It

therefore includes only the relatwely small amount of damage to other property, such as bulldmgs It IS worth noting, though, that If m decldmg whether to buy or use motor vehicles, people consistently underestimate their

probable out-of-pocket payments (ttxx.e not covered by Insurance) for repamng or replacing accident damage to tfwrown or others’ vehicles, then they will use motor velmcles more than IS socially effrclent (I e , more than

they would If they possessed and acted on the right reformation)

f It IS questionable whether these costs really are accounted for fully by motor vehicle users when they make motor vehicle ownership and use declslons

g Includes interest payments on the garage portion of the total cost

h Some road tolls, perhaps by comcldence, may be priced efficiently Slmdarly, some frees and producer charges may be efhclent (set equal to marginal cost), probably by coincidence

I All but a small fraction of this probably should not be counted as a payment by motor vehicle users for motor vehicle use

j The text discusses the Important differences between garages and unpnced parking

k Costs that the affected party (who IS not at fault) pays out of pocket or through private Insurance other than auto Insurance Costs covered by the automobile insurance of the affected party (who IS not at fault) are included

under “automobile Insurance” In column 1 (All auto Insurance costs are m column 1, even though some of the costs covered by auto Insurance are attributable to accidents caused by others, because the relevant cost IS

not the cost of the Items or serwces covered by Insurance but the cost of the Insurance policy Itself, and the cost of the Insurance policy IS borne by and attributable to the person who buys It) Costs paid by the responsible

party also are Included In column 1, under either “automobile Insurance” or “accident costs “ Costs paid by the government are Included In column 4 of this table

I A pecuniary externality, a transfer between consumers and producers, and hence not normally a true econornc cost or benefit But if a pafllcular class of prcducers (e g , foreign 011 producers) IS excluded from the welfare

analysis, then consumers’ loss IS not balanced by producers and IS thus a real net welfare loss wlthln the scope of the analyss

m Includes pain and suffering Infhctec on pedestrians, cyclists, and other nonusers of motor vehicles, as well as other users of motor vehicles This also should Include the cost of the threat of accidents to other drivers,

pedestrians, and cycksts, but no data are available on this cost

SOURCE M A DeLuchl, Unlversty of California-Davis, 1994

d

o

IQ
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions I 103

allocated components and inefficiently allocated

components), these costs must be divided in unusual ways to fit this classification scheme (e.g.,

accident costs appear in three separate places according to who is responsible for the accident and

whether the costs are monetary or nonmonetary).

However, there is substantial value in pursuing

this classification scheme, rather than simply adding up costs according to their physical nature.

because the policy prescriptions for dealing with

each category are different. Thus, knowing the magnitude of the costs in each class is necessary to inform policy choices. Policy options for dealing with

the various categories of inefficiently priced or unaccounted-for costs are discussed in chapter 5.

An issue that is not dealt with explicitly in the

classification scheme outlined in table 4-l is that

of time: to what extent should costs be classified

as “fixed” or “variable,” and what should the relationship be between policy measures and the time

horizon of the costs? This issue is dealt with in

slightly more detail at the end of this section, but

ignoring the time horizon implies that one is viewing travel behavior over the long term, during

which changes in vehicle costs can have as signifi -

cant a role as changes in fuel cost; and trying to

separate short-term (variable) from long-term

(fixed) costs implies that one is viewing travel behavior in the short term and attempting to change

behavior by altering the traveler’s perception of

costs faced on a daily or weekly basis.

Two last but critical points: first, the estimate of

social cost derived here is only an average cost.

This much would be saved if motor vehicle use

were eliminated, and thus an average value of the

reduction in vehicle-miles traveled (vmt) can be

calculated by dividing social cost by total vmt. We

cannot be sure, however, that the marginal cost of

a small reduction (in dollars per mile) would be

the same as the average cost, and for some cost

components, we know it is not. Since viable policies seek only to reduce motor vehicle use by a significant but small fraction-a 10-percent reduction would be optimistic--the average rate calculated from this social cost estimation may not

yield the correct estimate for such a small reduction. On the other hand, in at least some scenarios

of relatively large changes in motor vehicle use,

the average rate of social cost reduction might be a

serviceable approximation of the actual marginal

rate.

Second, although OTA has substantial confidence in the estimates of monetary costs, the estimates of the cost of externalities warrant less confidence. In some areas (e.g., the cost of global

warming impacts associated with a unit volume of

carbon dioxide emissions ), extremely large uncertainties exist, and these estimates should be considered tentative. In other areas (e. g., the cost of

air pollution damages), estimated values are firmer, although they are not without controversy.

fl Detailed Results

Monetary Payments for Motor Vehicles,

Fuel, and Other Items

The largest part of the social cost of motor vehicle

travel is the private cost of new and used cars and

trucks, gasoline and oil, maintenance costs, and

the variety of other costs (’parking, insurance, inspection costs, etc. ) that maintains the rolling

stock of motor vehicles, Wages of freight drivers

constitute a special category of costs that must be

included to incorporate highway freight transportation properly into the accounting system.

Table 4-2 lists the private payments for these

items, which account for more than $800 billion

of the total social cost of motor vehicle travel. All

of the items listed in the table are bought and sold

in markets that function more or less properly.

Consumers face and account for the price of each

of these items, and the price (presumably) equals

the marginal supply cost. Thus, the items in this

category are produced and consumed efficiently.

An interesting point is that the Federal gasoline

tax used to construct highways, as well as road

tolls and vehicle registration fees, are not included

here because the taxes, tolls, and fees are only

loosely tied to the infrastructure and service costs

they are designed to pay for.
104 I Saving Energy in U.S. Transportation

Item Low cost High cost Weight on cost

Passenger vehicles

New and used cars and trucks (including embedded fees

levied on producers; these are deducted en masse below)

Interest on debt for new and used cars and trucks

Gasoline and 011 (including road-user taxes and fees, these

are deducted en masse below)

Maintenance, repair, cleaning, storage, renting, towing, Ieasing

Parts, tires, tubes, accessories

Automobile Insurance

Parking (excluding taxes)

Vehicle Inspection fees

Accident costs not covered by insurance

Garages and residential parking, including interest on loans

Losses from parking lot robberies and larceny or theft from carsb

Subtotal

Highway freight transportation

ICC-authorized intercity trucks

Non-lCC intercity trucks

Local trucks

Intercity buses

Government-owned freight trucks

$2217

4 3 7

1240

8 7 6

2 5 7

2 0 7

6 7

0 8

157

100

0 1

5567

$2217

4 3 7

1240

8 7 6

2 5 7

2 0 7

6 7

0 8

1 8 0

201

0 2

569 3

1

1

1

1

1

1

1

1

1

1

7 5 4 7 5 4 1

8 5 2 8 5 2 1

11 8 111 8 1

0 2 0 2 1

5 5 5 5 1

Less wages of drivers (counted as time cost, table 4-7) C

1777 1777 -1

Subtotal $1004 $1004

Deduction for user taxes and fees counted separately in this analysis (39 2) (39 2) 1

Total $617.9 $630.5

a The low end IS based on 4-percent discount rate and the high end on 2 5-percent discount rate

b The estimate accounts for the Ilkellhood that if there were no motor vehicle use, some larCenY thefts from mOtOr vehicles and some

parking lot robberies would become larceny theft of other th!ngs and robberies m other places The estlrnate does not Include the

value of theft losses of motor vehicles, parts, and accessories, because it IS assumed theft v!ctlms buy replacements for these

Items, and replacement purchases are Included on total national payments for vehicles, parts, and accessories, estimated elsewhere In this table The estimate also does not include payments for legal assistance, security services, or security dewces (to the

extent that they are costs of motor vehicle use and not already included m other Imes m this table) because these costs proved too

difficult to estimate

c The wage cost of drivers Is a money cost, and technlca[ly belongs In this table It IS Included In table 4 7 to give a COrnp/ete plCtUrE?

of the cost of all travel time

KEY ICC = Interstate Commerce Commission.

SOURCE M A. DeLuchl, Urwerslty of California-Davis, 1994, based on Federal Highway Admmistratlon data

Monetary Payments by Users

for Highways and Services

Highway users pay for a large share of highway infrastructure and services through a variety of user

charges. The primary source of payments is the

Federal gasoline tax, which is now 18.4 cents per

gallon, coupled with license fees and toll charges.

State sales taxes represent an accounting difficulty: should these taxes, amounting to $14.3 billion,

be counted as user charges (and included here in

the total of motor vehicle user payments), or

should only the small portion of sales taxes (about

3 percent) spent on highways be counted? The latter was chosen because sales taxes are collected on

virtually all goods, not just gasoline, Table 4-3

displays the motor vehicle user payments counted

toward highway infrastructure and services, about

$70 billion in 1990.

As noted above, these fees are not marginal cost

prices, and most of them do not fully cover costs.

For example, the Federal excise tax on gasoline is

a charge per gallon of gasoline consumed, and it is
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions I 105

Item Low cost High cost Weight on cost

FHWA tax, license and toll payments by highway users

Portions of the tax dedicated to nonhighway purposes

(Including collection expenses)

Other Imposts used for highways

Investment income from Highway Trust Fund

Extra highway user payments in 1991, over 1990a

Fees levied on producers

Sales taxes

Air quality and in Iieu fees paid with vehicle registration

(and not already counted)

Traffic fines

Parking fines

Parking taxes

Total

$44 3

113

3 0

1 0

7 4

0 2

1 4 3

0 6

3.0

1 0

0 7

$70.3

$44 3

113

3 0

1 0

7 4

0 2

143

0 6

3 0

3 0

0 8

$72.3

1

1

0 1

1

1

1

0 0 3

1

1

1

1

~ In December 199o, the federal gasoline lax was raised 5 cents/gallon, to 14 1 cents/gallon, of which 25 CentSgOeS to reduce the

Federal deflclt (Federal Highway Admlnlstratlon, Highway .Slatlst;cs 1991, 1992) There must also have been other Increases In

user payments In 19!31 compared with 1990, because the extra revenue from the Federal tax does not account completely for all of

the extra user payments In 1991 compared with 1990 As a result of these Increases, total user payments for transportation were

about $7 bllllon higher In 1991 than In 1990 Gwen that this increase In payments has already occurred, It would be misleading If the

basellne estimate dld not account for It Consequently, the 1990 eshmates have been adjusted so that the difference between cost

and revenues IS the same as m 1991, even though the basehne IS nominally 1990 Note that the $7- bllllon difference between 1990

and 1991 IS due mostly to differences In the rate of payment or expenditure per umt of vehicle use or ownership (the point of interest), rather than differences In total vehicle ownership or use In 1991 compared with 1990, total motor vehicle registrations were

O 2 percent lower total vehicle miles traveled was 1 3 percent and total fuel gallonage taxed at prevailing rates was 1 6 percent

lower (Federal Highway Adm[nlstratlon, Highway Stakstlcs 7991, 7992) These ddferences are small compared with the roughly 12

percent Increase In user payments from 1990 to 1991

KEY FHWA Federal Highway Admlnlstratlon

SOURCE M A DeLuchl, Unwerslty of Callforma Daws, 1994, on Federal Highway Admlnlstratlon data

designed to pay for highway infrastructure and

maintenance. However, the amount of highway

that a driver “consumes” depends on the type of

highway (a freeway is orders of magnitude more

costly per mile than a dirt road), the amount and

kind of driving, the weight and other characteristics of a vehicle (a very heavy truck causes much

more road damage, and necessitates a much heavier road, than does an auto), and other factors; the

amount of gasoline consumed bears some relationship to these factors, but the relationship is a

weak one.

Hidden Private Expenditures for

Motor Vehicles

Table 4-4 displays those costs paid by the private

sector for motor vehicle use that are ● *hidden” (not

counted by motor vehicle users in their decisions

about traveling). The largest expenditure is for

parking: very few motorists pay for parking (according to the National Personal Transportation

Survey, only about 1 to 2 percent of travelers during a typical travel day), but providers must still

pay to build and maintain parking facilities. Estimates in the table represent both the “value” of

parking, estimated by assuming that free parking

would be charged at prevailing commercial rates,

and the cost of parking, estimated by computing

the likely actual expenditures needed to build,

maintain, and operate parking facilities. Note that

if all parking charged commercial rates, total parking demand would decline dramatically, and so

might prices, as people carpooled, reduced tripmaking, and switched to other modes of transport

to avoid charges. The “cost” estimate is considered the more accurate gauge of the social cost of

free parking.

Another important hidden expenditure is the

fraction of the monetary accident costs (property

losses, medical costs, lost wages, etc.) of motor
106 I Saving Energy in U.S. Transportation

Item Low cost High cost Weight on cost

Value of free off street nonresidential parking at work $3710 $6550 0

(excluding parking taxes)

Value of free off street nonresidential parking for all other trips 643 0 15230 0

(excluding parking taxes)

Annual cost of off street nonresidential parking 4350 18520 1

(excluding taxes), less payments for parking

Onsite roads provided by developers 5 0 0 1500 1

Monetary accident costs to those not responsible 326 0 345 0 1

(and not covered by auto insurance)b

Monopsony cost of Importing oil 7 5 2 216 2 1

Total $88.60 $256.30

a Roads built within the boundaries of the development, as opposed to roads outside the boundary (offslte roads, see table 4 5)

b The IOWend IS based on a 4 percent discount rate estimate, and the high end on a 25 Percent discount rate

SOURCE M A DeLuchl, Unlverslty of California Davis 1994, on Federal Highway Admmlstratlon data

vehicle use that is incurred by nonresponsible parties (both motorists and pedestrians) and not covered by automobile insurance, 17 more than $30

billion. These costs are considered hidden because the people who cause them do not pay for

them and therefore do not consider them in travel decisions.

Another important but controversial hidden

cost is the so-called monopsony cost of importing

oil-the effect of the large U.S. import requirements on the world price of oil. A large reduction

in U.S. oil imports presumably would lower world

prices, saving all U.S. motorists a portion of their

fuel bill (and providing savings for nontransportation users of oil, as well), but individual drivers do

not take this potential savings into account. Calculating this cost demands estimating the sensitivity

of world oil prices to U.S. oil demand, an uncertain and time-dependent value. A central value for

this cost is about $15 billion, but the margin of uncertainty is very high.

Public Expenditures for Motor Vehicle

Infrastructure and Services

Local, State, and Federal governments provide

much of the infrastructure and services associated

with motor vehicle use: highway construction,

maintenance, and administration, police and fire

protection, all aspects of the judicial system, and

so forth. They pay for portions of accident costs

not covered by insurance or private payments.

And they pay for some aspects of national security

associated with motor vehicle use of oil: military

costs, and building and running the Strategic Petroleum Reserve. National security costs

associated with relying on a fuel source whose primary reserves are located in politically volatile

areas potential y represent the second largest governmental cost, after highway construction and

maintenance. The range of expenditures is very

large, however, because of accounting problems.

Given U.S. commitments to the security of its

political allies who also import oil, and given other U.S. interests as the remaining world superpower, would military expenditures to protect oil

supplies necessarily be affected by large reductions in oil imports? Or how much of U.S. expenditures should be associated with its oil imports,

and how much with the general importance of oil

to world commerce, and thus to U.S. interests?

Different answers to these questions yield very

different estimates of U.S. military expenditures

related to motor vehicle use. Table 4-5 lists these

public expenditures.
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 1107

Item Low cost High cost Weight on cost

Highway construction, maintenance, services, and

administration (excluding costs of police and private

investment in onsite local roads, but including collection

expenses and private investment in offsite roads)

Pollee protection, including portion estimated by FHWAa

Fire protection

Court and judicial systema

Corrections a

Environmental regulation and government pollution control

(e.g., sewers)

Energy and technology research and development

Military costs related to oil use

Strategic Petroleum Reserve construction, operation, and

oil-holding costs

Monetary accident costs covered by the government

(excluding pain, suffering, and lost quality of Iife)b

Other social services

Tax subsidies

Subtotal

Total: public infrastructure and services, net of

Payments from table 4-3.

$76.5

79

1 4

4 0

2 5

1 0

0.0

5 0

0.2

4.4

0.0

0 0

$1030

$32.6

$765

765

3 2

1 0 0

3 5

3 0

0.0

2 0 0

0.2

1

1

1

1

1

1

1

1

1

1

1

1

a These estimates do aflempt to account for the possibility that many crimmal offenses that Involve mOtOr Vehicles and highways

might occur anyway even if there were no motor vehicles and highways.

b The IOW end is basecj on a 4-percent discount rate and the high end on 2.5- perCent discount rate

KEY FHWA = Federal Highway Administration.

SOURCE M A DeLuchi, University of California-Davis, 1994, on Federal Highway Admmlstratlon data

Externalities

Table 4-6 presents some rough estimates of classic

externalities associated with motor vehicle use.

Although the term externality has many definitions, here externalities are nonmonetary damages

imposed by motor vehicle users on others (including other motor vehicle users) without accounting

for these damages. In other words, A affects B, but

may not know it and, in any case, does not care.

The monetary values for the externalities presented here are taken from the literature, with less

evaluation than was applied to the monetary costs

and expenditures in earlier tables. Typically, for

most of these externalities, there are large uncertainties about both the physical magnitude of

damages and the appropriate way to place monetary values on them.

Nonmonetary Personal Costs

Table 4-7 presents rough estimates of the nonmonetary personal costs of motor vehicle travel. The

two important components of these costs are the

value of travel time and the pain, suffering, and

lost quality of life due to accidents for which the

traveler is responsible. At an assumed cost of time

of $4 to $7 per hour for motor vehicle occupants,

travel time costs are huge; they are the single largest cost category in the entire set of social costs.

The observed behavior of travelers makes it clear

that they take significant account of travel time in

their travel decisions; for example, travel time is

a critical factor in choice of transport mode and

one of the primary reasons why mass transit does

so poorly in competition with auto travel. On the

other hand, it is less clear that travelers take full
108 I Saving Energy in U.S. Transportation

Item Low cost High cost Weight on cost

Pain, suffering, and lost quality of life inflicted on others,

due to accidents

Macroeconomic costs of oil supply disruption

Mortality and morbidity effects of air pollution

Global warming due to fuel cycle emissions of

greenhouse gases

Congestion travel time costs inflicted on othersa

Leaking tanks, oil spills

oil refineries (environmental Impacts, excluding global

warming)

Gasoline distribution (counted separately only if doing cost

of gasoline use)

Agricultural losses

Material, visibility, and aesthetic losses due to air pollution

Noise inflicted on others

$132.1

15.5

40,0

2,5

128.9

1,0

1,0

0.0

1.0

3.0

1,5

$138.8

40,9

200.0

25.8

149,5

3.0

6.0

5.0

6.0

10,0

5.0

1

1

1

1

1

1

1

0

1

1

1

Total $325.5 $579.0

a This is a crude first approximation only, The breakdown between external Congestion COSt and other travel time cOSt is conjecture

SOURCE M A DeLuchi, Umverslty of California-Davis, 1994, on Federal Highway Administration data.

Item Low cost High cost Weight on cost

Pain, suffering, and lost quality of life, due to accidents $132.1 $138,8 1

Travel time, excluding external congestion costsb

855,4 992.0 1

Value of personal time spent working on cars and fixing 40,0 96,3 1

and cleaning garagesc

Pain, suffering, inconvenience, anxiety, and avoidance 0.8 1.6 1

behavior due to crimes related to motor vehicle use

Personal noise costsd

0.0 0.0 1

Total $1,028.4 $1,228.7

a Personal nonmonetary costs are distinguished from nonmonetary externalities because of the different policy implications a PIgouvlan tax on externalities (with no compensation for the victims), and a “reminder” to individuals about the personal costs that

they Infllct on themselves Technically, a small part of total air pollution damage, global warming damage, and other nonmonetary

damage is actually borne by the party that generates it and thereby really is a personal nonmonetary cost rather than an externality However, for these damages, the personal cost is so much lower than the external cost that the distinction seems pedantic

Only m the cases of accident costs, noise costs, and travel time is the distinction between personal and external costs of practical

significance

b This IS a crude first approxlma[lon only The breakdown between external congestion cost and other travel time COSt IS COn@CkIre.

c Based on an estimated 8 to 11 mmutes per person per day, and a $4-$7/Per Per hour time cost

d No estimate has been made of the noise costs that motor vehicle users inflict On themselves.

SOURCE. M A DeLuchl, Uruverstty of California-Davis, 1994, based on Federal Highway Administration data
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions I 109

account of the potential for accidents, and the resulting injury costs, in their travel decisions. The

recent sharp increase in consumer interest in vehicle safety, which has translated into vehicle purchase decisions beginning to focus on the presence of airbags, anti lock brakes, and other safety

equipment, implies that safety is playing a strong

role in long-term travel decisions: it is less clear

to what extent safety influences short-term travel

behavior.

B Conclusions

Because different policy makers are more or less

willing to incorporate nonmonetary costs into

their decisions, and are more or less interested in

equity among transportation alternatives versus

economic efficiency, the numerical results of DeLuchi’s analysis can be interpreted in a variety of

ways.

The question of whether motor vehicle users as

a class are paying most of the costs of their use is a

good starting point. This is primarily a question of

fairness, not economic efficiency.

First, if the focus is purely on monetary costs,

motor vehicle users as a class pay openly18 for

most of the costs of motor vehicle use. In 1990,

these payments ranged from $866 bill ion to $881

billion, while total motor vehicle use costs, including costs for free parking and the monopsony

cost of imported oil, ranged from $988 billion to

$1,200 billion; in other words, motor vehicle users paid openly for 73 to 88 percent of the monetary costs of motor vehicle use. Note that these

costs include both “private” and “public’” costs.

Second, if all costs of motor vehicle use are

considered, whether monetary or nonmonetary,

including externalities such as the costs of oil supply disruption, global warming damages, and

damages to vegetation and materials, but excluding the value of travel time, motor vehicle users

“paid" about $988 billion to $1,019 billion in

1990, out of total social costs of $1,437 billion to

$1,918 billion. In other words, motor vehicle users paid openly for 53 to 69 percent of the social

(public plus private) costs of motor vehicle use,

both monetary and nonmonetary, excluding

the value of time. Further, to the extent that most

of the accident costs listed as externalities are inflicted by users on other users, these could be added to the costs paid by users to yield a higher percentage of paid costs.

Third, because the costs of travel time (and other time spent in motor vehicles) are extremely

high and paid entirely by motor vehicle users, adding time costs to the social cost equation leads to

users’ paying a much higher percentage of total

costs. At average costs of $4 to $7 per hour for personal travel, the 1990 costs for motor vehicle travel time, excluding truck driver wages and external

congestion costs, were about $718 billion to$911

billion. Thus, if all costs of motor vehicle use—

monetary or nonmonetary (including travel

time)—are considered, motor vehicle users

“paid” about $1,716 billion to $1,930 billion out

of total social costs of $2,155 billion to $2,937 billion. In other words, motor vehicle users paid

openly for 66 to 80 percent of the social (public

plus private) costs of motor vehicle use, both

monetary and nonmonetary, including the value of time.

The general conclusion that can be drawn

from these specific conclusions is that if subsidies were withdrawn, externalities “internalized,” and hidden costs brought out into the

open and directly charged to motor vehicle users, the perceived costs of motor vehicle use

would increase substantially (by 14 to 89 percent, depending on whether nonmonetary

costs and other factors are included), and

people would drive less.

Another question that this analysis can answer

is, are motor vehicle users paying for the public

services they receive? Motor vehicle users paid

$70.3 billion to $72.3 billion for highway in-
110 I Saving Energy in U.S. Transportation

frastructure and services in 1990, out of public expenditures of $98.0 billion to $115.9 billion, not

counting military costs related to oil use. If military costs are counted, public expenditures were

$103.0 billion to $135.9 billion, depending on

point of view. Thus, motor vehicle users paid for

62 to 72 percent of public expenditures for

highway infrastructure and services, not

counting military expenditures, or 53 to 68 percent if military expenditures are counted.

If economic efficiency is of primary concern,

an attempt must be made to separate those costs

that represent marginal costs to society and are

paid and recognized by motor vehicle users, and

those that do not fit this description.

Only the costs outlined in table 4-2—payments

for motor vehicles, fuels, parts, service, and wages

of freight drivers—satisfy the conditions for economic efficiency (the items in table 4-3, payments

by motor vehicle users for highway infrastructure

and services, are not considered to be efficiently

priced). These costs amount to $796 billion to

$808 billion out of total monetary costs of $988

billion to $1,200 billion, including the cost of free

parking and the monopsony cost of importing oil.

Thus, approximately 67 to 81 percent of the total monetary costs of motor vehicle use are efficiently priced, that is, paid for entirely by motor vehicle users, counted in their travel decisions, and priced at marginal costs to society.

If nonmonetary costs are considered as well,

personal nonmonetary costs (table 4-7) may also

be viewed as efficiently priced, although there

will be arguments about the extent to which travelers properly account for some of these costs—particularly accident costs—in their traveling decisions. If these costs are efficiently priced, motor

vehicle users efficiently paid for about $929 billion to $949 billion (or 49 to 65 percent) of total

social costs, monetary and nonmonetary, of

$1,437 billion to $1,918 billion, excluding the

value of travel time. In other words, approximately 49 to 61 percent of the total monetary

and nonmonetary costs of motor vehicle use, excluding the value of time, are efficiently priced.

An important caveat that must be attached to

these conclusions is that they apply to a rather

long-term perspective, with the focus on total

costs rather than short-term, variable costs. The

ratio of “accounted-for” costs to “unaccountedfor” costs would change substantially if only variable costs were being considered. In particular, a

large component of the accounted-for costs is the

cost of purchasing vehicles, which would not appear in a short-term accounting. And many of the

unaccounted-for costs—such as free parking and

environmental costs—are variable, and would remain in the travel budget when a short-term perspective is taken. Thus, in taking a short-term perspective, the ratio of accounted-for to total costs

should be considerably lower than the ratios computed when both short-term and long-term costs

were considered. Does this mean that moving to a

system that forced travelers to account for all costs

would affect their behavior more than is implied

by the relatively small fraction of total unaccounted-for costs discussed above?

The question is, which perspective-one that

looks at total costs, or one that looks only at shortterm, variable costs--best reflects how potential

travelers will behave? Certainly, if policy makers

were concerned primarily about the impact on

travel decisions that would occur immediate] y following a move to a “full cost accounting” system,

they would focus on variable costs. However,

travelers must eventually make decisions about

vehicle purchases, insurance renewals, even the

size garage they desire in a new home, and these

decisions reflect both short-term variable costs,

such as the cost of gasoline, and longer-term costs,

such as vehicle purchase prices. These long-term

decisions then greatly constrain travelers’ future

shorter-term decisions about how much to travel

and which mode to use. Thus, both short- and

long-term costs influence travel behavior.

No attempt has been made here to unravel the

relative impacts on travel behavior of variable and

long-term costs, although some data exist about

certain elements of these impacts. Thus, no quantitative estimate is made of the extent to which a

shift to an economic system that forces travelers to

confront openly the total (marginal) social costs of

their travel would impact both total travel and the

distribution of travel modes. Nevertheless, OTA
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 1111

concludes that a shift to such an economic system

would have important effects on travel, probably

reducing its magnitude by a significant amount

and possibly shifting the modal distribution. OTA

believes that further research on the subject of

social cost estimation and the effects of

transport pricing on travel behavior would be

a valuable contribution to national transportation policymaking.

CONGESTION

Analyses of the potential for reducing U.S. transportation energy use—and transportation planning in general-demand a reliable picture of current and future levels of highway congestion and

its impacts, for two reasons. First, severe highway

congestion may increase energy use by slowing

travel speeds to a level at which internal combustion engines are relatively inefficient, and may increase or decrease energy use by affecting travel

demand, travel patterns, and residential and business locational decisions. Second, at some level of

severity, road congestion would place significant

constraints on any transportation strategies that

stress continued U.S. reliance on private vehicles

for mobility. Some analysts fear that traffic congestion could become the Nation’s primary problem in surface transportation by the 1990s,19 and

could cause average travel speeds to slow greatly—and travel times to soar-—soon after the turn

of the century. Congestion of this severity clearly

would affect the relative priority transportation

strategists would give to, say. new transit systems

versus improved vehicle efficiency. Other analysts have expressed skepticism that congestion

problems are as severe as they have been portrayed, or that the future will be as bleak as preSome analysts fear that traffic congestion could become the

Nation's primary problem in surface transportation by the end

of the 1990s

dieted. The validity of the available congestion estimates and forecasts must be

1 Proposition: There Is a

Congestion Problem

examined carefully.

Major National

Some recent analyses of highway congestion conclude that growing congestion is an extremely serious problem for the U.S. highway system. The

Federal Highway Administration (FHWA) has

completed a number of congestion studies whose

results point in this direction:

By all system performance measures of highway congestion and delay, performance is declining. Congestion now affects more areas,

more often, for longer periods, and with more

impacts on highway users and the economy than

at any time in the Nation’s history.2o

For example, FHWA has determined that the percentage of highway mileage in which peak-hour
112 I Saving Energy in U.S. Transportation

travel occurs in congested conditions21

rose

sharply between 1983 and 1989: on rural interstate, from 3 to nearly 10 percent; and on urban

.

interstates, from 31 to 46 percent.22 Similarly, the

percentage of total peak-hour travel occurring in

congested conditions rose in the same time frame:

on rural interstates, from 8 to nearly 23 percent,

and on urban interstates, from 55 to nearly 70 percent. 23 More importantly, most of the peak-hour

travel under congested conditions was rated as

“highly congested” by FHWA standards.24

FHWA examination of severe congestion in a

20-city sample shows similar results. In the sample, FHWA estimates that the percentage of total

freeway travel operating under severely congested

conditions—level of service F, where traffic is

highly unstable and likely to degenerate into stop

and go-rose from 5.2 to 6.4 percent during

1985-88.

The Texas Transportation Institute (TTI) also

has studied national congestion trends. Table 4-8

presents estimates of changes in values of the

roadway congestion index (RCI) from 1982 to

1988. The index is a simple measure of congestion, measuring the daily vehicle-miles of travel

per lane-mile of road on freeways and principal arterial roads; an increase of 10 percent in the index

means that the growth in vehicle-miles of travel

has outstripped roadbuilding (the growth of lanemiles) by 10 percent. RCIs greater than 1.0 are

considered to indicate congested conditions, although the average highway speeds generally

achieved at RCI = 1.O—a bit more than 40 miles

per hour (mph)—would not be considered slow

for urban freeways in dense cities.

As shown in table 4-8, in 28 of the 39 cities, the

growth in vehicle-miles traveled (vmt) on highways and principal arterial roads outstripped increases in lane-miles by at least 10 percent, and in

several cases by well over 20 percent, in just 6

years.

Estimates of the costs of congestion—including time delays, wasted fuel, and increased insurance premiums25—indicate that these costs are

high. Available studies generally conclude that total costs are in the tens of billions of dollars and are

rising rapidly. For example, TTI estimated congestion costs for 39 of the Nation’s largest metropolitan areas to be more than $34 billion in

1988.26

Some studies have attempted to project future

congestion levels by extrapolating trends in highway travel and road building, Their results, in project ions of congestion levels and average highway

speeds, appear extremely worrisome. For example:

1. FHWA has projected that by 2005, in the absence of further highway improvements or

growth, 23.9 percent of all freeway trave127 will

be at least mildly congested—that is, traffic

will slow from true free-flowing conditions—

simply from normal daily peaks in traffic, not

~ ] Vt~Iun~e to capacl(y (\rC) ratios {JfO.80 {)r greater; for urban freeways, ii J’ c rati{~ {~f 0.77 c(mwp)nds to an :i~cragc speed of ab(wt 54

miles per hour, and a ratio of ().80 c(wresp~nds to a slightly l{)wer spud. LJ. S. General Accxwnling Office, op. cit., f{x)tm~te 19, table 3.1.

22 U.S. Congress, 0p. cit., ft~(m)le 20.

24 V~C of 0.95 or greater, clmes~mding t{) iii cr[igc speeds of iiboiit 40 (cl 45 m]lcs ~’r h(~iir or less according [() the U.S. General Accounting

Office, op. cit., f(mtm~te I 9, table 3.1.

25 Other costs, generally m)t estlrnatul, incllide excess \ehicle wear :ind drik w stress.

‘h J.W. Hanks, Jr, and T.J. L(nnax, RoadI\ a] [’cm<fc$ll{~~~ In ,tf<~j~~r ~’rha)~ Arm\ /982 to /988, Repmt .N(). FHWATX-90- I I 3 I -3 (College

Station, TX: Texas Transpmati(m Institute, JIIIYI 1990).

~’ Measured in vchicic-miles.
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 1113

Urbanized area

Phoenix, AZ

Detroit, Ml

Houston, TX

Memphis, TN

Cincinnati, OH

Pittsburgh, PA

Louisville, KY

Corpus Christi, TX

Philadelphia, PA

Oklahoma City, OK

New York, NY

Baltimore, MD

Tampa, FL

Miami, FL

San Antonio TX

Milwaukee, WI

Fort Worth TX

Salt Lake City, UT

Albuquerque, NM

Chicago, IL

Kansas City, MO

Denver, CO

El Paso, TX

Indianapolis, IN

St Louts, MO

Minneapolis-St Paul MN

Cleveland, OH

Dallas, TX

Portland, OR

Washington DC

Seattle-Everett WA

Boston MA

Atlanta, GA

Austin, TX

Los Angeles CA

Sacramento, CA

San Francisco-Oakland, CA

Nashville, TN

San Diego, C A

Northeastern average

Midwestern average

Southern average

Southwestern average

Western average

Total average

Maximum value

Minimum value

0 9 3

0 8 3

0 9 0

0 8 2

0 9 4

0 8 7

122

0 6 2

SOURCE J W Hanks Jr and TJ Lamas, Texas Transportation Institute, Roadway CongestIon m Major Urbamzedmeas 1982 (o 1988, FHWW

TX90-1 131-3 (College StatIon TX July 1990)
114 I Saving Energy in U.S. Transportation

counting accidents or other singular events.28

In 1984, only 11.4 percent of freeway traffic

was congested because of normal traffic peaks.

The same analysis projects total delay from

both normal peaks and singular events of nearly

7 billion vehicle-hours, from slightly more than

1 billion vehicle-hours in 1984-an increase of

450 percent. Similarly, excess fuel consumption is projected to increase from 1.378 billion

to 7.317 billion gallons per year, a 431 -percent

increase .29

2. Various local studies have projected sharp declines in service because of congestion. For example, Los Angeles freeway speeds are projected to slow to 11 mph from their present 31

mph by 2010.30 Planners for Southern California projected in 1988 that average freeway

speeds would drop by 50 percent and speeds on

other roads by 46 percent, to 24 and 19 mph, respectively, within 20 years.31

Neither the estimates of changes in actual congestion levels nor the forecasts of future congestion

appear at odds with areawide data on highway

travel and highway capacity. These data show that

travel has been increasing at a far greater rate than

capacity; for example, vehicle-miles increased by

168 percent during 1960-87 (3.7 percent per year),

whereas highway mileage increased by only 9 percent.32 And while vehicle-miles are expected to

increase more slowly in the future, it remains a

virtual certainty that future travel growth will continue to outstrip highway building, at least for the

next few decades.

1 Counterarguments

Despite these trends, some analysts have questioned the high estimates of congestion costs

made by FHWA and others. They have focused

particularly on travel data that, on the surface, appear to contradict the estimates. One such “contradictory” data set is the available survey data on

commuting times; although local commuting

times have changed, the national average commuting time has been remarkably stable over the

past decade. Two major surveys measuring recent

changes in commuting times showed little change

during the 1980s: the national census estimates

that average commuting times increased by 40 seconds between 1980 and 1990, from 21.7 to 22.4

minutes;33 the National Personal Transportation

Survey (NPTS) estimates that they declined by

about 40 seconds during 1983-90.34 An examination of commuting times in 20 cities showed that

between 1980 and 1985, 18 of the 20 cities experienced a decrease in commuting times. 35 Although

commuting represents only 32 percent of all

28 J. Llndley, “Urban Freeway Ctmgestitm, Quantificatitm of the Problem and Effectiveness of Potential Soluti(ms, ITA Jourmd, vol. 57,

N(). 1, January 1987.

29 Ibid.

lo ‘“TranSpoflatlon” and Land use, Br](J~ln~ the Gap, ” f)el,e/{~pn/en[s, the Newsletter of the National Growth Management Leadership pr’oject, spring-summer 1990, p. 2, in J .J. MacKenzie et al., The (loirrg Rate.” Whar 1/ Rea//y COSIS To Dri\’e (Washington, DC: World Resources

Institute, June 1992).

~ I southern Ca]ifomia Ass(~~latl(~n of Governments, ReKlona/ h40b;/lty P/an (Los Angeles, CA: 1988), cited in p. Gordon et al., “The C(mlmuting Paradox: Evidence From the Top Twenty,” American Plarrnin~ Assocla!ion Journal. autumn 1991.

32 U.S. General Acc(nmting Office, op. cit., footnote 19.

~~A E plsarskl Ne)t. Per Ypc{.r;le.r In Cof11n114r/nX (Washington, DC: U.S. Department of Transportati(m, Federal H ighway Administration,

. .

Ju]y 1992).

34 ps Hu and J. Younu S1/nlnIar}. ~j~’ 7)-a~f~/ Trends; ] 990 Narion~~’ide Pcrsonol Transportation Sw\>e~l, FHWA-PL-92-027 (Washingt(m,

. .

DC U.S. Department of T~~nspwtati(m, Federal Highway Administrati(m, March 1992), table 10.

{5 p G{)rd,)n et a]., ,)P. Cit., f(x)tnote q 1, pp. 416-420. The reducti(m in commuting times represents kx)th a Small decrease In average w(~rktrlp

length and a small increase in speed.
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 1115

household personal vehicle miles-traveled,36 it almost certainly represents a substantially larger

share of congested vehicle-miles traveled. Thus,

it is not easy to reconcile the idea of huge increases

in congestion and little change in commuting

times.

Also, contrary to what might be expected from

the thesis that urban congestion—and bumper-tobumper traffic moving at a crawl—is spreading,

essentially all nationwide measures of highway

speed (average, median, percentage exceeding 55

mph, etc.) show increases. For example, average

speeds37 on urban interstate highways rose from

55.5 mph in 1981 to 58.6 mph in 1990; similarly,

average speeds on other urban freeways and minor

arterials rose from 55.0 to 57.6 mph in the same

time. 38

Further, if congestion is such a problem, drivers

making unscheduled trips would be expected to

avoid peak traffic periods. Although available

data do not distinguish clearly between unscheduled and scheduled trips, NPTS data on peak-hour

travel reveal that trips other than commuting account for 63 percent of all trips in metropolitan

areas during the morning and afternoon peaks (6

to 9 a.m. and 4 to 7 p.m.).

39 Although many of

these trips (e.g., parents driving children to

school) cannot be shifted to other times, it seems

likely that others could be taken at off-peak hours.

The willingness of drivers to make so many of

their nonwork trips during peak hours may imply

that many do not consider current congestion levels severe; it also implies the existence of some

potential to hold off increased congestion (presumably, at some congestion level, drivers would

switch to other times).

1 Evaluation

Do these seeming contradictions mean that either

the congestion estimates or the “opposing” data

sets are incorrect, or can both be correct? A lthough the data do not allow a definitive conclusion, it appears likely that the trends of stable commuting time and rising highway speeds could

coexist comfortably with rising congestion, at

least for a while, There are reasons to doubt, however, that current congestion impacts are as severe

as portrayed or that they will necessarily grow as

rapidly as forecast. On the other hand, traditional

estimates of the economic impacts of congestion

tend to ignore some of its important negative consequences.

First. the failure of commuting trips to show

significant increases in average time may reflect

the effects of one trend being canceled by a few

others. That is, although congestion may indeed

be growing, which should tend to increase travel

times, a variety of factors (e.g., a shift in commuting patterns to suburb-to-suburb routes and a larger percentage of single-rider commuting, thus reducing the average number of stops necessary and

trip circuity) would act in the opposing direction

to reduce travel times.

Although the data show clearly that total vehicle-miles traveled has grown much faster than

total road capacity, there have been important

shifts in trip patterns that counteract at least some

of the potential congestion impacts of the vehiclemiles traveled versus capacity trends. In particular, there has been a continuing shift of worktrips

from central city to suburbs: between 1970 and

1980, for example, central-city to central-city
116 I Saving Energy in U.S. Transportation

commuting trips declined as a percentage of all

commutes by nearly 18 percent, whereas suburbto-suburb commuting trips increased by 20 percent, and these trends have continued.40 This appears to be a crucial reason why average

commuting times have not escalated. Even if congestion is growing in some areas, many workers

have escaped it. Suburban trips are likely to be

made under less congested conditions and thus at

higher speeds, and they are more likely to be made

in autos than on transit, also reflecting lower doorto-door times. In fact, worktrip speeds have increased over time for both central-city and suburban residents, except for those driving off-peak.41

Evidence is less clear about whether changes in

the time of day that trips are made may also have

played a role in reducing the impacts of congestion. Although there has been much anecdotal discussion of workers’ attempting to avoid the worst

congestion by arriving at work significantly earlier than they are expected (or leaving later) or taking advantage of flextime schedules, analysis of

American Housing Survey data shows little evidence of peak elongation in the smaller metropolitan areas.42

If, at the national level, large shifts in travel

patterns are compensating for the failure of highway capacity to keep up with growing travel, substantial geographical differences should still show

up in the data since there are large differences in

growth rates among cities, and large differences

among urban areas in their willingness to expand

highway capacity. Such differences do appear to

exist. 43 For example, during 1980-90, Los Angeles gained 2 minutes in average commuting

time, and some of the nearby counties had gains

that were much higher; whereas Houston, despite

a large growth in commuting traffic, lost 1.7 minutes during the period. On a State-by-State basis,

New Hampshire showed the largest percentage

increase—about 13 percent—while Wyoming

showed a 13 percent decline in commuting time.44

Another trend that would tend to reduce commuting time is the growth in the percentage of

workers driving alone. According to census data,

in 1980 single-occupancy vehicles accounted for

64.4 percent of commute trips; in 1990 this mode

accounted for 73.2 percent of all such trips,45 a

gain of 22 million single-occupancy vehicles during a period when the total number of workers increased by only 19 million.46 In the same period,

commuting on public transportation declined

from 6.4 to 5.3 percent of all commute trips, and

carpooling declined from 19.7 to 13.4 percent,

with nearly half of the decline coming from carpools of three or more riders.47 Transit trips and

carpool trips tend to be relatively long (because of

waiting time and access time for transit, and

pickup-dropoff time for carpools; even when husband and wife drive together, one generally drops

the other off at a work location, with added distance and dropoff time).

Second, the data on highway speed may also reflect two opposing trends. Increases in average

highway speeds could simply result from the combination of speed increases at off-peak hours and

(congestion-caused) decreases at peak hours, with

the increases thus far outweighing the decreases.

Q p. G(~r&Jn and l+. Richardson, “Notes From Underground: The Failure of Urban Mass Transit,“ The Public lnteresr, lssue94, winter 1989,

table 1.

~1 p. Gordon” e[ a]., op. cit., f{x)tnote ~ 1.

42 Ibid.

43 pisarski, op. cit., footnote SS.

4 Ibid., figure 12.

45 I bid., table 2.

% Ibid.

47 Ibid.
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions

As a hypothetical scenario, in 1990,off-peak48

trips accounted for about 54 percent of total trips

in metropolitan areas.

49 If off-peak highway trips

are usually uncontested, the actual 2.6 to 3.1 -mph

speed increase on urban highways during 1981-90

could have resulted from a 2.5 to 3.O-mph decrease in speed during peak hours due to congestion and about a 5.0 to 6. O-mph increase during

off-peak hours due to more drivers exceeding

50 Unfortunately, FHWA does not speed limits. -

have time-of-day data on highway speed: further

study using State data is necessary to determine

the validity of the above hypothetical scenario.

Third, although the estimated costs of congestion appear very high. they may be relatively low

compared with the total volume of travel. The

present amount of congestion seems quite drastic

because of current rhetoric and because the aggregate estimates of “congested” roads and monetary

damages seem very high. For a variety of reasons.

however, the impact on the average driver may not

yet be all that great, although it may get much

worse.

“Congested flow” in FHWA terminology

means only that traffic has slowed from total 1 y unconstrained levels: 54-mph speeds on freeways

represent congested conditions under this definition. Even FHWA’s “highly congested” traffic

flow (volume-to-capacity (V/C) ratio greater

117

than

0.95) implies average speeds of about 40 mph or

less, 51 which includes traffic that would be considered quite free-flowing by most residents of

large urban areas. Interestingly. FHWA, in its report to Congress, slightly misinterprets its own

congestion data:-52 it reports that 70 percent of

peak-hour travel on urban interstate is experiencing level E service or worse53 (E is severely congested ). whereas the 70 percent value actually refers to V/C levels of 0.80 or more, which is closer

to level C service. or very mildly congested.

To get a better fix on congestion impacts, it

makes sense to compare the estimated total delay

time caused by congestion with the total time of

travel. AS noted, FHWA estimates that congestion

delay in 1984 was about 1 billion vehicle-hours

and will increase to more than 7 billion vehiclehours by 2005. TTI's estimate of the vehicle hours

of delay in 1989 for 50 major urbanized areas

(with a combined population of 103 million) is

2.46 billion.54

The FHWA estimate is a relatively small number of hours compared with total highway vehiclehours: in 1983. about 15 billion vehicle-hours

were devoted to commuting, and perhaps 40 to 50

billion vehicle-hours to trips of all purposes.55 If

half of the delay hours affected commuting trips,
118 I Saving Energy in U.S. Transportation

then the delay for the average commuting trip in

1983-84 was about one-thirtieth of 20 minutes--40 seconds per trip. However, FHWA’s

projected 450-percent increase in delay time by

2005 will have far greater impact, because in that

period the total number of commuting trips is likely to increase by only about 50 percent over the

1983 value, which implies an average delay of

about 3 minutes per trip.

The TTI estimate implies a more substantial

impact on the average trip. Even if the sample of

50 urban areas includes a much higher percentage

of the Nation’s total congestion than is implied by

its portion (less than 50 percent) of the total U.S.

population, the estimate seems to imply an impact

on commuting trips of at least 2 minutes per trip,

compared with FHWA’s 40 seconds.

It is not easy to interpret these congestion values, particularly because the averages almost certainly hide strong distributional impacts. Even at

the higher TTI figure, it is not clear that current

levels of congestion represent a substantial inconvenience to the average driver at most times. The

TTI congestion delay estimate implies that congestion costs the average city dweller about 30

hours per year, or 5 minutes per day. On the other

hand, it is entirely possible that the distribution of

congestion impacts is strongly skewed, so that a

minority of drivers is impacted very heavily. Unfortunate y, available analyses of congestion costs

do not attempt to evaluate how the impacts are distributed.

Although the above arguments imply that the

trends in highway speeds and commuting times

do not really contradict FHWA and TTI estimates

of congestion, other evidence implies that the estimates are overstated. FHWA and other organizations that estimate congestion damages do not rely

directly on speed data to calculate congestion delays; instead, the organizations estimate speed by

collecting data on traffic flows and applying

known relationships between traffic flows and

speed. In one of its estimates, for example, FHWA

applies traffic flow-speed relationships derived

from 1983 and 1984 traffic counts on Interstates

66 and 395 near Washington, DC.56 Another,

widely used source for traffic flow-speed relationships is a set of graphs of average speed versus

volume of passenger cars per lane published by

the Transportation Research Board (TRB).57 New

research shows that the old graphs are not accurate

anymore; today’s drivers are able to maintain

higher speeds with high traffic counts than their

counterparts in the past. Therefore, applying the

old (1985) TRB curves would yield estimated

speeds that are too low and estimated delays that

are too high. Figure 4-1 compares the 1992 curve

for freeways and multilane highways with its

counterparts for 1985 and 1965. The curve shows

that in 1992, the actual capacity of each freeway

lane is at least 2,200 cars per hour, rather than

2,000 cars per hour for the earlier years. Furthermore, there is now essentially no dropoff in speed

until traffic flows reach 1,400 cars per hour per

lane, and after that the dropoff is relatively mild.

The curves for earlier years show an immediate

dropoff as traffic increases from zero, and the beginning of a sharp dropoff at about 1,600 cars per

hour per lane.

By using the old curve, highways at traffic

counts of 2,000 cars per hour per lane would be estimated to be close to gridlock, with average

speeds of about 30 mph. Each of the 2,000 cars

would be accumulating ‘*delays” of about 5 minutes for every 10 minutes actually on the highway,

By using the new curve, however, average speeds

for this situation are estimated to be 55 mph, with

essentially no delays. Because the data used by

FHWA in its congestion analyses are similarly
Chapter 4 Why lntervene? Externalities, Unpriced Inputs, Problems Needing Solutions I 119

outdated, its congestion damage estimates are

overstated.

A reanalysis of urban freeway congestion delays by FHWA58 using the revised capacity of

2,200 cars per hour per lane and the revised speeds

for V/C less than 1.0 indicates that the estimated

1987 vehicle-hours of delay are reduced by 12 percent with the new data. This reduction seems surprisingly small given the severity of the change in

figure 4-1. The author of the reanalysis explains

that most of the delay occurs at very high V/C levels, particularly during non-reoccurring events, so

that the changes have no effect on the greatest portion of the delay. 59 The accuracy of both the original analysis and the reanalysis depends, however,

on the accuracy of a key assumption used in both

calculations, that average travel speed at V/C levels greater than 1.0 is 20 mph. No data exist to allow a reliable representation of this average speed.

Even if congestion impacts are spread relatively widely and are lower than FHWA has estimated, yielding a somewhat milder view of the

current problem, the question of future impacts remains. As noted, congestion is projected to increase rapidly in the future. This is not surprising,

given its nature: once traffic reaches a threshold of

congestion—about 80 to 90 percent of the design

capacity of the road60—average speeds drop (and

delays increase) rapidly with increasing traffic

flows. What the FHWA data seem to show is that

traffic flows on a large percentage of U.S. highways have passed the congestion threshold for

several hours per day; thus, if traffic continues to

increase at historic rates with increases in road capacity lagging behind, congestion will increase

very quickly. Presumably, an analysis based on

the TTI methodology would yield still higher estimates of future congestion impacts. Although

OTA believes that a reanalysis of congestion im60 -~

-.

.

.

.

E

: 50 .

-ua) .

a) Qu)

.

~ 40

2

*

a) \

m \

a - Freeways/multllane highways, 1985

g 30- ‘

-

a

Freeways, 1985

— Multllane highways, 1985

— - Freeways, 1965

20 I I I

I I I

1 r

I

0 4 8 12 16 20

Volume of passenger cars per hour

per lane (hundreds)

SOURCE 1965 Highway Capacity Manual Highway Research Board

(HRB) Washington DC 1985 Highway Capacity Manual,” TransportaIlon Research Board Hghway Capacity Manua/ Special Report No

209 (Washington DC National Research Council 1985) data from National Cooperative Htstory Research Program Project 3-33 “Capacty

and Level of Serwce for Multilane Highways

pacts using the most recent data on speed-traffic

flow relationships would yield a reduced estimate

of current congestion impacts, this is not to deny

that congestion problems exist.

The importance of congestion in the future depends on the growth rate of vehicular travel; infrastructure responses (new roads, improved maintenance of roadways, smart highways); behavioral

responses of drivers and businesses, either spontaneously or reacting to government incentives: and

general trends in urban structure. The actual degree of congestion to be expected in future years

should be very sensitive to changes in these vari5X J A Llndle}, Federal High W a} .~drlllnl~tr:lti{~ll, “Supplmmn[al Anal!’sls f~f Llrban Frccw:i} Cfmgcslt(m L’stng Rc\ised Capacity and

Speed-Fl(w Relati(mshlps,’” unpublished paper, April 1993.
120 I Saving Energy in U.S. Transportation

ables. For example, increasing highway capacity

by 20 percent by 2005 would decrease the expected traffic delay by about 27 percent, according

to the FHWA model.61

No similar analysis is available for possible

changes in travel behavior caused by continuing

changes in jobs and residential locations, as well

as other changes such as varying work hours and

shifting of peak-hour nonwork travel out of the

peak. The FHWA model does not consider such

changes, and data to allow such consideration may

not be available. Changes in travel patterns, however, probably could have impacts on congestion

at least as strong as the likely increases in highway

capacity, especially as congestion becomes severe. Questions that need to be asked, and investigated, include: Will growing congestion cause

more workers to change jobs or residences? Will

businesses relocate to less congested areas, change

their business hours, or perhaps establish remote

annexes connected by telecommunications?

Trends in urban land use and travel patterns

have tended over the past few decades to mitigate

the impacts of rapidly growing travel and slowly

growing road capacity, by shifting travel away

from congested routes. Unfortunately, it is not

clear to what extent congestion played a key role

in the important shifts in job and residential locations that have occurred over this time period. In

all probability, the shifts in job locations owed as

much or more to advances in telecommunications

and the general degradation of urban services as

they did to congestion. Similarly, movement of

workers to the suburbs reflected growing urban

crime and degenerating school systems, as well as

a desire for single-family housing, at least as much

as it reflected an escape from congestion. In other

words, although past trends worked well to reduce

the impacts of congestion on commuting, it is unlikely that the primary causal factor behind these

trends was the congestion itse[f. Consequently, it

may be risky to assume that businesses and workers will adapt their behavior to growing congestion in the future and thus mitigate it, unless other

forces push their decisions in the same direction.

Also, the locational shifts of the past may have reduced the growth of congestion in the cities, but

they introduced congestion to the suburbs and beyond. If recent trends in job creation continue, the

suburbs will gain population and employment. Increases in congestion will then depend on just

where this growth occurs—in the already developed portions of the suburbs or in new outer rings

of development. Congestion will also depend on

whether additional suburban growth concentrates

in subcenters or, as some predict, develops in a

more uniform character.

Despite the uncertainty, however, it is difficult

to believe that the forecasts of extreme drops in

travel speeds will prove correct. The forecasting

models assume that congestion does not have

some self-limiting mechanisms, that is, that traffic

will simply keep on increasing as highway speeds

fall. It seems more likely that, instead, growing

congestion will restrain growth in traffic volumes

and shift travel to less congested areas and less congested times, especially when average speeds drop

severely. Unfortunately, there are few data on the

nature of the effect—the critical speeds beyond

which driver behavior might shift strongly, regional differences in driver tolerance of delay, etc.

Aside from concern about the accuracy of current estimates and projection of future congestion

delays, estimates of the dollar costs of congestion

must be treated with care as well. TTI computes

costs in three categories-insurance, delay, and

fuel. Insurance costs represent the difference between costs in smaller urbanized areas and those

in large urban areas.

62 Attributing these differences solely to congestion is unwise, however;

higher insurance rates in large urban areas are like1 y to be due to higher rates of auto theft, existence

of more intersections and more traffic regardless
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 1121

of congestion, more interaction between pedestrians and traffic, and other factors in addition to

congestion. Estimates of fuel costs calculate increased fuel use by applying fuel economy adjustment factors obtained from empirical evaluation

of automobiles operating at different speeds. Although maintaining high-efficiency levels at low

speeds is a problem for auto designers, a large

growth in congestion could conceivably spur redesign of vehicle drivetrains to reduce the lowspeed fall off in efficiency. This redesign would be

facilitated by a shift by the U.S. Environmental

Protection Agency in its city-highway adjustment

factors, or in its test cycle, to account for changes

in driving patterns.

Estimates of delay costs assign an hourly value

to lost time (in the TTI study, $8.25 per personhour) and calculate delay as time lost by driving at

speeds below the off-peak average. These estimates implicitly assume that extra time spent in

vehicles is wasted. Certainly many would agree

with this, but the extreme comfort levels attained

in modem vehicles (including high-quality stereo

systems and portable phones) may begin to challenge this assumption.

To our knowledge, both TTI and FHWA focus

on direct delays attributed to congestion, and do

not attempt to quantify the economic impact of

congestion-caused changes in travel behavior: the

need to schedule extra travel time because of increased variability of commuting time due to congestion; and forced shifts in destinations and

times, or even foregoing travel because of congestion. These impacts may be quite significant, although clearly they are difficult to measure.63

TTI’s methodology averages areawide traffic

flows with areawide measures of capacity, and

may have difficulty correctly gauging actual

changes in congestion levels if tripmaking patterns change over time, which they have. FHWA’s

methodology appears to measure individual sections of roadway and average these. Congestion

estimates using this methodology would not appear to be easily distorted by changes in travel patterns.

If commuting trips are not getting longer on average, but large increases in travel delay are occurring, this could mean that most of the direct impacts of congestion are falling on nonwork trips

for shopping, social and recreational purposes,

and other family or personal business. Certainly,

the time spread of congestion now impinges on

trips that once avoided congestion simply by

avoiding the traditional “rush hour.” Also, the

spread of suburbanization and the large movement

of women into the workplace may have added

enough jobs with short commutes to balance congestion effects on those workers remaining in

traditional commuting patterns, so that the data on

average commuting time may be hiding strong

congestion impacts affecting many workers. Finally, congestion may affect even those workers

who have changed jobs and residences and shortened their commuting times; without the added congestion, they would have saved still more time.

To conclude, congestion on U.S. urban and

suburban highways is an important and growing

problem, but the magnitude of the problem is not

well defined. Current congestion levels are not

well measured, and available forecasts of future

congestion levels appear simplistic. Some analysts believe that FHWA estimates of current congestion levels, and its characterization of the nature of the congestion problem, are grossly

overstated. Evidence that appears to contradict the

FHWA estimates (constant commuting times, increasing average highway speeds) turns out to be

equivocal, however, when examined more carefully. At FHWA-estimated levels, congestion delays are still a small fraction of total travel times

during peak hours. Thus, it is not unlikely that

congestion at these levels could fail to impact

63 Recf)mnlenda{i{)ns for paying more a[[en[i(m t{) these impacts appear in A.E. Pisarslii, Sii?mK~r] fl~d ~C[~r7~rTJP~(i[]~)[>~T [[f J)lc ~~j~~.~}lfjtj

On Nafiondi Urban Congestion Monitoring, FHWA-PL-90-029 (Washington, DC: U.S. Department of Transpwtatl{~n, Federal Hlghw ay Administra[i(m, September I 990).
122 I Saving Energy in U.S. Transportation

measures such as average commuting times, especially when recent changes in commuting patterns

are factored in. If congestion does grow as rapidly

as forecast, however, the efficiency of the U.S.

highway system could be seriously degraded.

Given this potential threat, upgrading of congestion measurements and forecasts is a worthwhile

goal.

ENERGY SECURITY AND

TRANSPORTATION

The high levels of U.S. oil imports and the nearabsolute dependence of U.S. transportation on

oil—as well as a similar or worse situation for its

major allies—represent a threat to U.S. energy and

economic security. Yet, neither the price of gasoline nor the prices of other cost components of petroleum-based transportation includes any premium or tax directed at reducing the danger or

potential cost to the U.S. economy of a future oil

disruption or at establishing a fund to pay for future actions the United States might be forced to

take to prevent or reverse such a disruption. This

threat to U.S. security is one of several external

costs whose absence from the price of travel artificially boosts oil consumption above the level that

would be achieved if these prices reflected the full

social costs of travel. There are severe disagreements, however, about the magnitude of the costs

associated with this security loss.

If domestic oil production continues to fall and

U.S. oil demand continues to increase, oil imports

will soon surpass 50 percent of consumption.

Congress clearly viewed the high levels of oil imports of the 1970s as a threat and responded with

extensive legislation establishing programs to

promote synfuels development, tax incentives for

energy conservation and alternative energy

sources, an extensive energy research and development program, and the construction of the Strategic Petroleum Reserve (SPR). In addition, Congress appropriated funds to establish military

forces specifically designed to deal with threats

far from established U.S. military bases (e.g., in

the Middle Eastern oil fields).

Industry supporters of congressional measures

to fight increases in U.S. oil imports, especially

measures to boost domestic oil production, have

portrayed the potential import increases in precisely the same manner—as a serious threat to the

security and long-term economic interests of the

United States. These individuals, as well as supporters of conservation-oriented import reduction

strategies, have pointed to its large expenditures

during the Desert Storm campaign in the Persian

Gulf as one cost of U.S. oil import dependency.64

Will reducing U.S. oil imports cause an improvement in energy security if even the reduced

level is a large portion of total supply? And, conversely, will allowing imports to increase adversely affect security? After all, the United States will

remain vulnerable to economic and military disruptions associated with Persian Gulf instability

whether it is importing 30 percent of its oil or 70

percent, because any price increases attributable

to that instability will affect all world oil supplies

simultaneously and because U.S. agreements with

its allies require sharing the effects of any widespread shortages.

It does matter to U.S. energy security whether

import levels are lowered or raised. Lower imports would reduce pressures on worldwide oil

supply, at least for a time, lowering the probability

of a disruption in supplies and/or a rapid price increase. Also, higher oil prices would likely damage a U.S. economy importing 70 percent of its oil

more than an economy importing 30 percent, because more of the added energy expenditures

64 Crltlcs of this vlewP)lnt would ~)int out that mritmirlg to U.S. oil vulnerability all costs of actions such as those Of ~Seft StOrm ignores

the other :eopditical considerations at stake, including a desire to protect our European allies and U.S. recognition of the long-term danger

tt) the regi(m of allowing a dictatorial regime to swallow its neighbor and gain access to the enormous wealth of the Kuwaiti oil fields (and the

wapms purchases and development this wealth would allow).
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions [ 123

would be recycled into the U.S. economy in the

latter case. Further, to the extent that lower imports were caused by lower oil consumption-and

conservation would yield this result—the effects

of a rapid price increase would be reduced simply

because the economy would be faced with paying

for fewer barrels of higher-priced oil (or oil equivalent). Finally, if a percentage of U.S. highway

travel relied on fuels whose prices were somewhat

buffered from world oil prices, which is possible

under certain circumstances,65 the economic impact of an oil price shock would be still less.

The two different import levels may also differ

in the degree to which the U.S. economy could

quickly reduce its oil use to compensate for a

shortage. Ironically, an economy with higher imports and oil use, though more vulnerable to damage from an oil shock, may have more options to

quickly reduce its oil use; the more oil-efficient

economy may already have undertaken many of

the available options before a shock occurred.

1 Extent of the Security Threat

There is little doubt that an oil security threat to the

United States still exists. There are four basic elements to this threat—the dependence of the U.S.

transportation sector on petroleum: the limited

U.S. potential to increase oil production; the preponderance of oil reserves in the Middle East/Persian Gulf; and the basic political instability and

considerable hostility to the United States existing

there. At least two (transport dependence and limited U.S. production potential) are as true today as

they were in the early 1970s at the time of the Arab

oil boycott.

In fact, in some ways these elements have

grown more severe. For example, during 1973-92.

the transportation sector’s share of total U.S. petroleum use grew from 52 to 64 percent. This is

particularly important because the sector’s prospects for fuel switching in an emergency are virtually zero. In addition, the boom-and-bust oil price

cycle of the postboycott period, and especial] y the

price drop of 1985-86, created a wariness in the oil

industry that would substantially delay any major

boost in U.S. drilling activity in response to another price surge. With the passage of time, the industry’s infrastructure, including skilled labor, that

would be needed for a drilling rebound has been

eroded. Further, environmental restrictions have

placed much offshore oil off limits to drilling.

Despite the continuation of basic security problems outlined above, an examination of differences between the U.S. and world energy situation

in the 1970s and the situation today shows some

important positive changes: 67

■

■

m

■

●

●

the existence of the Strategic Petroleum Reserve and increased levels of strategic storage

in Europe and Japan;

increased diversification of world oil production since the 1970s:

the end of U.S. price controls, allowing quicker

market adjustment to price and supply swings:

the advent of the spot market and futures market, making oil trade more flexible;

the increasing interdependence of the world

economy, particularly the major investments of

the Organization of Petroleum Exporting

Countries (OPEC) in the economics of the

Western oil-importing nations and, especially,

their oil-refining and marketing sectors;

reduction or elimination of the large cash reserves of Persian Gulf exporters, reducing their

ability to absorb the financial losses associated

with an embargo;
124 I Saving Energy in U.S. Transportation

m

■

●

■

■

■

a lessening of the strategic importance of the

Gulf of Hormuz due to diversification of transport routes out of the Gulf;

the growing importance of natural gas and its

substitutability for oil in key markets;

political changes in the Eastern Bloc nations

and the resulting lowering of tensions between

East and West (although this is counterbalanced somewhat by growing tensions among

nations in the former Eastern Bloc);

new prospects for developing oil resources in

the Far East (e.g., Vietnam) and the former Soviet Union;

demonstration in the North Sea that new

technology, cost-cutting design and management, and more sympathetic tax and royalty

structures can increase enormously the resource and production potential of areas once

thought “mature”; and

a general lessening in Arab hostility to the

United States, associated in part with U.S.

sponsorship of Arab-Israeli peace negotiations

and its role in liberating Kuwait. Another positive sign in the area is the decline of Mideastconnected international terrorism. A potential

counterbalance is the growing tension between

the religious and secular communities in the

Mideast.

This variety of changes in world oil markets

can be summarized as a general shift to more flexible and responsive markets, with closer economic ties between oil producers and users, improved

overall supply prospects, and improved capability

for effective short-term responses to market disruptions.

The overall effect of this complex series of

changes and adjustments since the early 1970s has

likely been a net improvement in U.S. and world

energy security, at least for the short term. A substantial disruption of oil markets is probably less

likely now than it was then, and the industrial nations appear better equipped to handle a disruption

if one were to occur, especially over the short

term. Further, the recent political changes in the

Soviet Union and its Eastern Bloc neighbors are

redefining basic perceptions about the nature of

U.S. national security problems. Nevertheless, it

remains true now, as it did then, that the lion’s

share of the world’s oil reserves lies in the Persian

Gulf nations, that these nations have most of the

world’s excess oil production capacity, that they

remain politically shaky, and that there exist

groups extremely hostile to the United States even

in those nations we consider our friends. As long

as this is true and as long as a sharp price shock

would be disruptive to the U.S. economy (although the magnitude of the disruption is in dispute), policy makers must still count the effects on

energy security as an important factor in judging

proposed energy policy measures. However, the

relegation of energy security from the “number

one energy issue” status that it held in the 1970s to

the somewhat lower status that it has today, seems

to be a reasonable response to both a reduced security risk and an increased concern about environmental issues.

Also, policy makers should recognize that the

U.S. balance between domestic and imported energy is enviable compared with most of the developed world. Whereas U.S. oil imports for 1992

were about 41 percent of oil consumption (and

less than 20 percent of total energy consumption),

the European OECD nations imported about twothirds of their oil, and Japan all of its oil and most

of its energy. However, this difference might be

interpreted in the opposite fashion: that it illustrates further the U.S. dilemma because of our

close economic and military ties to the OECD nations. Further, the U.S. advantage in its overall reliance on domestic energy sources is partially canceled by its relatively higher level of oil use per

unit of gross national product (GNP) and per capita. As discussed in chapter 3, for example, both the

Japanese and the Europeans use far less oil per

capita than the United States for passenger transport, and far less per unit of GNP for freight trans-
....

Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions I 125

port. This means that oil price increases driven by

market disruption would tend to hurt the American economy more than either the European or the

Japanese economies.

9 Impact of Conservation on Security

In examining the impacts of transportation conservation initiatives on U.S. energy security, it is

important to recognize that different categories of

initiatives will have different impacts. It is worthwhile to examine separately three categories of

conservation initiatives:

1. improvement in the long-term technical efficiency of transport;

2. changes in behavior that reduce energy use

(e.g., in load factor, driving patterns, and maintenance); and

3. switching from oil-based to alternative fuels.

Improvements in technical efficiency change

the capital and management structure of transportation (e.g., by improving the basic fuel economy of vehicles, by smoothing traffic flow with improved signaling, or by using computer-aided

scheduling and management to improve load factors in freight hauling). Generally, these improvements occur slowly and require substantial capital

investment over time. Thus, the improvements are

not available to serve as a short-term response to

an oil shock, and their implementation does not

“use up” a potential strategy for managing such a

shock. Therefore, cost-effective improvements in

energy-efficiency technology are unambiguously

beneficial to U.S. energy security.

Changes in behavior—such as improving engine maintenance in automobiles, forming carpools, inflating tires properly, using better trip

planning—reduce oil use at low cost and will reduce the immediate economic shock of an oil disruption. These measures yield environmental and

long-term economic benefits. Ironically. however, their implementation well in advance of a price

shock will reduce somewhat the ability of the

economy to respond to a disruption. Although deliberately leaving some “slack” in oil consumption is by no means recommended-it almost certainly has fewer benefits than costs--conservation-oriented changes in short-term behavior may

have smaller energy security benefits than would

improvements in technical efficiency.

The development of alternative transportation

fuels can have a positive effect on energy security

by diversifying supply sources or getting supplies

from domestic or more secure foreign sources,

easing pressure on oil supplies through reduced

demand for gasoline, and reducing the impact of

an oil price shock. The magnitude of the effect will

depend on the feedstock used for the fuel, the volume of alternative fuel use, the selection of dedicated vehicles or flexible fuel vehicles, and so

forth. The magnitude of any subsidies is important

as well. Large subsidies of “secure" energy

sources can backfire because the subsidies themselves may harm U.S. economic efficiency and

competitiveness. Policy makers must carefully

balance the value of establishing alternatives to

foreign oil imports against the market distortions

of large subsidies.

Although the security benefits of some fuels are

indisputable, analysts disagree about others.

. Fuels such as electricity,68hydrogen, and ethanol

are likely to be produced domestically and thus

unambiguously advantageous to energy security

(again, if they can be produced cheaply enough),

although ethanol current dependence on intensive corn production,

69 which may suffer on occasion from drought, may make it less secure than

the others. Natural gas would likely rely on domestic supplies or gas pipelined from Canada or

Mexico, although supply requirements above a

few trillion cubic feet per year could strain these

sources--especially if gas usage for other sectors

continues to increase. With secure sources, natural

gas use should be beneficial to energy security.
126 I Saving Energy in U.S. Transportation

However, natural gas competes with both residual

oil and middle distillate in commercial and industrial markets. Higher gas prices, which could result from large-scale transportation use, would

lead to some shift from gas to oil in these markets,

thereby increasing oil imports. Thus, the oil

“saved” by shifting to gas in vehicles would not

reduce imports on a one-for-one basis.

Methanol could be produced domestically in

substantial quantities,

70 although it is also quite

possible that a large portion of methanol supplies

would be imported from countries with large gas

reserves. In the latter case, methanol effect on

energy security will depend on which countries

enter the market, the type of financial arrangements made between producers and suppliers, the

worldwide price relationship between natural gas

and oil (i. e., will a large oil price rise automatically raise gas—and methanol—prices?), and

other factors. Because two-thirds of the world’s

gas reserves reside in the Middle East and the

Eastern Bloc, some analysts deny that the

United States would receive any security benefit

from turning to methanol. The Nation can derive

a security benefit even if much of the methanol

were imported, because methanol use will reduce

pressures on world oil supplies; also, strategies

such as establishing long-term trade pacts with secure methanol sources could enhance the potential

benefits.

Positive effects on energy security of alternative fuels use could be reduced or canceled if automakers claim corporate average fuel economy

(CAFE) cred ts for the alternatively fueled vehicles they manufacture and reduce their actual

fleet fuel economy below the levels they would

have attained had the credits not been available

(see chapter 5, section on alternative fuels) .7] The

likelihood that CAFE credits will be used in this

fashion is in dispute, but the probability that

they will be used to depress actual fleet fuel

economy will increase steeply if CAFE standards are raised without a shift in the relative indifference to fuel economy currently demonstrated by car purchasers,

There is one energy security issue that cuts

across the various categories of conservation measures. A large reduction in U.S. oil demand, whatever the cause, could serve to reduce world oil

prices. Lower prices would boost the United

States and world economies but would also depress U.S. oil production which would then have

to be made up with imported oil. The effect would

be to reduce the drop in oil imports that would

otherwise be expected, thus reducing the net benefit to energy security. There is considerable uncertainty about the sensitivity y of world oil price to demand, but it is likely that a drop of a few million

barrels per day (mmbd) would be needed to sustain a long-term drop in world oil prices.72

1 Energy Security Costs

Some analysts have attempted to measure in dollar terms the energy security costs of using imported oil and thus the energy security value of resubstantially (m [he res(~urce C(MI, interest rates, distance fr(m~ markets,

and availabil i[y of suppm infrastructure. Current IOW gas costs and interest rates in the United Stales, c(wplcd w ith U.S. superiority with regard

tt) availability of infrastructure and closeness to markets, inlply that chm~cstically produced methanol can be c[mlpetitive with methanol produced from inexpensive remote gas and shipped to the United States. The longevity {~f these favorable c(mditi(ms is unclear, htn+ever. An ahernative mode of pr(tiuctit)n-metham)l as a copr(}duct t)f steel production-might also serve to supply ctmptiti~c d(mwstic rne[hanol to U.S.

markets.

7 I AutoIllakers pr(~tlclng ;in ~]tcm;ltlk ~1} fue]~d v~hic]c arc allowed to rectml that ~chicle “s fuel econt)nl~ acc(m-iin~ tt) the amount of o11-

.

based fuel c(msunwd. In (Jthcr words, a ~chlclc cxmsuming tml~ a blend of 90-pcrcurt methanol and 10-percent gasollne w(mld ha~e ii rcc(mied

fuel ecim~mly appro~lnlately 1 () times as blgh as Its counterpart iehicle cxmsuming gasoline {rely. By manufacturing large numbers of such

J ch ]cles, autonlakcrs w(N]M art i frclal l) raw their fleet fuel ec(mtm~ ics, thus giirng them “’hcadrxx)m” to reduce the fuel cc[mtmly f )t’ the renmmder t~t’ their fleets.

7J one Department of Energjr model projects a $().93 per harrcl drop in w (mid oil prices in resp(mse to a 2.5-nmM reductitm In U.S. demand.

Phillp Patterwm, U.S. Department of Energy. Pers(mal ct)nln~unicatit~n, 1993.
Chapter 4 Why Intervene? Externalities, Unpriced Inputs,

ducing oil imports. (Note that these costs do not

necessaril y represent the total net security value of

reducing imports, because the measures taken

may have their own security costs. This is especially true for alternative fuels requiring importation of the fuels themselves or their feedstocks.)

The types of costs associated with energy security

include the following:

●

m

Risks of an oil disruption. Most of the costs to

the economy of occasional disruptions to world

oil supply—lost productivity, inflation, and so

forth—are not included in the price of oil, even

though such disruptions have happened three

times in the past and almost certainly will occur

again. To the extent that significant reductions

in oil use and oil imports would lower these

costs, 73 their inclusion in oil prices and the incentive to reduce consumption provided by

their inclusion corresponds to an actual benefit

to the U.S. economy. The Congressional Research Service (CRS) has estimated costs for

the disruption risk of $6 billion to $9 billion, or

5 to 7 cents per gallon of motor fuel, after accounting for the protection offered by the SPR,

greater private reserves, and the advent of the

oil futures market.74 Other analyses offer alternative estimates of disruption costs ranging

from near zero to levels considerably higher

than the CRS estimates.75

Market power associated with oil use reductions. Theoretically, a substantial reduction in

U.S. oil use could create world excess oil production capacity and reduce world oil prices,

which would benefit the U.S. economy as well

as that of oil

dividual oil

Problems Needing Solutions I 127

importers worldwide. Because inusers would not consider such

benefits-their actions cannot alone have any

effect on world prices—this potential benefit of

oil use reduction will be lost unless it is direct] y

incorporated into oil prices or indirectly accounted for by regulatory controls on consumption. Controversy about the magnitude of

this benefit of use reduction (cost of consumption) stems primarily from disagreement about

the magnitude of reduction necessary to have

any effect on price, uncertain y about the potential for OPEC to respond successfully to a drop

in oil demand (by decreasing production), and

how long the benefit would last. CRS’s estimate of this so-called monopsony component

of an oil price premiumis$21 billion to $24 billion, or 17 to 20 cents per gallon.76

National security expenditures. The United

States spends large amounts on military expenditures related to oil use, for example, rapid deployment forces that can be targeted to Middle

East flashpoints. Desert Storm cost more than

$61 billion, although much of this was paid by

U.S. allies.77 Allocation of these costs to actual

oil costs is highly uncertain, however. In particular, U.S. military expenditures are linked to

complex geopolitical considerations wherein

oil security is only one of several elements; and

the extent to which U.S. oil use drives military

expenditures is dependent on administration

and congressional perceptions of oil security,

which may be different from reality. Further,

the U.S. military stake in the Middle East is

7 ~ B ~ ~:l~lng (J1 ] nlarh~[s and [hus r~duclng the r-l ~A of a ciisruptl{m occurring, and by reducing the volume of capital exported fr(m~ the U.S.

ect)nt)n~y to the expmtlng natlt~ns In the et cnt t)f a iilsrupti(m.

74 Congrcsslonal” Research Scr~ Ice, Envinmment and Natural Res(mrces Policy Division, “The External Costs of Oil Used in Transp)rta-

!Ifm,”’ June 7, 1992.

7$ Scc for ~k:lTl)plc DR. B(~hl, ~~rl[,rq} Prl( c S}V~k.~ and,vatrocc~~nonl(c Perjtirnmrrce (Washington, DC: Resources for the Future. 1989) <.

for a ratl{)n;ile t{lr \erj l~)v, cstlrnattxl disruption costs. Greene and Leiby (D.L. Greene and P.N. Leiby, The Soeia/ Costs 10 the U.S. ojMorropu/l-

:~~fl~~n (~/ fhc Liijr/d ()// tlcirLr/, / 9-2-i 99/, OR NL-6744 (Oak Ridge, TN: Oak Ridge Nati(mal Laboratory, January 1993) estimate disrupti(m

ct~sts ( ll~;icr~w’c(~n~~rl~ic :idJuitnwnt co~tj) t)f $0.8 trill I(m to $1.3 trill i[~n ( 1990 dollars) (~ver the 20-year period oil used. Although this value is

a 20-year at crage C(JS[ and docs m~t reflect current condlti(ms, ]( still appears [(J imply a higher disnipti(m cost than the CRS value.

76 lbld,

77 Ihld.
128 I Saving Energy in U.S. Transportation

Dg

Los Angeles has the Nations most severe ozone pollution

problem Urban air pollution remains a crucial national

problem more then two decades after passage of the Clean

Air Act

complicated by U.S. obligations to its allies in

the event of an oil disruption; these obligations

may limit the reductions in military costs that

might otherwise be expected to follow U.S. reductions in oil use. Alternative estimates of

annual oil-related expenditures for defense of

the Middle East-Persian Gulf region range

from less than $0.5 billion annually to $50 billion and higher.

78 Alternative ways of allocating these costs yield a range of 1.5 to 30 cents

per gallon.

OZONE POLLUTION AND

TRANSPORTATION79

Although past transportation energy conservation

initiatives have aimed primarily at reducing oil

use or at relieving transportation service problems

such as congestion, the motivation for many conservation initiatives during the past few years has

been the relief of urban air pollution problems,

particularly ozone-related problems. Today, more

than two decades after the Clean Air Act original

passage, about 100 urban areas (depending on

weather conditions) still violate the National Ambient Air Quality Standard for ozone.80

Since 1970, Federal and State governments

have maintained separate but interacting roles to

handle ozone control, with the Environmental

Protection Agency (EPA) setting nationally uniform ambient air quality standards and New

Source Performance Standards,81 and the States,

with EPA’s help and oversight, developing and enforcing detailed implementation plans82 to attain

the air quality standards. Based on ozone’s known

health effects, the standard is currently set at a

peak, 1 -hour average ozone concentration of 0.12

part per million (ppm). Any area experiencing

concentrations exceeding the standard more than

once a year, on average, is declared a nonattainment area. EPA updates the nonattainment list

annually, as data become available. The list in

1991 included cities housing about 140 million

people. 83 

I Why Control Ozone?

The O. 12-ppm national standard for ozone derives

from solid evidence of the health effects of shortterm exposure above that level. Excessive ozone

is harmful to people. Even healthy adults and children can experience coughing, painful breathing,

and temporary loss of some lung function after

‘R Ibid.
.

Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions 1129

about an hour or two of exercise at peak concentrations found in nonattainment cities.

Experts are unsure whether the current standard

adequately protects people who are exposed for

long periods or at high exercise levels. Several

studies over the past 5 years have shown temporary loss of some lung function after an hour or

two of exposure at concentrations between 0.12

and 0.16 ppm, among moderately to heavily exercising children and adults. And despite the current

standard’s emphasis on a 1 -hour peak, real-life exposures to near-daily maximum levels can last

much longer; ozone levels can stay high from

midmorning through late afternoon. With exposure during 6 hours of heavy exercise, temporary

loss of some lung function can appear with ozone

levels as low as 0.08 ppm.

Potentially more troubling and less well-understood are the effects of long-term, chronic exposure to summertime ozone concentrations found

in many cities. Regular outdoor work or play during the hot, sunny summer months in the most

polluted cities might, some medical experts believe, cause biochemical and structural changes in

the lung, paving the way for chronic respiratory

disease. To date, however, evidence of a possible

connection between irreversible lung damage and

repeated exposure to summertime ozone levels remains inconclusive.

Aside from damage to human health, ozone

pollution damages the natural and managed environments. In particular, clear evidence shows that

ozone damages economically, ecologically, and

aesthetically important plants. When exposed to

ozone, major annual crops produce reduced

yields. Some tree species suffer injury to needles

or leaves, and lowered productivity; in severe

cases, individual trees can die. Important tree species are seriously affected in large areas of the

country. In the most heavily affected forested

areas, such as the San Bernardino National Forest

in California, ozone has begun altering the natural

ecological balance of species.

Whether or not the current standard is adequate,

many areas of the country have failed to meet it.

About half of all Americans live in areas that exceed the standard at least once a year. In 1991,74

of 98 EPA-designated nonattainment areas were

classified either as marginal or moderate, 14 were

classified as serious, nine as severe, and one (Los

Angeles) as extreme.84

1 Ozone and Its Precursors

Ozone is produced when its precursors, volatile

organic compounds (VOCs) and nitrogen oxides

(NOX

), react in the presence of sunlight. VOCs,

which include hundreds of specific compounds,

come from both natural and human-made sources,

the latter including automobile and truck exhaust,

evaporation of solvents and gasoline, chemical

manufacturing, and petroleum refining. In most

urban areas, such human-made sources account

for the great majority of VOC emissions, but in

the summer in some regions, natural vegetation

may produce an almost equal quantity. NOX arises

primarily from fossil fuel combustion. Major

sources include highway vehicles, and utility and

industrial boilers.

Ozone control efforts have traditionally focused on reducing local VOC emissions, partly

because the relevant technologies were thought to

be cheaper and more readily available, In some

areas, however, controlling NOX is more important than controlling VOCs. However, under some

conditions at some locations, reducing NOX can

be counterproductive because of the peculiarities

of ozone formation chemistry.85

Local controls on VOC emissions cannot completely solve the Nation’s ozone problem. In many

places, even those with good control of local emissions, reducing ozone is complicated by the

“transport” of pollutants as ozone or precursors

84 Ibl(l.

~~ Alth(luoh NO, IS an (~70ne precursor, it also can destroy ozone when NORWOC ratios are high. 0
130 I Saving Energy in U.S. Transportation

originating elsewhere are carried in by the wind.

“Plumes” of elevated ozone have been tracked

100 miles or more downwind of some cities: the

Greater New York area’s plume, for example, can

extend all the way to Boston. More than half of the

metropolitan areas that failed to attain the ozone

standard between 1983 and 1985 lie within 100

miles downwind of other nonattainment cities. In

such cases, VOC (and sometimes NOX) reductions in the upwind cities could probably improve

the air quality of their downwind neighbors. Indeed, reductions in certain areas that are themselves already meeting the standard might also aid

certain downwind nonattainment areas.

The significance of transported pollutants varies substantially from region to region and day to

day. During severe pollution episodes lasting for

several days, for example, industrial or urban NOX

or ozone pollution can contribute to high ozone

levels hundreds of miles away. In certain heavily

populated parts of the country, pollution transport

is a significant and very complex problem. The

Northeast Corridor, from Maine to Virginia, contains 21 nonattainment areas in close proximity;

California contains eight; the Gulf Coast of Texas

and Louisiana, seven; and the Lake Michigan

area, five.

1 Controlling Volatile Organic

Compounds

Since 1970, reducing VOC emissions has been the

backbone of U.S. ozone control strategy, and the

Nation has made substantial progress, at least in

slowing further degradation from preexisting

conditions. According to EPA estimates, VOC

emissions were reduced by 13 percent during

1982-91; 86 without existing controls, they would

have grown considerably during this period. Despite this progress, however, large areas of the

country have missed each of several 5- and

10-year deadlines set by Congress-the original

deadline of 1975, and again in 1982 and 1987.

In 1982, highway vehicles accounted for about

45 percent of all VOC emissions; in 1991, their

share had been reduced to about 35 percent87

through implementation of tighter emission controls, retirement of older vehicles, and institution

of limits on gasoline volatility.

If we are willing to use and pay for currently

available technology, we can make significant advances over the next 5 to 10 years, achieving about

two-thirds of the emissions reductions in nonattainment areas needed to meet air quality standards. This should bring about half of current nonattainment areas into compliance. However, by

the year 2000, the entire Nation cannot reach the

goal that Congress established in 1970. In the

worst areas, even the most costly and stringent of

available measures will not lower emission levels

sufficiently to meet the standard. Achieving that

goal is a long-range project, well beyond the 5- and

10-year horizons of existing law. It will require

both new technologies and lifestyle changes in the

most affected communities, including changes in

transportation, work, and housing patterns.

To meet ozone standards in all cities, new, nontraditional controls, with uncertain costs, must be

used. One of these controls involves significantly

reducing the use of motor vehicles, especially private cars. Although technologically simple, this is

politically difficult. The 1977 amendments to the

Clean Air Act required urban areas to implement

whatever measures were needed to attain the

ozone and carbon monoxide standards, including

transportation control measures (TCMs). Experience shows, though, that TCMs require considerable local initiative and political will because they

aim to change the everyday habits and private decisions of hundreds of thousands of people. Involuntary TCMs have proven politically infeasible,

and voluntary programs difficult to sustain. Success requires long lead times, priority in urban

transportation and land use planning, a high degree of public support and participation, and in
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions ] 131

some cases such as mass transit development, major capital expenditures. Possible tactics include

requiring staggered work hours; encouraging carpools through inducements such as priority parking places, dedicated highway lanes, and reduced

tolls; constructing attractive and economical mass

transit systems; limiting available parking places;

and encouraging employers to locate closer to residential areas, which could cut the distances workers have to travel.

As with the other external costs of transportation energy use, estimates of the costs of ozone-related air quality damage to public health and welfare are controversial because of both scientific

disagreements and differences in value judgments. Calculating these costs means constructing a credible inventory of transportation emission sources, estimating resulting pollution

concentrations in ambient air, transforming these

concentrations into damage estimates, and computing the monetary costs of the estimated damages—and none of these steps is without controversy. For example, even the emission inventory,

presumably the most easily measured of the four

steps, is subject to considerable error because the

available emission tests do not accurately replicate actual driving conditions (e.g., tests performed during inspection and maintenance programs miss the cold start, which is the critical

period for emissions and, because they do not use

a dynamometer, do not capture the true effects of

acceleration).

OTA has investigated the monetary costs of

transportation-related ozone damage, focusing

primarily on health impacts and damage to commercial crops and forests. The quantifiable health

impacts of reductions in ozone concentrations involve primarily the reduction in numerous episodes of respiratory discomfort--coughing, chest

pain, shortness of breath—among many of the

over 100 million persons living in nonattainment

areas. Meeting the ozone standard everywhere

would avoid several hundred million of these episodes each year, with some people in the worst

areas experiencing dozens fewer incidents of respiratory symptoms annually. About 8 million to

50 million person-days per year of restricted activity may be eliminated; these are days when someone feels ill enough to limit the day activities, if

not necessarily to stay in bed or home from work.

Most of the benefit would be concentrated in high

ozone areas such as southern California and the

Northeast corridor cities. The economic value of

eliminating these short-term effects might be

about $0.5 billion to $4 billion a year, a large fraction of which will be transportation-related benefits,88 with most benefits concentrated in highozone areas such as southern California and the

Northeast Corridor. Although the value of the decreased risk of long-term, chronic effects of ozone

exposure cannot be estimated, these potential effects remain a strong concern.

OTA has also examined the potential effects on

agriculture of reduced ozone concentrations.

These estimates are complicated by the current inability to reliably predict the impact that VOC and

NOX control measures would have on ozone concentrations in rural areas (partly because current

ozone concentrations in areas where crops are

grown are not accurately known) and uncertainty

about how farmers will respond to improved

growing conditions in their planting operations.

For a reduction in rural ozone of 50 percent of the

difference between current levels and background

concentrations, agricultural benefits are estimated

to be $1.01 billion to $1.91 billion annually, primarily from improved yields of corn, soybeans,

wheat, and cotton. with most benefits occurring in

California, the South, and the Northeast.89 With

the likelihood that nontransportation controls

would be very limited in rural areas, much of this
132 I Saving Energy in U.S. Transportation

benefit might be attributed to transportation controls.

The Congressional Research Service estimates

transportation-related ozone damage to forests of

$0.1 billion per year, incorporating both damage

to recreational values and damage to the forest

materials resource.90

OTHER EXTERNALITIES

Aside from ozone pollution, energy security, and

greenhouse warming, other transportation externalities are important and should be considered in

evaluating alternative transportation policies or

full cost accounting. These include:

●

m

B

●

m

●

8

m

other air pollution damages;

aesthetic losses from facilities or vehicles;

noise pollution;

vibration damage, especially from highways

and railroads;

water pollution, especially from roadway runoff—also, loss of groundwater recharge and absorptive capacity for flood prevention from

highway land use;

accident impacts on nonusers or on society

(e.g., lost productivity) that are not compensated by user insurance or other payments;

ecosystem losses from highways, airports, etc.;

and

effects on energy efficiency, economic vitality,

open space, ecosystem protection, and other

values caused by the patterns of land use

associated with transportation choices.

Although attempts have been made to quantify

these costs,91 they remain uncertain for reasons of

inadequate data on the magnitude of the impacts,

disagreement about their monetary valuation, and

ambiguity about where to draw the boundaries to

separate externalities from impacts borne by users. Further, with air pollution excepted, these externalities are not tied as directly to oil use, or energy use, as the initial three (ozone pollution,

energy security, and greenhouse warming). Although reducing energy use by reducing travel demand or shifting modes will tend to reduce (or at

least change) these externalities, improving technical efficiency (e.g., by improving auto fuel

economy) will not; levels of accidents, road capacity requirements, aesthetic losses, and other

externalities will be essential y unchanged despite

the reduction in oil use.

1 Other Air Pollutants

Aside from ozone, key transportation-related air

pollution problems include emissions of carbon

monoxide (CO) and fine particulate matter.

Excessive levels of CO are associated with aggravation of angina pectoris in individuals with

heart disease, occasional deaths from suicide and

faulty vehicle exhaust systems, and widespread

cases of headache and other low-level health effects. About 70 percent of national emissions of

CO are vehicle exhaust emissions.92

Particulate air pollution—solid particles and

liquid droplets—has been associated with a variety of adverse health effects; elevated particulate

levels can lead to respiratory symptoms such as

cough, shortness of breath, and asthma attacks and

have been associated with increased rates of hospitalization, restricted activity due to illness, and

chronic respiratory disease. Of greatest concern

are fine particulate, those smaller than 10 mi-

~ Congre ssional] Research Service, op. cit., fOOtnOte 74.

91 For example, M.E. Hanson~ “Automobile Subsidies and Land Use: Estimates and Policy Responses,” Journa/ oj’fhe American P/arming

Association, vol. 58, No. 1, 1992, pp. 60-71; B. Ketcham, “Making Transportation a National priority,” paper presented at panel discussion

on “Transpmtation as a Matter of Choice,” Snowmass, CO, Oct. 6, 1991; J.J. MacKenzie et al., The Going Rate: What It Really Costs to Dri~’e

(Washington, DC: World Resources Institute, 1992) all discussed in M.E. Hanson, ‘+Results of Literature Survey and Summary of Findings:

The Nature and Magnitude of Social Costs of Urban Roadway Use,” paper prepared for the U.S. Department of Transportation, Federal Highway Administration, 1992.

92 U.S. Environmental ~otection” Agency, Nafional Air Qua/i~ and Emissions Trends Report, 1991, 450-R-92-001 (Washington, w: mtober 1992).
Chapter 4 Why Intervene? Externalities, Unpriced Inputs, Problems Needing Solutions I 133

crons that can evade the normal defense mechanisms of the human respiratory system, penetrating deep into the lungs. Epidemiologic studies

have shown a statistical association between high

levels of fine particulate and premature deaths.93

Key problem areas for highway vehicles include

carbon particles from diesel-powered vehicles,

particulate formed from hydrocarbon emissions,

sulfate particles from diesel and gasoline-powered vehicles, and fine particulate associated

with tire wear. Because requirements for diesel

fuel and reformulated gasoline include reduced

sulfur levels, fine particulate problems associated

with sulfate emissions from vehicles should decrease in the future.

I Land Use Impacts

As discussed in chapter 5, transportation choices

and land use are linked by the varying direct land

requirements of alternative transportation modes,

the minimum population density requirements of

mass transportation modes, and the different types

of mobility—and thus the differing levels of practicality for certain locational choices--offered by

alternative modes. Although the linkages between

land use and transportation are not absolute, urban

areas whose transport systems are based primarily

on automobiles tend to be far less dense than areas

relying primarily on mass transit, with more emphasis on single-family housing than on apartments, less likelihood of walking access to services, and so forth. Automobile-based land uses

generally are more energy-intensive than those

based on mass transportation, even if direct transportation energy costs are disregarded, because of

the higher heating and cooling costs of singlefamily residences and other factors, Although

these costs are not externalities-they are borne

directly by “users, “ if all residents of such developments are at least indirectly users of the dominant transportation system—some or all of the external costs associated wit h increased

nontransport energy use should be charged to the

transportation system choice.

Aside from higher energy costs, the type of dispersed land use and economic development

associated with automobile-oriented transportation systems has other costs that may be considered, at least in part, transportation externalities.

One such cost is disinvestment in downtown areas

as retail stores relocate to suburban malls. upwardly mobile families move to the suburbs. and

businesses move to office parks; with such trends.

social services become more difficult to deliver,

job opportunities for inner-city residents shrink.

and city neighborhoods decline.94

1 Accidents

Accidental deaths and injuries associated with different transportation modes represent large external costs and subsidies to the transportation system because of the nature of the damages and the

way society pays for them, and because a significant percentage (about 17 percent95 ) of the damages occur to persons who are only peripheral users of the modes (e.g., pedestrians and bicyclists).

According to a recent FHWA-sponsored study,

highway accidents caused $358 billion in damages in 1988.96 Most of the physical damage occurs to drivers and passengers, but the monetary

component of this damage (property damage,

medical expenses. ambulance costs. etc. ) is paid

for only part] y out of auto insurance, as discussed

above, and thus there is a substantial subsidy to

‘

) 

~ D.k$r, Df)chcr~ C( al,. ‘“An Assfwlatl(Jn Bet\+ ccn Air P(~llu[lon iind M(wtalitj in SI~ CI.S, CItIc~,” ,\’(’)\ /;?l,q/(Jnd J()//rn(i/ ()/ ,ifcdl( In(’. \ 01,

~zg, N(). 24. Dec. 9, 1993.

‘)4 L.S. B(mme. ‘“Self-Fulfillmg Prophec]cs’) Dcccntrali/ation. Inner City Dccl]nc, and the Qua[il> of L’rhan Life,’” Anicri(cln P/<dnnfn~

A \ \(MfdfIorI ./ofma/, autumn 1992, pp. 509-5 I 3.
134 I Saving Energy in U.S. Transportation

the transportation system. The negative effect on

society and the economy of lost productivity due

to accidents, especially where accident victims

have skills that are not easily replaced, may represent a large externality; depending on where analytic boundaries are drawn, so may the component

of damages to “peripheral users” that is not paid

by auto insurance or directly by the responsible

drivers.

I Noise and Vibration

Noise and vibration from highway vehicles, railroads, and airplanes strongly affect quality of life,

reduce property values, and in the case of vibration, do structural damage. People and property

alongside rights of way or under flight paths are

the most affected. Data to estimate vibration damage are inadequate. Examination of changes in

property values with decibel levels can lead to

highway noise damages estimated at several billion dollars per year, primarily due to heavy

trucks. 97

9 Ecosystem Losses

Both the direct land requirements of transport systems and the requirements of the land uses they

support have significant impacts on ecosystems.

The value of these losses is controversial, particularly the loss of prime farmland around cities, because there is severe disagreement about the adequacy of U.S. cropland resources for future needs.

If long-term annual increases in crop yields continue at historic rates, the effect on U.S. food production capability of cropland losses from roadbuilding and the urban sprawl that our autooriented system supports will be small or, from a

practical standpoint, nonexistent. However, many

in the environmental community believe that increases in crop yields cannot continue, that we are

reaching the natural limits of an agricultural system based on high levels of chemical input, and

that losing high-quality cropland to urban and

suburban development will force agriculture onto

ever more marginal land and soon begin to limit

production. This is an extremely controversial

issue; there is nothing in the statistical record to

indicate an imminent slowdown in yield increases, and many in the agricultural community

look to genetic engineering to provide another

long-term round of yield increases, but data on

erosion rates (which have been higher than soil replacement rates for years), pesticide usage and

growing immunity problems, and other factors

cause great concern.

97 MacKenzie ~t ~]., ~)p. ~i(., f(x)tn{)te 9 ] , ~cl~] ]eve]s are Come]ated with ty~ of roadway, anloun[ and nature of traffk, and air po]]uti(m

levels, all of which can affeet property values (e.g., the safety, aesthetic, pollution, and congestion impacts of a roadway may vary in step with

decibel levels and impact property values in the same direction). This type of collinearity makes it quite difficult to separate the effect of a single

variable and makes quantitative estimates somewhat suspect.
Policy Options

for Transportation I

Energy

.

Conservation 5

P

olicymakers interested in transportation energy conservation-whether for reducing oil use, lowering emissions of greenhouse gases, or generally reducing energy

use and its environmental and economic consequences--

are faced with a complex array of conservation activities and a variety of policy options or tools that will promote the activities.

The kev categories of conservation activities are:

■

■

■

■

■

d

improving the technical efficiency of existing vehicles, or

introducing new, more efficient replacement vehicles;

increasing vehicle load factors:

using more efficient travel modes:

reducing the number and length of trips made; and

shifting to non-oil-based fuels.

The policy options available to policymakers to pursue the various conservation activities include:

economic incentives--direct taxes, granting or eliminating tax

breaks, subsidies, granting of regulatory exemptions, making

pricing more efficient:

public investment---in research and development (R&D), new

infrastructure (including new types of systems and service),

maintenance and rehabilitation of old mass transit infrastructure. and expansion of service; also includes withholding investment and investing in urban development, and

regulatory incentives--efficiency standards, zoning, fuel use

requirements, speed limits, inspection and maintenance requirements, and travel restrictions.

In most cases, each of the basic categories of policy options is

applicable to each activity, forming a matrix of government actions that can be used to pursue increased efficiency. For exam- I 135
136 I Saving Energy in U.S. Transportation

pie, the option of getting travelers to shift to more in busways and rail transit (also withholding of inefficient modes can be pursued with economic in- vestment from expansion of road capacity); and

centives in the form of taxes on gasoline and park- regulatory incentives in the form of zoning

ing, elimination of the treatment of free employee changes designed to increase urban density (inparking as a normal business expense, and higher creasing the ability of transit systems to achieve

operating subsidies for transit; public investments high modal shares). Table 5-1 lists each of the

Improve the Technical Efficiency of Vehicles

1 Higher fuel economy requirements—CAFE standards (R)

2 Reducing congestion smart highways (E,l), flextime (E, R), better signaling (l), Improved maintenance of roadways (1), time of day charges (E), Improved air traffic controls (1, R), plus options that reduce vehicular traffic

3 Higher fuel taxes (E)

4 Gas guzzler taxes, or feebate schemes (E)

5 Support for increased R&D (El)

6 Inspection and maintenance programs (R)

Increase Load Factor

1 HOV lanes (1)

2 Forgiven tolls (E), free parking for carpools (E)

3 Higher fuel taxes (E)

4 Higher charges on other vmt trip-dependent factors (E) parking (taxes, restrictions, end of tax treatment as

business cost). tolls etc

Change to More Efficient Modes

1 .

2

3

4

5

Improvements in transit service

a New technologies—maglev, high speed trains (E,l)

b Rehabilitation of older systems (1)

c Expansion of service—more routes, higher frequency (1)

d Other service improvements (1)—dedicated busways, better security, more bus stop shelters, more comfortable vehicles

Higher fuel taxes (E)

Reduced transit fares through higher U S transit subsidies (E) a

Higher charges on other vmt/trip-dependent factors for less efficient modes (E)—tolls, parking

Shifting urban form to higher density, more mixed use, greater concentration through zoning changes (R), encouragement of “infill ” development (E, R, I), public Investment in Infrastructure (l), etc

Reduce Number or Length of Trips

1 Shifting urban form to higher density, more mixed use, greater concentration (E,R,I)

2 Promoting working at home or at decentralized facilities (El)

3 Higher fuel taxes (E)

4 Higher charges on other vmt/trip-dependent factors (E)

Shift to Alternative Fuels

1 Fleet requirements for alternate fuel-capable vehicles and actual use of alternative fuels (R).

2 Low-emission/zero emission vehicle (LEV/ZEV) requirements (R)

3 Various promotions (E) CAFE credits, emission credits, tax credits, etc

4 Higher fuel taxes that do not apply to alternate fuels (E), or subsidies for the alternatives (E)

5 Support for Increased R&D (E,l)

6 Public Investment—government fleet Investments (1)

Freight Opt/ens

1 RD&D of technology improvements (E,l) —

c] U S transit subsldles already among the highest r the developed world may merely promote mefflclencies

KEY CAFE - corporate average fuel economy E - economic mcentwe, HOV - high-occupancyvehlcle, I = publlc investment, maglev = trams supported by magnetic Iewtat[on R - regulatory acllon RD&D - resealch, development, and demonstration, vmt = vehicle-miles traveled

SOURCE Office of Technology Assessment 1994
Chapter 5 Policy Options for Transportation Energy Conservation I 137

conservation activities and the policy options

available to stimulate that activity. Each of the options listed in table 5-1 is tagged with an indicator:

E for economic incentive, R for regulatory incentive, and I for public investment.

As discussed throughout this report, policymakers do not have the freedom to pick and

choose freely among conservation activities and

individual policy actions, even if budgetary limits

and potential damage to the private economy were

not constraints. The constraint on freedom of

choice occurs because there is negative synergy

among certain sets of policy actions. For example,

policy actions that promote the freer flow of automobile traffic will generally sabotage measures to

effect shifts to mass transit, reductions in trip

length and frequency, and increased load factors in

automobiles.

In choosing transportation energy conservation

policy opt ions, therefore, policymakers must consider how implementation of these options will fit

into an overall (multioption) transportation strategy, as well as how—individually—the options

satisfy a number of performance criteria. Table

5-2 lists relevant criteria for option selection.

The first criterion, examining the extent to

which the option requires a major lifestyle shift

for transportation system users, is ignored at a policymaker’s peril. Some lifestyle shifts are conceptually very attractive—for example, large increases in urban residential density and firm

restrictions on development of outer areas can

yield strong environmental and energy advantages that go well beyond transportation energy

reductions. However, the types of intrusive policy

actions required to implement such changes are

socially and politically acceptable only if an uncommon consensus can be created among all segments of an urban area’s residents and business interests. This is likely to be feasible only in isolated

cases or in cases of widespread perceptions of an

emergency. Such perceptions may well emerge in

the future as more becomes known about global

warming and other potential environmental or social problems, but at present there is little likelihood of achieving such a consensus.

The last criterion, which inquires whether the

option has relevance to the needs of developing

nations, may not apply to most options but recognizes that the largest future growth in energy and

■

■

■

■

■

■

■

✘

■

Degree of llfestyle/social changes required

Cost-effectiveness measured by using market benefits and costs or full social benefits and costs

Effectiveness at resolving individual energy problems

1 011 use reduction

2 greenhouse gas reduction and

3 energy security Improvement

Effectiveness at resolving other transportation-related problems

1 air emissions reduction, and

2 reduced congestion

Potential risks

1 technical risks,

2 uncertainty in consumer reaction, and

3 management difficulty

Time scale

Potential interaction with other goals—does it foreclose or aid future projects?

Distribution of costs and benefits—which segments of society absorb costs or gain benefits?

Integration with International needs-–does it yield benefits for other nations, particularly developing nations?

SOURCE Office of Technology Assessment 1994
138 I Saving Energy in U.S. Transportation

Measuring the costs and benefits of adding a new transportation service or changing the nature of an

existing one IS complicated by the Interdependence between the supply of and demand for transportation

services In general. because much of the U.S. transportation network IS near capacity during parts of the

day, adding to the supply of transportation can reduce congestion, improve travel times, and thus Increase

demand on the affected segments Highway analysts often comment on the long-term futility of continuously expanding highway capacity, because continued travel growth overtakes the new capacity until it, too, IS

congested Similarly, addition of travel capacity on competing modes (e g , competition between highspeed rail and air or highway travel for trips of a few hundred miles) may relieve congestion at airports and

on highways, but add to overall travel demand by encouraging more trips

Also, the options for adding new capacity may not be clear although an intensive assessment of new

travel capacity may spell out a range of options, in actual planning it is not always clear what will happen if an

option under consideration, such as a new railway, IS not built. Will airports, many already close to capacity

and experiencing substantial congestion delays, be expanded, or will new airports be built? Will lack of

capacity force changes in aircraft design and operations that allow greater capacity without physical expansion? WiII growth in air travel be constrained by lack of capacity, with excess demand either stifled entirely or forced into other modes (such as highways or existing train service)? WiII the lack of physical capacity force early development of advanced telecommunication services that, for a segment of the travel

market, can substitute for physical travel?

Each of these alternatives has radically different energy implications, as well as radically different implications for the whole range of societal Impacts Because in many cases it is impossible to predict which

option--or which set of options—will be pursued, analysis of the energy implicatlons of adding new systems is made much more uncertain

SOURCE Off Ice of Technology Assessment 1994

oil use and in greenhouse gas emissions will occur

in the developing world, not in the industrial nations. Developing nations often cannot afford

technological options that are considered cost-effective in the industrialized world, and so apply

more weight in their decisionmaking than industrialized nations would to criteria such as low infrastructure requirements, and ease of maintenance.

A critical and difficult aspect of measuring

costs and benefits is to measure losses and gains

that occur because lifestyle decisions and investments made under the current set of economic and

regulatory rules will lose (or gain) value under the

new set of rules. For example, restrictions on automobile travel, or large increases in gasoline taxes,

will have effects that go far beyond simple increases in travel costs and convenience: they will

reshape real estate values and the distribution of

prices in the used-car market, as fringe housing

loses value and fuel-efficient used cars increase in

price.

Another problem encountered in measuring

costs and benefits, discussed in box 5-1, is the set

of complex interdependencies among alternative

transport systems.

This chapter discusses some of the conservation activities and policy options available for the

transportation sector. Given the very large number

of activities and options available, no attempt is

made to be comprehensive; instead, the focus is on

a range of potential government actions. The

chapter begins with a discussion of how the U.S.

transportation future is likely to look if the Federal
Chapter 5 Policy Options for Transportation Energy Conservation 1139

Government makes no major changes to transportation and urban planning policy.

If the baseline case in the Energy Information Administration’s (EIA’s) Annual Energy Outlook

1993, ] Baseline Case is an accurate guide, oil use

in the transportation sector will grow from about

11 million barrels per day (mmbd) in 1990 to 12.5

mmbd by 2000 and 13.9 mmbd by 2010-a

20-year growth rate of 1.2 percent per year, for a

total growth of 29 percent over the period. The

growth of travel, however, is substantially higher

in this forecast: for 1990-2010, light-duty vehiclemiles traveled (vmt) increases 41 percent, freight

truck vmt 45 percent, and air travel (in seat-miles)

128 percent. Thus, even without new efficiency

standards, EIA expects moderate rates of efficiency growth to continue: over the 20 years, it projects new car fuel economy to grow from 28.0 to

34.6 miles per gallon (mpg)2 and light-truck fuel

economy to grow from 20.7 to 25.4 mpg, though

the total fleet of light-duty vehicles is projected to

grow in efficiency only from 18.6 to about 21.3

mpg;

3

and aircraft efficiency is expected to increase 36 percent.

What does this mean in more physical and

policy-oriented terms? First, the transportation

sector projected addition of near] y 3 mmbd of oil

use is a source of substantial concern, particularly

since industrial use of petroleum is also expected

to increase more than 1 mmbd during the period,

and domestic production is expected to decline by

more than 1 mmbd. This means that oil imports,

already at 7 mmbd, or 42 percent of consumption,

in 1990, will rise to more than 12 mmbd, or 58 percent of consumption, by 2010. Although the import situation would look considerably better in

EIA’s high oil price case—10.3 mmbd, or 52 percent of consumption—recent price trends and patterns of reserve additions make this case (assumed

oil price of $38 per barrel in 2010, in 1991 dollars)

appear to be a low probability one.

The 29-percent increase in energy use also

translates into an approximately 29-percent increase in emissions of carbon dioxide (CO2

),4 in

contrast to international goals of maintaining

greenhouse gas emissions at or below 1990 levels.

Although EIA’s expected increases in oil imports and CO2 emissions are of substantial concern, the Office of Technology Assessment (OTA)

believes the EIA projections of energy growth and

its consequences to be understated. As discussed

in chapter 2, EIA’s projections of travel growth appear consistently at the low end, and its projections of efficiency improvements consistently at

the high end, of the plausible range. Without new

regulations or economic incentives, there is little

reason to be optimistic about future increases in

new car and light truck fuel economy, nor are

changing demographics likely to reduce growth in

vehicle-miles traveled (vmt) nearly as much as

EIA projects.

Second, the 41-percent increase in light-duty

vmt and 45-percent increase in freight truck vmt

projected by EIA--or the still higher travel increases that OTA believes are more likely—imply

a substantial increase in highway congestion,

since road miles will not increase nearly as fast.

Available forecasts of congestion, when translated into specific examples, often are alarming:

A one-way 30-mile commute on U.S. Route 1

from New Brunswick, New Jersey to Trenton

could easily turn into a five-hour ordeal by 2005, ”

1 U.S. Department of Energy, Energy Infornlation Administration, Annuu/ Energy Out/ook 1993, DOE/EIA-0383(93) (Wash lngt~m, DC

January 1993), app. A.

2 U.S. Environmental Protecti(m Agency test values.

3 On-road values.

A mere ~11] be some small Vfiation from 29 ~rcent because the com~~siti(m of] iquid fuels will change due 10 reft~mlu!ation of ga~f~llne

and moderate amounts of alternative fuels entering the marketplace.
140 I Saving Energy in U.S. Transportation

as traffic inches along at an average speed of six

miles per hour, slower than a trotting horse.5

If Federal Highway Administration (FHWA) forecasts were realized, congestion levels in the year

2010 would create enormous costs in terms of

time lost, gasoline wasted, and emissions increased. However, as discussed in chapter 4, the

forecasts overstate likely congestion growth.

Also, it is quite possible that much of the growth

in vmt will occur in areas where congestion problems are limited. Although congestion is expected

to grow, this growth will probably not be as severe

as feared.

Third, EIA did not model transit explicitly in

the forecasts, so energy use estimates are not directly translatable into mass transit’s modal share

or ridership estimates. However, transit share of

total trips is likely to decline during the period, although total ridership may increase. Increased ridership will result primarily from the attempts of

hundreds of urban areas to deal with Clean Air Act

requirements. A great diversity in transit solutions

is expected, with a few planned heavy and light

rail systems and system additions, many different

types of paratransit6 operations, and expansions

of conventional bus systems. In some areas, such

as Portland, Oregon, planned solutions to both air

quality and congestion problems will include attempts to shift land use toward greater density and

better mixes of uses. It is difficult to predict the

outcome of this kind of program, because there is

little precedent to forecast the effects of the strategies used---changes in zoning laws, an urban

growth boundary, implementation of light rail,

etc.—in the face of the U.S. auto-oriented market

trends and incentives.

Introducing new, more stringent standards for the

corporate average fuel economy (CAFE) of each

automaker is one option for reducing the fuel consumption of the U.S. light-duty highway fleet. In

1991-92, Members of Congress responded to recent growth in gasoline demand and sagging new

car fuel economy by introducing a number of legislative proposals designed to boost the current

CAFE standard of 27.5 miles per gallon (mpg) for

each corporate domestic and import fleet. One of

the first of the 102d Congress, Senator Richard

Bryan’s bill (S. 279), called for a 20-percent improvement in each company’s new car fleet average (over a 1988 baseline) by 1996 and a 40-percent improvement by 2001 (yielding an overall

new car fleet average of about 34 and 40 mpg, respectively). Other bills were introduced that offered different standards and approaches.

S. 279 and the other bills generated substantial

controversy, with the key issue (aside from the obvious question of whether setting any new fuel

economy standards is sensible national policy) being disagreement about the level of fuel economy

increase that is technically and economically feasible. The debate also brought out significant concerns about potential negative impacts of new

standards on vehicle safety and auto industry jobs,

as well as substantial disagreement about how

much oil would be saved by new standards. Other

issues that deserve careful attention are the relative merits of alternative regulatory structures

(e.g., level standard, uniform percentage increase,

or standards based on vehicle interior volumes)

and the appropriate scheduling of any new stanS Harvey Gant(, American Institute of Architects, testimony at hearings before the House Committee on Interior and Insular Affairs, Subcommittee on Energy and Environment, June 27, 1991, cited in J.J. MacKenzie et al., ~~e Go@ Rate: WhaI It Reu//y Cosfs Tol)rii’e (Washington, DC: World Resources Institute, 1992).

6 paratran5i[ 15 ~ub]lc tran5p)flatlon(hat 15 “loreflex ]ble than regulartransit (pratlons In route and schedule, and often privately operated.
Chapter 5 Policy Options for Transportation Energy Conservation 1141

dards. OTA’s findings regarding most of these issues, published in a recent report, are summarized

below.’

1 Are Fuel Economy Standards an

Efficient and Effective Approach

to Fuel Conservation?

Arguments about whether or not standards are a

sound approach to conservation in the transportation sector revolve around the effectiveness of the

27.5-mpg standard set in 19758 and the relative

merits of a regulatory approach versus the use of

economic incentives such as gasoline taxes and/or

taxes and rebates on vehicles depending on their

efficiency.

Arguments have raged for years about the effectiveness of the 1975 standards. The only area of

agreement is that the years in which the standards

took effect coincided with a large increase in the

fuel economy of the U.S. new car fleet, from 17.2

mpg in 1976 to 27.9 mpg in 1986.9 Although advocates of new regulations seize upon this efficiency increase as an indicator of the success of

the standards, opponents point out that real gasoline prices tripled between 1973 and 1980, affecting both industry planning and consumer purchasing decisions about car size and efficiency. Thus,

some industry analysts conclude that the CAFE

standards increased fuel economy only about 1.0

to 1.5 mpg beyond the level that would have been

achieved without them,

10 whereas other analysts

conclude that the standards had an impact of 4 to 5

mpg or more.

11 Further, analysts argue about

whether or not the standards affected the rate and

composition of new car sales, since any slowdown

in sales (leaving older and less efficient vehicles

on the road) or shift from automobiles to light

trucks (vans, pickups. and utility vehicles) would

adversely affect the fuel economy of the entire

fleet.12 During the last two decades, light truck

sales rose significantly as a percentage of total

light-duty sales, and the median age of registered

automobiles increased from 4.9 to 6.5 years.13

The most likely reasons for the rise in median age

were the improvements made in rust prevention

and auto reliability, and a gradual increase in the

value embedded in vehicles (sophisticated sound

systems, air conditioning, automatic transmission. etc.). If the trends in light-truck sales and

fleet median age were somehow abetted by the

CAFE standards, however, the real effectiveness

of the standards would be less than it appeared.

To gauge the impact of the CAFE standards,

analysts must be able to estimate how automakers

would have reacted in the absence of standards.

Unfortunately, these estimates are suspect because, prior to the 1972 oil shock, oil prices had

been low and stable for many years, so no historical model is available. Thus, analysts must rely on

other clues about whether or not similar fuel economy gains would have been attained even without

standards. Some analysts have focused on the degree to which the standards appear to have

constrained automakers; that is, they assume that

automakers who easily exceeded the standards

probably were not affected by them and would
142 I Saving Energy in U.S. Transportation

have reached their recorded fuel economy levels

with or without standards.14 OTA’s examination

of some analyses claiming to demonstrate a minor

impact of CAFE standards on fuel economy levels

found these analyses to be unconvincing. 15 Probably the most convincing evidence of the effectiveness of CAFE standards is the family of

graphs of actual versus required levels of corporate fuel economy. 16 These show that Ford. General Motors, and (to a lesser extent) Chrysler—

companies likely to be most affected by the

standard because their fleets had relatively low

economy—increased their fleet fuel economy in

virtual lockstep with the levels required. On the

other hand, the levels of Japanese and other

manufacturers producing small, high-fuel-economy cars-companies little affected by the standard but affected by rising gasoline prices—meandered (and sometimes fell) during the same

period. Although this does not “prove” that the

standards played a critical role, it places the burden of proof squarely on the shoulders of doubters.

The role of CAFE standards in the increased

sales of light trucks and greater age of the auto

fleet is unclear, but no impact on new car sales was

obvious, and the success of light trucks seems due

primarily to their market attractiveness, not to any

artificial advantage conferred by fuel economy requirements.

If the previous CAFE standards “worked” in

the sense that they played a major role in driving

up industrywide fuel economy levels and had no

significant side effects that might have slowed vehicle turnover, policy makers still need to be concerned about the efficiency of standards: Do the

gains in reduced fuel use and lower oil imports

justify the costs, and are standards preferable to alternative ways of reducing auto fuel use?

Because regulations generally are justified by

the claimed existence of market failures (usually

the market failure to incorporate social costs into

its prices), determination of a favorable cost-benefit ratio for CAFE demands an evaluation of the

environmental, energy security, and other social

costs of gasoline use. This type of evaluation is

discussed in chapter 4. However, policy makers

must judge for themselves whether reducing these

extramarket costs justifies adding the costs of a

CAFE standard.

Opponents of CAFE standards argue that alternatives, especially taxes on gasoline or oil, are a

more attractive, efficient means of reducing automobile fuel consumption. Gasoline taxes (discussed later in this chapter) reduce oil use by reducing the demand for travel in addition to

increasing new car fuel economy. The demand effect applies to the entire fleet, not just new cars, so

much of the oil use impact occurs immediately

without requiring an extensive period for the fleet

to turn over.

Unfortunately, comparative estimates of the

costs and benefits of gasoline taxes and fuel economy standards depend on a number of highly uncertain assumptions about the cost of fuel economy increases, manufacturer responses to

standards, the gasoline price elasticity of demand

for travel, and so forth. One recent comparison

concluded that a gasoline tax beginning at 3 cents

per gallon in 1996 and rising to 25 cents per gallon

by 2006 would save as much gasoline as a CAFE

increase to 34 mpg in 1996 and to 40 mpg in 2001,

at much lower (43 to 83 percent less) welfare costs

than the CAFE standards. 17 However, the asI ~See ~.g,, L~f}n~ and parklnson, op. cit., footnote 10; and D.L. Greene, CAFE or Price?: An Anal~sis @rhe Eflk(ts 0~ Fuel Econonl)” Re~u-

/atwts and Gaso/lne frl~e on Neit Car MPG, /978-89 (Oak R]dgc, TN: Oak Ridge National Laboratory, revised Nov. 30, 1989).

I SFor ~xanlple, hone and parkins(m ((~p. cit., footnote 10) appear to award an “unc(mstraincd” status h) some automakers in an unusually

generous fashion; and to underestimate the r~)lc of technological advances in improving fuel economy.

I ~Greene, (}p. C]t., f(}otnote” I ~.

I Tcharlcs River Associates, “’Policy Alternatives for Reducing Petroleum Use and Greenhouse Gas Emissi(ms, ” paper prepared for the

Motor” I’chicle Manufacturers Ass{)clati{m, September 1991.
Chapter 5 Policy Options for Transportation Energy Conservation 1143

sumptions used appear to overly favor gasoline

taxes over CAFE standards in terms of cost-effectiveness. On the other hand, because it is possible

to structure gasoline taxes so that they have few or

no net negative impacts on the economy,18 it

should be possible to gain energy savings from a

well-designed tax at lower total social costs than

from CAFE standards.

The above perspective reflects an "either/or ”

view of taxes and standards. However, policymakers may not view taxes as a viable option because of political considerations, or they may be

willing to consider taxes and standards as complementary policies. Although taxes alone can save

much energy by reducing travel demand, they are

unlikely to yield very high fuel economy levels at

the rates (perhaps up to $1 per gallon) likely to be

the outer limit of political feasibility;19 

consumers

typically exhibit very high discount rates in their

purchasing decisions for energy conserving

technologies.

Further, although automakers may complain

about the market risk associated with new fuel

economy standards, new standards may work to

reduce some of the market risk of introducing new

fuel-efficient technologies. In the current market,

consumer devaluation of fuel economy tends either to keep new technologies out of the marketplace or to dictate their use in a form that maximizes performance. For example, the higher

specific horsepower of multi valve engines can be

used primarily to gain acceleration performance.

but this sacrifices a significant component of their

fuel economy potential by foregoing the engine

downsizing that could be accomplished. Automakers choosing to gain maximum fuel economy

from such engines might lose market share to others that stressed performance, a more highly valued commodity in the current marketplace, and in

fact multivalves have generally been designed and

advertised as performance boosters, A new fuel

economy standard, if properly designed to put

near equal technological pressure on each automaker, would limit the ability of competing makers to grab market share by focusing on performance, thus limiting the market risk of stressing

fuel economy.

1 What Is the Fuel Economy Potential

of the U.S. New Car Fleet?**

Congress has been bombarded with a range of estimates of the “technological potential” of the

fleet. Many of the variations among these estimates result not from technical disagreement

about the efficiency improvement from specific

technologies--although such disagreements clearly

exist—but from differences in the following assumptions:

■

■

m

m

■

■

●

the time frame of the higher fuel economy levels, that is, the lead time available to the industry for making technical and marketing

changes;

the nature of regulations accomplishing the efficiency change;

future shifts in the size mix of the fleet;

changes in acceleration capabilities or other

measures of vehicle performance;

passage of new safety and emission regulations;

the time required to develop, perfect, certify,

and bring to market new technologies;

judgments about what should be considered an

acceptable level of economic disruption to the

industry in responding to new fuel economy

regulations; and

1‘By ‘“rccycllng “ the rc~ cnucs into rtxfuc[ion~ in c)thcr talc~, c~pcc I ally laxcs that hake disttming effects (m the economy. See the discusslt)n of ga~olme taxes CISCM hue In this chapter.
144 I Saving Energy in U.S. Transportation

* judgments about the response of consumers to

changes in vehicle costs and capabilities

(which is, in turn, a function of oil prices and

supply expectations).

Assumptions about these factors must be made to

calculate “technological potential ],” since each

factor will affect the ultimate fuel economy

achieved by the fleet.

OTA has examined various estimates of technological fuel economy potential, which range

from conservative estimates prepared by domestic

automakers to optimistic estimates prepared by

energy conservation advocates. The technical arguments surrounding the many technologies

available to improve the fuel economy of the U.S.

auto fleet are not discussed here; the interested

reader is urged to examine the 1991 OTA report21

as well as a report of the National Research Council, especially its appendix B.22 The range of

views about fuel economy potential can, however,

be characterized as follows: at the conservative

extreme, further increases in fleet fuel economy

are characterized as likely to be quite small-—less

than 3 mpg within 10 years23—because the major

gains have already been achieved, consumer

tastes are heading toward vehicle characteristics

that conflict with greater fuel economy, and government safety and emissions standards will tend

to degrade fuel economy. At the optimistic extreme, large increases in fleet fuel economy, to 45

mpg and higher, are portrayed as readily obtainable by existing or soon-to-be-available technology, possibly as early as the year 2000.24

OTA’s contractor, Energy and Environmental

Analysis, Inc. (EEA), prepared a set of estimates

of future fleet fuel economy potential for the earlier OTA report. These must be used in context:

each individual estimate of the fuel economy potential for a certain “scenario”--a concept of a

particular future, with defined characteristics—is

associated with a set of critical assumptions that is

a powerful determinant of the magnitude of reported fuel economy values. In some regards,

EEA estimates may be viewed as somewhat conservative for the 2001 time frame, because they do

not consider the possibility that new technologies,

not yet available commercially, may begin penetrating the market by that date; they do not allow

for improvements in the fuel economy performance of already-installed technologies;25 nor do

they consider the potential for diesel engines to

overcome their current negative market perceptions and their problems in meeting emission requirements. On the other hand, the scenarios all

assume that, at worst, vehicle performance, use of

luxury equipment, and size will not increase indefinitely, but instead level off after 1995; other

scenarios assume a policy-driven rollback in these

characteristics to 1990 or 1987 levels. These assumptions could prove too optimistic. Further, the

EEA values assumed passage of fuel economy

legislation by the end of calendar year 1991. The

passing of this date with no legislative action, the

intervening 2 years and the failure of fleet fuel

economy to improve during that time, and the

high probability that at least an additional year

2‘ office of TcchntJl(~gy Asscssnlen[. op. cit., ft)otnotc” 7
Chapter 5 Policy Options for Transportation Energy Conservation 1145

will pass before new standards might be set imply nario (no new fuel economy regulations, no major

that the times specified in the original analysis shifts in market factors), to a “maximum-technolshould be reset by adding a few years. ogy” scenario that postulates what could be

Table 5-3 provides OTA estimates for a variety achieved if regulations forced maximum use of

of fuel economy scenarios, ranging from a “prod- fuel economy technologies and accelerated model

uct plan” meant to represent a projection of likely retirement rates, to a longer-term projection posfleet fuel economy in a “business-as-usual” sce- tulating the success of several new technologies

Fuel economya

levels achieved

(mpg)

1995 Product plan

Cost-effective technology, continuation of current trends, no 283 domestlcb

new policy initiatives 31 1 imports

292 fleet

Regulatory pressure

Fuel economy potential with added pressure of new efficiency 300 fleet

regulations but without size-class shifts

2005 Regulatory pressure

As above 365 domestic

374 Imports

371 fleet

(38 1, mpg with 2-stroke)

2010 Advanced technologies

Size/performance/luxury rolled back to 1987 levels, no new emissions

standards post-2000

a U S Enwronmental Protect Ion Agency test values, combmed city-highway, potential credits for alternate fuel vehicles not considered

b Domestic refers to vehicles made and sold In the United States by the three U S automakers, Imports refer to vehicles sold m the

Umted States by the lop five Japanese automakers

c Note that these dates reflect the assumption Ihat any new standards would be set by the end of 1991

SOURCE U S Congress Off Ice of Technology Assessment Improv\ng Automobile Fuel Economy OTA-E-504 (Washington, DC U S

Government Prlntlng Off Ice October 1991) based on analysls by Energy and Environmental Analysls, Inc
146 I Saving Energy in U.S. Transportation

such as two-stroke engines. The “regulatory pressure” scenario yields a result that may be viewed

by some as a “middle-of-the-road” fuel economy

target, although it does assume a rollback in vehicle size and performance to 1990 levels in defiance of current upward trends. OTA does not,

however, believe that there is any “best” fuel

economy target, since any selected target value involves both a degree of market and technological

uncertainty and a balancing of many values.

As illustrated by these scenarios, neither end of

the range of claimed fuel economy potential—"little change” to better than 45 mpg by

2000 or soon thereafter—appears credible for the

time frame in question. OTA analysis shows that

the application of multiple existing technologies

can lead to fleet fuel economy gains of several,

and up to about 10 mpg by 2001 (or 2004 when the

passing of the date by which fuel economy standards were assumed to have been passed is taken

into account) if consumers are willing to accept

some rollback in vehicle size and performance,

and to pay more for improvements in fuel economy than will likely be repaid in fuel savings. Such

an acceptance, however, is not a foregone conclusion, given the existing market trends discussed

above. A few additional miles per gallon may be

available in this time frame from incremental improvements in technology performance and upgrading of existing applications of fuel-efficient

technologies. On the other hand, buyer resistance

to limits on vehicle acceleration or increased purchases of light trucks could either reduce the potential for increases in fleet fuel economy or partially defeat the purposes of higher auto standards.

The National Research Council (NRC) is

somewhat more pessimistic than OTA about

achievable levels of fuel economy. NRC projects

that a “practically achievable” level of fuel economy for 2006 is 34 to 37 mpg, with the higher value representing a low-technical-confidence, highcost level.26 Its practically achievable level for

2001, which may be somewhat comparable to

OTA’s regulatory pressure scenario (35.5 mpg), is

31 to 33 mpg. 27 In OTA’s view, NRC’s projections

of fuel economy are not consistent with its assessment of the likely technological performance of

individual technologies.28

Greater fuel economy gains than those discussed above, to 45 mpg or even higher, may be

available by 2010 when new technologies could

make major inroads into the marketplace, although the success of these technologies is by no

means guaranteed. The longer schedule is required because of the time needed to develop and

adequately test new technologies.

As noted above, changes in consumer preferences for fuel economy, vehicle size, and vehicle

performance or, in the extreme, the imposition of

limits in the choice of these attributes, offers an alternative to a strictly technological approach to

improving new car fleet fuel economy. Moderate

changes in purchaser selection of vehicles within

size or weight classes toward more efficient models, and shifts in size or weight class to smaller vehicles, can substantially increase fleet fuel economy. For example, in the 1990 U.S. new car fleet, if

consumers had purchased only the dozen most

fuel-efficient models in each weight class and

shifted their purchases towards lighter-weight

classes so that average weight was reduced by 6.2

percent, fleet fuel economy would have improved

from 27.8 to 33.2 mpg, or 20 percent.29 About

two-thirds of the fuel economy improvement

would have been due to consumers selecting the

more efficient vehicles in each weight class, with

the remainder due to the actual shift in weight

class market shares. The “cost” of the improve26Cimmlittee (m Fuel Ec~m(mly of Aut(mlobiles and Light Trucks, op. cit., footnote 22.

“ibid.

~RThc individual techn(dt)gles are assessed in ibid., app. B.

‘(]R. M. Heawmrich et al., Lighl-D14rJI Auton@l~’e Iivhnologyand Fuel Economy Trends TArough 1991. EPA’AAI CTAB/9 I -02 (Washington, DC U.S. Envinmrmmtal Protection Agency, May 1991 ).
Chapter 5 Policy Options for Transportation Energy Conservation I 147

ment (in terms of loss of consumer attributes)

would have been a 7-percent decrease in the average interior volume of the fleet (from 107 to 99 cubic feet), an 11-percent increase in 0 to 60 miles

per hour (mph) acceleration time (12. 1 to 13.4 seconds), and a major shift from automatic to manual transmissions (about 40 percent of the fuel

economy benefit would be lost if drivers refused

to change transmission types). The “average

car”—the car that attains the average fuel economy of the fleet and is representative of its average

characteristics—-would have been a Toyota

Camry rather than a Dodge Dynasty.30

What, then, should be the targets for a new generation of fuel economy standards? If Congress

wishes to set a fleet target for 1998 that pushes the

industry further than it would otherwise be likely

to go, a realistic target would be 30 mpg, if no significant changes occur in current trends in vehicle

size and performance. With full use of available

alternative fuel credits, a reported fleet average

31

of 31 mpg should be feasible. The fleet average

could be considerable y higher if consumers change

their relative preferences for efficiency, performance, and size; legislators will have to weigh the

benefits of attaining this higher level against the

risks—particularly potential customer dissatisfaction with smaller, lower-powered cars and the

resulting lower vehicle sales. Congress could reduce these risks by coupling higher fuel economy

standards with economic incentives-gasoline

taxes, or rebates and penalties tied to fuel economy--designed to push the market toward higher

efficiency.

For the longer term, the choice becomes more

difficult because there are more options and more

uncertainties. The maximum-technology value of

38 mpg in 2001 (2004 given delayed passage) assumes a rollback in size and performance to 1987

levels, an increase in vehicle costs that will not be

offset entirely by fuel savings (unless gasoline

prices rise substantially), and early retirement of

several model lines. which could be costly to the

industry. The compression of vehicle life cycles

embodied in the maximum- technology scenario

is not unprecedented, however, and legislators

may feel that growing oil imports and the need to

reduce greenhouse emissions warrant such measures. Further. a high fuel economy standard may

accelerate the entry of new technologies, such as

the two-stroke engine, into the fleet (although not

without market and technical risks). And, as

noted. the maximum technology target may be attainable with less performance rollback or at lower cost than projected; the projections do not consider potential improvements in the fuel economy

performance of these technologies. or the likely

upgrading of pre-1990 applications of fuel economy technologies when the models in which they

are installed are redesigned.

For legislators who believe that the market

should better reflect the societal costs of oil, but

who wish neither to demand that the industry

abandon product lines before their initial costs can

be recovered nor to risk requiring major changes

in vehicle size and performance, a fleet target of 35

mpg should be feasible by 2004. Alternatively, a

maximum-technology scenario that assumed a

rollback in size and performance only to 1990 levels would yield a fleet average fuel economy of

about 37 mpg by 2004. The change in size and performance between 1987 and 1990 cost more than

1 mpg in new car fuel economy. Because of the

importance of lead time, these targets assume passage of new fuel economy legislation by calendar

year 1994. Substantial delays in passing new rules

would lower the fuel economy values attainable in

the target year.

For the still longer term (i.e.. 2010 and beyond), as noted above, there is real potential for
148 I Saving Energy in U.S. Transportation

very high fleet fuel economy values, 45 or even 55

mpg,

32 but considerable uncertainty as well because attainment requires introduction of still-untested technologies. For this time period, Congress might consider mechanisms to ensure

continued technological pressure while maintaining enough administrative discretion to reduce

fuel economy goals if optimistic forecasts of

technology potential turn out to be incorrect.

9 Which Type of Standard Is Best?

Recent proposals for new fuel economy legislation have moved away from the format of current

law, which imposes a uniform 27.5-mpg standard

on all automakers. With the current format, automakers that produce a variety of vehicle sizes, or

primarily large vehicles, are subject to a more demanding technological challenge than those who

concentrate on small vehicles. This gives the latter

more flexibility to capture markets for larger cars

and to introduce features (high-performance engines, 4-wheel drive, etc.) that are both attractive

to consumers and fuel-inefficient, which puts full

line and “high-end” manufacturers at substantial

market disadvantage.

Many legislators would not approve a new fuel

economy standard unless domestic automakers

could comply with it without a drastic shift in their

fleets toward small cars. However, a new “uniform-mpg” standard set under a restriction of this

sort would be unlikely to force makers of primarily small cars to improve very much. As a result,

the maximum fuel economy the fleet could be expected to attain from a uniform standard will be

lower than that from a format that would challenge

all automakers, even those making only small

cars, to substantially improve their CAFES.

New legislative proposals ask that automakers

raise their CAFES by a uniform percentage over

that attained in a baseline year—1 988 in Senator

Bryan’s proposal (S. 279). Because these 1988

CAFES reflect in some measure the size makeup

of each company’s fleet, they will take account of

the differences in size among various companies

in assigning fuel economy requirements—but

only to the extent that these differences do not

change from the baseline year to the compliance

year. If companies seek to gain share in market

segments different from their traditional market

(e.g., by marketing large luxury cars), the uniform-percentage approach could prevent them

from doing so and thus be viewed as anticompetitive. Furthermore, to the extent that some of the

differences for the baseline year were due to differences in fuel economy technology and design, a

uniform-percentage increase places the most severe new demands on those companies who have

tried hardest to improve their fuel economy. There

have been differences in fuel economy technology

and design among different automakers, and several companies—through deliberate marketing

strategy or loss of market shares—have changed

their size mix over time; both factors compromise

the internal logic of the uniform-percentage approach to CAFE regulation.

An alternative approach is to base company

standards on the attributes of each company fleet

at the time the standards are to be met. If based on

interior volume, for example, a new standard

would place the highest numerical fuel economy

target on the company making vehicles with the

lowest interior volumes. Such a volume average

fuel economy (VAFE) standard could be designed

to place as equal as possible a technological (or financial) burden on each automaker. This type of

standard would put no pressure on automakers to

build small (low-interior volume) cars33—a minus with some conservationists who believe that

3zEven higher values cou]d be achieved, bu( only with major changes in the basic character of cars (e.g., ]argt! numbers of diesel-electrlc

hybrid vehicles).

33 Because snla]]er cars Wi]] have higher fue] Ccon(mly targets and selling more of them wi]] not make it easl~r fOr an alltomaker 10 achieve its

company standard-unless the size-based targets are deliberately set [o give smaller cars a less difficult [arge[ fuel ec(m(m~y than large cars

would have.
Chapter 5 Policy Options for Transportation Energy Conservation I 149

most cars are too large, but a plus with others who

believe that consumers should have an unrestricted choice of car size and may also believe

that large cars are safer. Instead, a VAFE standard

demands that automakers focus on technology,

design, and performance to improve fuel economy, thereby removing the contentious issue of car

size from the policy debate. A perceived disadvantage of a VAFE standard is that any increase in

market share of cars in the larger size classes could

reduce the overall fleet fuel economy target, a potential outcome that disturbs some policymakers.

This disadvantage is not unique to VAFE standards, however; a uniform-percentage increase

standard could also have its total fleet target reduced with market changes .34

Another potential problem with VAFE standards—and with the original uniform 27.5-mpg

standard—is that they are difficult to apply to

manufacturers who fall outside the envelope of

automakers competing in the mass market. Companies such as Mercedes-Benz and BMW sell

products that stress high performance, luxury, and

safety at a high price. Traditionally, their vehicles

are substantially heavier than other vehicles in

their size class, more powerful, and rear-wheel

drive to achieve the handling characteristics they

seek), all of which compromise fuel economy.

These companies cannot match the fuel economies of mass-market automakers in their size

classes at similar levels of technology.

Basing fuel economy standards on a wider

group of vehicle attributes could provide more of a

move to a “pure”’ technology standard, that is, a

standard that can be met only by improving

technology (rather than by reducing size or power). Mercedes-Benz, BMW, and Porsche have proposed a standard based on a group of variables--

curb weight, the ratio of curb weight to interior

volume, and the ratio of curb weight to torque--

that would allow companies in a wide range of

market niches to comply with a reasonable standard by improving technology. without being

forced to move into other markets to "balance”

their production of niche vehicles. The standard is

formulated by performing a regression analysis,35

using U.S. Environmental Protection Agency

(EPA) data for the 1990 fleet, that defines current

vehicle fuel consumption as a function of the

above three variables. A standard requiring 1995

fleet fuel economy to be at least 20 percent higher

than the 1990 level would simply reduce the

1990-based fuel consumption function by 20 percent and apply this new function to each automaker's fleet. As with the uniform percentage increase

and VAFE standards, this system will not guarantee attainment of an exact fuel economy level (because the market can change), but it will force

technology improvement and provide positive incentives for weight and performance reduction.36

H What Is the Best Schedule

for New Standards?

Legislation proposed during the 1991-92 debate

focussed on setting new fuel economy standards

for 1996 and 2001. If the debate resumes this year,

these dates may be changed to 1998 and 2003, (o

reflect the loss of 2 years of "lead time" for the automakers. Are these the best years for a set of new

standards?

Generally, the design and product development

lead time for new models and major components

is about 4 to 5 years, indicating that products for

the 1998 model year are now being finalized,
150 I Saving Energy in U.S. Transportation

whereas products for 1997 have moved to a stage

at which tooling orders are being placed. The

models of domestic automakers will have a life

cycle of at least 7 to 8 years prior to redesign, during which their large development costs must be

recovered. Japanese models tend to have shorter

life cycles, as low as 4 years.37

These time horizons imply, first, that 1998 is

very early to demand significant improvements in

fuel economy beyond those already built into

product plans, and second, that 2003, although

enough time for major adjustments to be made, is

earl y for a standard that might seek fleetwide redesign unless Congress believes that energy concerns warrant an accelerated redesign schedule

that would induce accelerated retirement of several model lines. Although OTA has reached no conclusion about what an optimal schedule might be,

a set of dual dates that would allow an interim fuel

economy adjustment followed by a full redesign

of all model lines without forced early retirements

would be 2000 followed by 2006 or 2007. If desired, a 2003 standard could also be included,

predicated on redesign of only a portion of company model lines.

Any decision to design a schedule for new fuel

economy standards should include a careful examination of changes in new model lead times being pursued by the major automakers. For example, Chrysler’s new LH models apparently were

brought to market in less time than the 4 to 5 years

noted above, and other domestic manufacturers

are striving to reduce their lead times as well.

1 New Fuel Economy Standards

and Safety

Arguments about safety have been at the center of

the debate about new fuel economy standards. Industry and Administration opposition to new standards has included arguments that more stringent

standards, such as those proposed by S. 279,

would force consumers into a new fleet of smaller

cars that would be significantly less safe than a

new fleet with an unchanged size mix—perhaps

even less safe than the current fleet.38 Although

some safety advocates argue correctly that small

cars need not be unsafe, the bulk of statistical evidence argues that, given current design, the car

fleet would be less safe if all its vehicles were

somewhat smaller than they are today.

In OTA’s view, new CAFE standards of the

magnitude discussed here would be unlikely to

cause absolute levels of safety to decrease because

automakers should be able to achieve such standards without downsizing and because safety improvements will continue to be introduced to the

fleet. There is evidence, however, that reduced

weight--a likely consequence of new fuel economy standards--could cause some decrease in relative fleet safety, although changing safety equipment and design should lessen this decrease. Also,

there is no guarantee that automakers will not

choose downsizing as a method of meeting new

standards (unless standards are specifically designed to avoid this). Further downsizing of the

fleet (especially a reduction in exterior dimensions) would likely make the fleet less safe than it

would otherwise be. However, much of the rhetoric about safety used by both sides in past debates

about new standards has been overstated,39 and

some of the arguments purporting to demonstrate

the magnitude of the risk are flawed or misleading.

Car size can be characterized by weight, interior volume, or exterior dimensions. Each has a different relationship to safety. Added weight may

help the heavier car in a vehicle-to-vehicle collision, because the laws of momentum dictate that a

J7Light Imcks may have s{mlewhat ](m~er life CyC]eS.

38E ~ , see Jew Ralph Cuw, adnllnistrator, National Highway Traffic Safety Administrati(m, statement at hearings ~’for~ the House Con~-

. .

mittee on Energy and Commerce, Suhc(mm~ittee (m Energy and P(wer, Oct. 1, 1 YX1.

3~e level ~) frhetofic has escalated t{) the ~)int that adnlinistra{i(m representatives have nicknamed s~nal~~r BDfan’s fuel ec~~n(~mY Prt)~)sal “The Highway Death Act of 1991 .“ And, s(m~e in favor t)t standards have argued th:it there is no connecti(m h]tween vehicle size and safely.
Chapter 5 Policy Options for Transportation Energy Conservation I 151

heavier car will experience less deceleration in a

crash, but the weight and safety advantage afforded the first car represents a disadvantage to the

second, increasing the forces on it. Although studies of accident records have demonstrated a positive statistical relationship between overall fleet

safety and average weight of vehicles in the fleet,

the strong collinearity between weight and various

measures of vehicle size, especially exterior dimensions, makes it difficult to separate the effects

of weight and size. Many safety experts think size

is more important than weight to overall fleet safety, even though weight may be important to consumers making individual purchase decisions.

However, some experienced safety analysts do believe that weight plays a role in fleet safety independent of size.40

Interior volume may affect safety somewhat

because a larger interior makes it easier for vehicle

designers to manage the “second crash’’—when

passengers are flung about the passenger compartment. The average interior volume of the U.S. automobile fleet has been remarkably stable over the

past decade, but there is concern that this may

change if fuel economy standards are set at levels

that cannot be attained with technology alone.

However, the increased use of air bags may make

differences in interior space of less importance to

overall vehicle crashworthiness, because air bags

should reduce the movement-and the likelihood

of secondary collisions-of front-seat passengers

in a crash.

Exterior dimensions may be particularly important to a car’s crashworthiness, since these will

affect available crush space, and narrower vehicle

tracks and shorter wheelbases appear to increase

rollover frequency (rollover accidents are often

associated with fatalities). Accident studies have

shown that some of the largest vehicles in the fleet

consistently have the lowest fatality rates, even

when the data are corrected for driver characteristics (especially age). 41 Further, studies by the National Highway Traffic Safety Administration

(NHTSA) indicate that small vehicles experience

more rollover accidents, and more traffic fatalities

in such accidents, than large vehicles,42 and the

Insurance Institute for Highway Safety claims that

downsizing has driven up death rates in several redesigned General Motors models.43

Will new fuel economy standards yield a decrease in automobile safety? The risks are less

than characterized by some. First, substantial increases in fuel economy can be achieved with little

or no downsizing, although automakers might

conceivably choose downsizing over other measures to satisfy new fuel economy standards. Vehicle weight would likely be reduced, however. If

careful attention is paid to vehicle structural integrity, this may not have negative safety consequences, although some statistical evidence

points to a distinct role for weight in fleet safety.

Second, even if further downsizing were to

cause a decrease in safety relative to that without

new standards, this need not mean an absolute

safety decrease. Since CAFE standards have been

in effect, when the median weight of new automobiles decreased by about 1,000 pounds, wheelbase

by 10 inches, and track width by 2 to 3 inches, the

safety record of the U.S. fleet improved substantially: between 1975 and 1989, death rates for passenger cars declined from 2.43 per 10,000 registered cars (2.5 per 100 million miles) to 1.75 per

Wsce ~ ~, L, E~ ~n~ and M,C, Fri~h, General Motors” Research Lab(mt(ms, .0 , “C’ar Size or Car Mass-Vrhlch Htis Greater lnflucncc (m

Fatallty Risk’?” unpublished dt}cunwnt, Aug. 30, 1991.

4 I Na[]onal Highway Traffic Safety Adn~inlStrati(m, “II-w Effect of Car Sim (m Fa(alit} and injury Risk. ” unpublished paper. 1990.

42C,J. Kahanc, Nati(mal Highway Traffic Safety Admin istraticm. “’Effect t)f Car SIZC (m the Frequency and Scferit} of Rt)ll(mcr Crashes,’”

unpublished paper, May 1990.

~~lnsurance Ins[ltut~ for Highway Safety. “D{)wnsl~ing Cars Means Mtwe Dca{hs, ” .Sro///J Report, J 01.25, N(J. 8, SCpI. 8, 1990.
152 I Saving Energy in U.S. Transportation

10,000 registered cars ( 1.7 per 100 million

miles) .44 In other words, at worst the reductions in

vehicle size and weight reduced somewhat the

fleet’s overall improvement in safety during this

period, and new standards might well do the same.

Not surprisingly, this outcome can be interpreted

in radically different ways: to proponents of more

stringent standards, it indicates that better fuel

economy was achieved without compromising

safety—in fact with substantially improved safety—and that this can be the case in the future; to

opponents, it indicates that nearly 2,000 lives per

year, which could have been saved, were lost because of forced downsizing of the fleet,45 and that

new standards will similarly reduce our ability to

improve safety in the future. Both viewpoints may

be correct.

Improvements in vehicle design have not been

the sole cause of the noted improvements in the

fleet’s safety record. Improvements to highway

design, a crackdown on drunk driving, reductions

in highway speed limits, and other nonvehicle factors played a critical role. Some analysts question

whether further improvements in these factors of

similar magnitude are available; if they are not,

this would call into question the conclusion that

absolute levels of highway safety will continue to

improve even if there is some decrease in the average size of the fleet.

Third, some of the differences in safety between small and large cars do not seem irrevocable, as stated by some officials, but maybe amenable to correction. The safety technologies now

entering the fleet, including air bags and antilock

brakes, should work at least as well on small cars

as on large ones and should tend to decrease any

safety “gap,” measured in fatalities per 100 million miles, between the two.46 Also, some safety

features may focus on problems rather specific to

small cars. A major cause of increased fatalities in

small cars appears to have been their high propensity to roll over.

47 NHTSA is preparing regulations to deal specifically with this problem, and

OTA expects design improvements to be available

to reduce rollover danger and thus further reduce

the safety gap between large and small vehicles.

Fourth, in estimating the likely safety outcome

of further downsizing of the fleet, it may be incorrect to assume that all of the safety features incorporated into a downsized fleet would be incorporated even if no downsizing occurred. Under this

assumption, new safety features do not really

compensate for downsizing, since even more lives

would be saved with the same features added to a

fleet of larger vehicles. In the past, however, government rulemaking, consumer pressure, and automaker design decisions have not been made in

isolation from changes in the actual safety situation. All responded to perceived safety problems,

not to some absolute safety standard. In other

words, had the problems been less severe, fewer

safety measures may have been taken. To the extent that future safety responses are driven by

problems emerging from downsizing, the argument that safety would have been still greater

~Natlonal Highwai Traff;c saf~[~ Adnlinistra(ltm, }“aIa/ At~/dcnf Reportlnt~ .Y]s/em /989 (Washingttm, DC: 1989), tahk I -~B. For all

. .

nlt)t[~r vchiclcs, death rates dccl ined l’rt)m 3.23 pm 10,000 \ehiclcs (3.4 pcr 100 mi I I i(m II IIICS) [t) 2.38 pcr 10,000 k ehlcles (2.2 pcr 100 million

vehlclcs), table I - i

*However, ~ar]y, s[ii[ls[lcs on alr biig ~ffcctl~ eness in preventing occupant fatalities show thiit for 1987-92, [he addition of a]r bags reduced

fatalities per 10,000 rc.gistcrcd cars virtually idcn[ically in small, midsim, and large ~iirs. C(mtrary t{) OTA expcctati(ms. thepcr(cn/age decline

in fatal itles was greater for large cars than for sm:ill cars. Thus f;ir, the usc of air bags has not decreased the safety gap bc[ween large and small

~iirs. Insurance lnstltulc for Hlghw a) Safety. SI(lII($ Rcporl. \ 01. 28, iN(). I 1, oct. 9. 1993.

-$7 Kiihime< op, ~it,, f(M)tIlok! ~~.
Chapter 5 Policy Options for Transportation Energy Conservation 1153

without such downsizing may become, at least in

part, disingenuous.48

Opportunities to counteract any adverse impacts of new fuel economy standards maybe foregone by lack of resources. According to the Transportation Research Board, federal funding for

highway safety research has been cut 40 percent

since 198 l—to only $35 million per year-despite the enormous cost of traffic accidents in both

dollars and tragedy ($70 billion, 45,000 deaths, 4

million injuries per year).

49 Additions to Safety

R&D resources could go a long way toward mitigating any future negative consequences of further fleet downsizing.

In conclusion, potential safety effects of fuel

economy regulation will most likely be a concern

if increases in fleet fuel economy are required over

a period too short to allow substantial vehicle redesign, thereby forcing manufacturers to try to sell

a higher percentage of small cars of current design, or if requirements exceed the technological

capability of the automakers, thus forcing significant downsizing. Significant improvements in

fuel economy (on the order of 30 percent) should

be possible over the longer term (e.g., by 2004)

without compromising safety. Over this time,

there are opportunities to improve fuel economy

without downsizing, and there are also opportunities to redesign smaller cars so as to avoid some of

the safety problems currently associated with

them. However, the potential for safety problems

will still exist if automakers choose

downsizing over technological

achieving higher fuel economy, and

focus on solving problems such as

to emphasize

options for

if they do not

the increased

rollover propensity of small cars of current design.

If auto fatality rates would be lower without new

fuel economy standards than with them (even if

overall rates decline), then a real tradeoff between

new standards and safety does exist and must be

addressed explicitly during the fuel economy debate.

1 Employment Impacts

The potential impacts of more stringent standards

on both auto industry and national employment

have also been a source of controversy in the debate over fuel economy. Focusing on the impact

of a 40-mpg standard by 2001, the industry has

claimed that new standards would cost hundreds

of thousands of auto industry jobs;5o in rebuttal,

analysts in the conservation community have

claimed that standards would not claim industry

jobs and would increase overall domestic employment by hundreds of thousands of jobs. with many

of these being in the auto industry.51 The basic assumptions and conclusions of two key and opposing positions are described in table 5-4.

Whether new fuel economy standards will be

net job creators or destroyers depends on rather

uncertain assumptions or conclusions about the

capability of automakers to increase fuel economy

by technological means; the costs of new fuel

economy technologies; and the tradeoff consumers make among added costs, improved fuel economy, and any necessary changes in other vehicle

attributes (such as size). These factors will, in

turn, affect both total auto sales and the likely

share of those sales captured by U.S. manufacturers. For example, the American Automobile

-181t ~hould & “oted, ~{)mewha[ counter t{) this argument, that automakers tend to introduce new tcchm)k}gics first In the lu~ 11O ~jrtl{~n of

their fleet, and this tendency applies to safety equipment as well, despite the fact that larger luxury models tend to have gtxd safety ruxmls and

“need” the new equipment less than smaller models. The most recent examples of this tendency are the intr(tiuctiims tjf airbags and antih>ch

brakes.

~(~ran$p)fla[ion Research Board, Sajel}, Resear~,}l j~r a Changing ~ighway Errl’lrorrrr?er?f,Sp’C!a! Rcp)rt ~~~ (W:ishiw-y(m ~~ N~tionfil

Academy Press, 1991 ).

.f~Mot{)r vehicle Manufacturers Asstxiation, “U.S. Employment Effect of Higher Fuel Ec(m(m~y Standards, ” unpublished paper, Jan. 30,

1990.

5 I H Ge]ler et a] EnerRJ, ~>jf~(.lcnc.Y ~n~ Job Crcflllon: The En7p/oynlcnl and /nl~rne ~enp~jf.~ Fr(J~?j ]n\C.~{[ng in fItICr~~% (’on. \Cr\’Ollon”

.!

Technolox[es (Washingt(m, DC. American C(wncil for an Energy-Efficient Ecmmmy, Octd-rcr 1 W?).
154 I Saving Energy in U.S. Transportation

Motor Vehicle Manufacturers Association

1

2

3

4

5

6

7

Technically achievable fuel economy level:

29 mpg by 1995

33 mpg by 2000

Decline in sales of larger car sizes,

Large and luxury cars 87 percent

Midsized cars 72 percent

Higher sales of small cars at 80 percent of the labor of larger sizes

Overall sales decline of 10 percent by 2001 (increased fuel economy is not cost-effective)

Domestic Industry retains current share of small car market segment

Half of the Increases in foreign sales of small and midsize cars are produced in transplants

Transplant labor productivity is twice the domestic automaker average

Results ● 200,000 jobs lost by 1995, 210,000 by 2001, base case

● 173,000 jobs lost by 2001 without 10-percent sales decrease

● 159,000 jobs lost if Big 3 gets 53 percent of small-car market

● 315,000 jobs lost if sales decline 20 percent

American Council for an Energy-Efficient Economy

1 Technically achievable fuel economy level 34 mpg by 1995, 40 mpg by 2000

2 No decline in car sales, no change in domestic-import market share

3 40-mpg increase in fuel economy is cost-effective for 2000

Results By 2010, fuel savings are $53,8 billion per year, fuel economy investment is $17.3 billion per year

● 25,000-job increase nationally by 1995

■ 72,000-job increase nationally by 2000

“ 244,000-job Increase by 2010

● 47,000-job increase in auto industry by 2010

SOURCE Off Ice of Technology Assessment, 1994.

Manufacturers Association (AAMA)52 assumes

that new fuel economy standards will not be costeffective. 53 It further assumes that industry jobs

will be lost by a combination of lower sales (because of higher auto prices with inadequate compensation in fuel savings); shifts to smaller cars

requiring less labor to build (AAMA believes that

technology alone cannot achieve 40-mpg standards); losses of domestic manufacturers’ market

share due to Asian manufacturers’ relatively

greater strength in the small-car segment of the

market; and the greater labor productivity y of transplant factories, which will win part of the Asians’

larger market share.

On the other hand, the American Council for an

Energy-Efficient Economy (ACEEE) assumes

that stringent new CAFE standards are cost-effective; that customers will value the increased fuel

economy of new cars well enough to maintain

sales levels; and that no shifts to smaller cars are

necessary, because new standards can be met by

improved technology alone.54 Under these cir-

‘2F(Jmwly (he Motor Vehicle Manufacturers Association of the United States, or MVMA.

S \Motor” Vehlc]e Manufacturers Association, 0p. cit., f(~~tnote 50.

5.@,,]er e[ al., op. cit., footnote 5

1

.
Chapter 5 Policy Options for Transportation Energy Conservation [ 155

cumstances, any impacts on jobs are caused by the

balance of job losses from lower gasoline sales

and job gains from both the added dollars spent on

new cars (because of the added unit costs

associated with the new fuel economy technologies) and resending by consumers of any net fuel

savings (ACEEE estimates that, by 2010, fuel

savings will outweigh auto investment costs by

$37.5 billion per year55). ACEEE also concludes

that jobs lost in oil production, refining, and so

forth, are more than counterbalanced by jobs

created elsewhere in the economy, because the labor intensity of the oil industry is very low

compared with the rest of the economy. In other

words, even if the money saved in reduced oil expenditures is exactly balanced by the costs of fuel

economy technologies. net jobs will increase.

Some elements of each analysis appear firmly

grounded, and others do not. For example, achieving a 40-mpg standard by 2001 would be unlikely

by using improved technology alone (even assuming that passage of new CAFE standards had taken

place when they were first proposed). Automakers

would probably have to reduce both average vehicle size and performance, with a likely drop in

sales as a result. (Note that, if OTA’s fuel economy

analysis is correct, automakers could comply with

a 35- or 36-mpg standard without reducing car

size, although probably with some small reductions in performance.56) Thus, ACEEE’s “no loss

in sales” assumption seems optimistic. On the

other hand, AAMA’s conclusions about a large

sales loss are based on relatively pessimistic assumptions about technology and cost, and appear

overstated. 57 ACEEE’s premise that losses in oil

jobs (from the loss in gasoline sales due to greater

efficiency) will be more than counterbalanced by

job gains elsewhere in the economy appears to be

on firm analytical ground, as discussed above. In

fact, this argument applies to an y oil conservation

measure, not just automobile-oriented measures.

This source of job gain was not considered by

AA MA. However, there is substantial controversy about the magnitude of fuel savings—and thus

about the extent of the effect on jobs (see discussion below). ACEEE’s estimated oil savings are

on the high side of the potential range. The oil savings, dollar benefits, and thus new jobs created as

a result of new standards appear likely to be lower

than the ACEEE estimate.

A new fuel economy standard. if set at a level

that does not demand wrenching shifts in the composition of the fleet and does not require the

introduction of technologies whose oil savings are

greatly outweighed by their costs, might have a

positive job impact at the national level, primarily

by shifting investment from the low-labor-intensity oil importing segment of the economy58 to

higher-labor-intensity segments: however, new

standards may well have some negative impact on

auto industry jobs if consumers remain relatively

indifferent to fuel economy as a positive factor in

new car purchase decisions. This type of negative

impact might be reduced or eliminated if policymakers were to couple new standards with economic incentives—feebate-rebate programs, or

gasoline taxes—that make high fuel economy

more desirable to potential auto purchasers.
156 I Saving Energy in U.S. Transportation

i Fuel Savings From an Aggressive

Economy Standard (S. 279)

The magnitude of fuel savings likely from a new

fuel economy standard is both a critical component of the decision calculus for the policy debate

about standards and a source of great controversy

because of large differences in estimates prepared

by opposing interests. The source of these differences is the set of assumptions associated with

each estimate. Critical assumptions affecting the

magnitude of estimated savings include:

1.

2.

3.

Fuel economy values without new standards.

Alternative assumptions about the fuel economy of the new car fleet in the absence of new

standards will play a critical role in estimating

fuel savings associated with new standards.

Factors affecting future fleet fuel economy include future oil prices and price expectations,

fuel availability, consumer preferences for vehicle size and power, new safety and emission

standards, and progress in technology development. The span of credible assumptions about

future fuel economy is likely to be quite wide,

especially for the late 1990s and beyond.

Use of alternative fuel credits. Manufacturers

can claim up to 1.2 mpg in CAFE credits by

producing vehicles capable of using either gasoline or alternative fuels, and can gain additional credits by producing vehicles dedicated to alternative fuels. If the automakers produce large

numbers of alternative fuel vehicles and use the

credits to help them to comply with new CAFE

standards, the actual fuel savings associated

with new standards would be reduced.

Magnitude of a “rebound” in driving. An increase in fuel economy, by reducing per-mile

costs, may stimulate more driving and thus reduce the associated fuel savings. The magnitude of such a rebound effect is controversial,

with estimates ranging up to 30 percent of potential fuel savings lost to increased driving. In

OTA’s opinion, estimates on the low side of the

4.

5.

range— 10 percent or less—are more realistic,

implying greater fuel savings.

Magnitude of vmt growth. Small differences in

the growth rate of vehicle miles traveled can

make a significant difference in the fuel savings

estimated to occur from a new standard. The

credible range of future rates is fairly broad,

perhaps from 1.5 percent per year to 3.0 percent

per year, which translates into a variance of

about 1 mmbd in estimated fuel savings for S.

279 in the year 2010.

Effects of new standards on vehicle sales. Some

opponents of new fuel economy standards have

argued that stringent standards will have the effect of slowing vehicle sales (because of higher

vehicle prices and reduced customer satisfaction with smaller, slower, less luxurious cars),

thereby reducing vehicle turnover and its positive effect on fleet fuel economy. Others consider the likelihood of a sales slowdown that is

large enough to affect fleet fuel economy significantly to be very small. Clearly, however,

such an effect is theoretically possible, and

would be like] y if policy makers were to miscalculate and set a standard beyond automakers’

technical capabilities.59

Different estimates of the likely fuel savings

from S. 279, which requires improvements in each

automaker’s fleet fuel economy levels of 20 percent by 1996 and 40 percent by 2001, include:

●

●

■

American Council for an Energy-Efficient

Economy, for the Senate Commerce Committee: 2.5 mmbd by 2005;

Department of Energy (DOE): 0.5 mmbd in

2001, 1 mmbd by 2010; and

Congressional Budget Office (CBO): 0.88

mmbd by 2006 and.21 mmbd by 2010 (base

case); range of 0.45 to 1.42 mmbd by 2006 and

0.59 to 1.82 mmbd by 2010.

The differences among the above estimates can

be readily understood by examining their assumptions. For example, ACEEE assumes that fuel

.f~l~ ~~$un)e~ that ~)]lcylllakers refuse t. reconsider the standard when the Industry ‘S difficulties h(’~(1111~ ~l~~lr.
Chapter 5 Policy Options for Transportation Energy Conservation I 157

economy levels will remain unchanged from

today in the absence of new standards (i.e., about

28.5 mpg for cars and 21 mpg for light trucks).

DOE assumes that without new standards, new

vehicle fleet fuel economy will rise to about 33

mpg for cars and 24 mpg for light trucks by 2001,

and remain at that level thereafter. CBO has chosen baseline values of 30 mpg (range 28.5 to 33.0

mpg) for 2001. This difference in baseline mpg asresumptions is the most important factor in accounting for differences among estimates.

Similarly, DOE has chosen assumptions about

alternative fuel credits, rebound effect, and vmt

growth rate that tend to yield lower estimated fuel

savings than ACEEE, with CBO choosing assumptions somewhat in between. Much of the difference stems from DOE’s assumptions of rising

oil prices—$29 per barrel in 2000 and $39 per barrel in 2010 (1990 dollars).

The DOE baseline estimate of 1-mmbd fuel

savings from S. 279 by 2010 appears analytically

correct but very conservative. Although none of

its assumptions are extreme, virtually all push the

final result toward a low value. The likelihood of

such uniformity is small, although much less improbable if oil prices follow their assumed (upward) path.

In contrast to the DOE estimate, the ACEEE estimate of 2.5 mmbd by 2005 appears overly optimistic because it discounts entirely the potential

for a driving “rebound”; ignores the role that

CAFE credits for alternative fuel vehicles could

play in allowing automakers to boost their official

CAFE levels without actually improving efficiency; and accepts pessimistic assumptions about

likely fuel economy improvements in the absence

of new standards. However, if oil prices remain

low for the next decade or so and no major new

gasoline taxes are enacted, the assumption of no

improvement in fuel economy may turn out to be

correct.

Although the range of potential fuel savings

from S. 279 is wide, OTA believes that the “most

likely” value for savings in the year2010 lies between 1.5 and 2.2 mmbd as long as compliance

with S. 279 does not significantly hurt new car

sales. For a 10-percent rebound effect, a 2-percent

vmt growth rate per year. baseline fuel economy

of 32.9 mpg in 2001 (frozen for the next decade),

and no accounting for alternative fuel vehicles. the

fuel savings would be 1.64 mmbd in 2010. Although the 32.9-mpg baseline (no new standards)

value is optimistic unless oil prices rise substantially, it is also likely that automakers will use alternative fuel credits to achieve at least part of the

fuel economy increase required by new standards.

These two factors will tend to cancel one another:

an overly optimistic baseline fuel economy will

tend to yield an underestimate of fuel savings. and

ignoring the likely use of CAFE credits will tend

to yield an overestimate.

B Regulation of Light-Truck

Fuel Economy

Because light trucks make up a rapidly growing

proportion of the passenger vehicle fleet, and consumers can readily find transportation alternatives

to new cars in the light-duty truck fleet. fuel economy regulations must address light truck fuel

economy to ensure an effective reduction in total

fuel use. Proposed legislation generally recognizes this necessity and sets fuel economy standards for trucks that are similar to those for automobiles. For example, S. 279 proposes that light

trucks attain the same 20- and W-percent fuel

economy increases (by 1996 and 2001, respectively) as automobiles.

Currently available technology will not allow

automakers to improve light-truck fuel economy

to the same extent that they improve passenger automobiles. Sources of fuel economy limitations

include:

= load carrying requirements that impose structural and power needs that are more a function

of the payload weight than the body weight of
158 I Saving Energy in U.S. Transportation

the truck—yielding fewer flowthrough benefits from initial weight reduction;

~ open cargo beds for pickups and large ground

clearance that limit potential for aerodynamic

improvements;

~ need for low-end torque, limiting benefits from

four-valve engines; and

● likelihood of additional safety and emission requirements, with associated fuel economy penalties.

Projecting future light-truck fuel economy and

determining the potential for regulation-driven

improvements are made difficult by the large differences among types of vehicles—pickups, vans,

utility vehicles—all of which are made in varying

size and weight classes. Changes in sales mixes

among the classes have been a major cause of previous fluctuations in the fuel economy of the fleet;

for example, about two-thirds of General Motors’

3.05-mpg light-truck fleet increase between 1980

and 1985 was caused by changes in sales mix, and

much of the decline in 1985-90 was caused by mix

shifts.60 During the same periods, there were substantial improvements in fuel economy technology, but these improvements were offset somewhat

by increases in performance, weight, and level of

options (four-wheel drive, automatic transmissions, air conditioning, etc.). For example, during

1980-90, the fuel economy of GM’s standard

trucks increased 12 to 14 percent from technology

improvements, but decreased 5 to 8 percent from

performance, weight, and option increases.61

Energy and Environmental Analysis, Inc. has

made projections of year 2005 domestic lighttruck fuel economy for two scenarios—a product

plan scenario that assumes no regulatory pressure

on fuel economy, and a maximum-technology

scenario that assumes maximum practical adoption of fuel economy technologies and restraints

on size and performance levels. In the product

plan scenario, domestic manufacturers’ light

truck fleets average about 23 mpg in 2005; for the

maximum technology scenario, the fleets average

about 26 mpg. The product plan scenario is optimistic in that it assumes no further size increases

past 1998 and holds performance increases to an

average of 1 percent per year in horsepower/

weight ratios; the maximum-technology scenario

holds size and performance constant at 1995 levels, but restricts technology penetration somewhat because of the long product cycles normally

associated with light trucks.62

A “uniform-percentage increase” approach to

regulating light-truck fuel economy is particular y

problematic because of the extreme differences in

truck fleet composition among different automakers. A format based on truck attributes, similar in

concept but not in detail to automobile standards

based on interior volume, might be preferable.

Such standards would have to be individually tailored to truck types—undoubted] y an opportunity

for a considerable degree of argument about which

type each model falls into. As a point of departure

for further study, appropriate standards might

look as follows:

■ passenger vans--standards based on interior

volume, probably measured somewhat differently from automobiles;

■ utility vehicles--standards based on passenger

interior volume. with miles-per-gallon credit

for rough terrain capability; and

8 pickup trucks and cargo vans—standards based

on both volume and tonnage63 of load carrying

capacity (e.g., square or cubic foot-tons).

Given the growing importance of light trucks to

overall fuel consumption, more attention needs to
Chapter 5 Policy Options for Transportation Energy Conservation ] 159

be paid to the problems associated with regulating

these vehicles.

fi Conclusions

Using new fuel economy standards to promote

improved light-duty fleet fuel efficiency is a viable conservation option, but one that involves

difficult tradeoffs and demands careful program

design to avoid problems encountered by the previous CAFE program. Aside from the decision

about whether or not to set new standards, policymakers who favor standards must make careful

decisions about the stringency of fuel economy requirements. the schedule for compliance, and the

format of any new standards.

Critics of previous CAFE standards have

claimed they accomplished little in the way of improving fuel economy and caused severe market

distortions. Available evidence implies, however,

that the standards did force fuel economy improvements significantly above the levels that

would otherwise have been achieved, especially

with U.S. automakers, and that much of the market distortion was due to the design of the standards and should be avoidable in the future. OTA’s

analysis implies that a set of standards that would

be technically achievable, would not force early

retirements of car lines that would hurt cost recovery, would avoid the most severe market distortions, and would reflect a societal valuation of

gasoline savings somewhat above market prices

(to account for environmental and other societal

costs) might look like the following:

■

■

Required achievement of a fleetwide average

fuel economy of about 35 or 36 mpg by 2004

or so for automobiles, and about 25 or 26 mpg

by 2005 for light trucks.

Assignment of individual company fuel economy targets by accounting for differences in the

actual makeup of company fleets, by vehicle

size or other physical attributes. The assignment formula for autos and light trucks should

be different, to reflect differences in use for

these vehicles.

Major congressional concerns about new standards include safety and impacts on employment.

Some concern about safety is justified, but past

debate about likely safety impacts has tended to be

highly polarized and characterized by overstated

positions. Achievement of the above standards

could be accomplished without downsizing vehicles, and this would minimize adverse safety

consequences. Also, design and equipment improvements should be available to mitigate problems. Setting unrealistically high standards or designing schedules with too little lead time would

pose substantial safety concerns, however.

Employment concerns should also be allayed

by setting standards at realistic levels. Policymakers should recognize, however, that it is difficult to

forecast employment impacts with accuracy: previous estimates were driven more by their starting

assumptions than by data and analytical structure.

As noted earlier, gasoline taxes maybe viewed either as a substitute for new fuel economy standards or as a supplement to them: they could serve

to move market forces in the same direction as

regulatory pressure, reducing market risk by raising the value of fuel economy in purchaser decisions and thus making the higher vehicle costs required to obtain greater fuel economy seem less

onerous. Gasoline taxes clearly are a major policy

option for saving transportation fuel and are

treated later in this chapter.

“Feebate” plans offer another market substitute for, or supplement to, new fuel economy standards. Feebate plans involve charging fees to

purchasers of new cars that obtain low-fuel econom y

64 and awarding rebates to purchasers of new
160 I Saving Energy in U.S. Transportation

cars that obtain high-fuel economy. The plans can

be designed to be revenue neutral or revenue generating, but their general purpose is to provide a

strong incentive to consumers to purchase efficient vehicles and to manufacturers to produce

them.

Price incentives tied to fuel economy have

some precedents. The gas guzzler tax in the

United States is a primary example. It has been

successful in encouraging U.S. automakers to improve the fuel economy of their larger vehicles to

avoid the tax (and to avoid having their vehicles

branded as “gas guzzlers”), but there is little evidence available to gauge consumer response to the

higher prices of those models below the efficiency

cutoff (because only a few luxury vehicles have

been forced to pay the tax). Austria allows cars averaging less than 3 liters per 100 kilometers (km)

(more than 78 mpg) of fuel consumption to escape

any excise tax, and applies a sliding-scale tax of

up to 14 percent on less efficient vehicles.65 Other

related programs exist in Denmark, Germany, and

Sweden, and Ontario (Canada) has a four-tier gas

guzzler tax.

66 The State of Maryland has proposed

a feebate program, but the program has been

blocked by the U.S. Department of Transportation. And a number of such programs have been

considered at both the State (e. g., California, Arizona, Connecticut) and the Federal levels.67

Feebates can be structured in a variety of ways.

They can be scaled on fuel economy or fuel consumption, 68 or a measure of one or the other

normalized to a measure of size (interior volume,

wheelbase, wheelbase times track width, and so

forth).69 The purpose of normalizing is to focus

the incentive on choosing vehicles with good

technology and design rather than on small vehicles, which may present safety problems. Light

trucks can be treated separately or combined with

the auto fleet.

A critical issue associated with feebates is the

possibility that U.S. domestic manufacturers

would fare poorly compared with their Japanese

counterparts, because the Japanese fleets have

higher CAFES than the U.S. fleets. However, most

of the Japanese advantage is due to the smaller average size of the vehicles they sell. Analyses of hypothetical feebate programs by the American

Council for an Energy-Efficient Economy show

that a feebate program that separated light trucks

from autos and normalized according to size measures-either interior volume or “footprint”

(wheel base times track width)—-largely eliminated the disadvantages to domestic automakers.

70

Estimates of the effectiveness of feebate programs are uncertain because of doubts about the

likely response of manufacturers to the incentives

for increasing fuel economy that such programs

provide. Although calculations of potential consumer response can be made, this response is complicated by the existence of different configurations of each vehicle model (e.g., different engine

and transmission choices, levels of power equipment), the interaction between (unknown)

manufacturer actions and consumer actions, and
Chapter 5 Policy Options for Transportation Energy Conservation 1161

the large number of factors that affect vehicle purchase decisions. ACEEE quotes a rough estimate

for the consumer response of 1 -mpg fleet improvement for a $300/mpg feebate, ignoring multiple vehicle configurations and assuming a onetime only response.71 Such a response would save

0.3 million barrels of oil per day in 10 to 12

years;

72 coupled with good manufacturer response, the likely total response would be substantially larger.

A recent study by Lawrence Berkeley Laboratory (LBL) accounts for both consumer and

manufacturer response to feebates.73 LBL estimates manufacturer response by using EEA’s

model, which contains estimates for both the costs

and the effect on fuel economy of a large number

of automotive technologies, and by assuming that

manufacturers will introduce any technologies

costing less than the fuel saved plus the increase in

feebate that they will capture (by improving the

fuel economy of the vehicle),

LBL estimated the impacts of six different

feebate schemes on fleet fuel economy, fuel use,

CO2 emissions, and consumer surplus. 74 Key

(draft) conclusions are:

1.

A. 7

A relatively moderate feebate (e.g., one that

awarded a $500 differential between a 20- and a

25-mpg car) can achieve substantial fuel economy improvements (e.g., a 15 percent improvement in new car fuel economy by 2010

over levels expected without feebates).

Virtually all of the fuel economy improvement

comes from manufacturers’ adding more fuel

economy technologies to their vehicles. Because vechicles of about the same size and performance tend to have similar fuel economies

to begin with, and because the fuel economy

upgradings they would receive in response to a

3.

4.

5.

6.

feebate system should not be dissimilar, such

vehicles will tend to have similar fuel economies and feebates after a feebate system is instituted; the major differences in fees and rebates

will arise between vehicles with very different

size and performance characteristics, and consumers are rarely willing to switch to very different vehicles in response to rewards of a few

hundred dollars.

For feebates that group all autos (or all light

trucks and autos) together, domestic manufacturers on average will pay a fee on their vehicles, and foreign manufacturers will receive a

rebate. The net fees and rebates will decline

over time.

Feebates that account for vehicle size75 can reduce the disparity between domestic and foreign manufacturers, but at a substantial cost in

the improvement of total fleet fuel economy.

There is a rapidly diminishing response to increases in the size of feebates, because manufacturers “use up” most available technology

at relatively moderate feebate rates. Although

higher rates will increase consumer response,

this response is small and will remain that way.

The precise form of the fuel economy performance indicator used in a feebate program (i.e.,

either miles per gallon, gallons per mile, or

some nonlinear function of one or the other)

does not make a great deal of difference in the

results.

It is difficult to know how reliable these conclusions are. The key uncertainty involves the assumption that manufacturers will add technologies on the basis of their cost-effectiveness. In

fact, the presence in the marketplace of technologies that are not cost-effective, such as four-speed

automatic transmissions, indicates that manufac7

‘ Ibid.

721bid.

LBL-34408 (Berkclc~, CA Lawrence Berkeley Lalxwattmy, August 1993), draft.

‘Jlbd.

‘$ Th:lt IS. SIllaII ~ ~hlcles W(WId ha~ e to a~hiev~ a higher fuel ec(mtmly than large vehicles tt~ receive the sanle rebate.
162 I Saving Energy in U.S. Transportation

turers’ decisions about technology introduction

involve more complex decision making processes.

Another important source of uncertainty is the

tradeoff between performance and fuel economy.

The technologies can be used to achieve either

higher fuel economy, improved acceleration performance, or both, with more of one usually

meaning less of the other. The likely choices of

manufacturers, in their design tradeoffs, and of

consumers, in their purchase decisions, are not

well understood. Other potential problems with

the calculations include treatment of the auto

manufacturers as one large entity rather than as

multiple companies with a variety of design and

marketing strategies; and the inability of the model to account for manufacturers’ desire to optimize

their investment decisions over time, rather than

to immediately capture as many of the available

feebate dollars as they can regardless of the potential near-term availability of less expensive

technologies. 76 Finally, part of the very high benefits and low costs may be due to the model’s assumption that two-stroke engines, a very inexpensive way to gain large fuel economy benefits, will

be fully successful in a short time.

In conclusion, feebates appear to be a potential1 y attractive option to improve fleet fuel economy

while maintaining market flexibility. According

to LBL, most of the improvement in fuel economy

is likely to come from manufacturers’ attempts to

maintain or gain market share by reducing the net

costs of their vehicles (by adding technologies

whose costs are less than the gains in rebates plus

fuel savings). If the consumer response is as small

as LBL concludes, this implies that a small feebate program (e.g., the program proposed by

Maryland), will have little impact because it will

likely have little or no effect on manufacturers’ design decisions. Only a national or multistate program is likely to affect manufacturers; thus only

this large a program is likely to have a significant

impact on fleet fuel economy.

The uncertainty associated with manufacturer

response implies that policy makers should be prepared for the possibility that feebates, by themselves, might not improve fleet fuel economy

nearly as much as hoped. LBL suggests that feebates might be used to complement CAFE standards, to add certainty that the desired fuel economy improvements will be achieved.77 Since

virtually all of feebates fuel economy improvements are expected to come from manufacturer response, feebates would do little to help achieve the

standards. Their purpose would be to ensure continued incentives to boost fuel economy above

mandated levels; if new, relatively inexpensive

fuel economy technologies became available in

the future, feebates would give the manufacturers

an added incentive to incorporate these technologies in addition to, rather than instead of, the

technologies already in use.

Conventional improvements to automobile fuel

efficiency-particularly at the optimistic end of

the spectrum (e.g., a 40- to 45-mpg new car

fleet)--have the potential to stabilize oil use and

T~All of these ~nce~aln[les ~ISo apply [(} analyses ~lf the C(MS and benefits of fuel ectmtmlyf regu]ati(ms, discussed previtwsly. However, the

analysis of feebates attempts 10 understand how’ manufacturers will behave in a free market situati(m. In the absence of regulatory constrains,

manufacturer behavior (ii ffercnt from what the model predicts might sharply reduce or increase the fuel savings benefits being sought with

fecbates. The previ(ms analysls. (m the other hard sought to understand what the manufacturers co/{/d do in rcspmse to a regulati(m. Presumably, if they could behave differently to save themselves rmmcy or reduce risk while cxmlplying with the rcgulalion, this would reduce only the

costs of the rc.gulati~m while maintaining: the fuel savings bencfi[s of cornpl iancc. In t)[her w(mls, uncertainty is much less of a c(mcem with the

analysis {)f a fuel ec(m(m~y regulation, at Ietist m tem~s of projecting the impact (m fuel savings. On the other hand, cost and performance uncertainties h>c(mle a very great c(mcem in c(m]puting CAFE stiindards’ econornlc impact on producers, h’cause standards based on overoptim istic

assumptions could create large negati~ e impacts; with feebates, the effect would h> simply t[~ reduce the magnitude of the manufacturer resp{mse.

TTDavis et al., op. cit., fo{)tn(~te 73.
Chapter 5 Policy Options for Transportation Energy Conservation 1163

carbon dioxide emissions, at least for a decade or

two. To “outrun” rising travel demand and

achieve absolute reductions in oil use, however,

will require either a successful effort to suppress

travel through economic incentives. radical shifts

in urban form (which would take many decades to

have significant impacts), and other means, or else

a much larger change in automobile design than

required to reach 40 mpg. Whatever the technical

and economic benefits and costs of each approach,

a major change in design should most easily gain

public acceptance if the new designs do not significant] y degrade the basic amenities offered by current designs—space, performance, safety, reliability, convenience in refueling—and can be

made available at competitive prices. Reducing

the overall cost of key technologies--batteries or

fuel cells, lightweight materials, and so forth--

will be a critical challenge to any effort to “reinvent” the automobile.

For purposes of this discussion, a “major

change” in automobile design would entail a major shift in materials and drivetrain technology

built around either the internal combustion engine

(ICE), fueled by reformulated gasoline or by one

of a variety of alternative, nonpetroleum fuels, or

an electric or electric hybrid drivetrain.78 

The option of moving quickly to superefficient

automobiles raises a number of generic issues that

deserve careful evaluation. These include:

the appropriate role of government in researching, designing, and commercializing superefficient vehicles, given the government’s ability

to focus on longer-term goals, the expertise of

the national laboratories, the need to avoid stifling innovation. and so forth;

the importance of financial and personnel resource constraints on the auto industry, given

requirements for continued evolutionary up9

8

■

dates79 and satisfaction of new safety and emission standards:

the potential for important shifts in market power away from the traditional vehicle manufacturers, especially if the new vehicles are electric, and the large changes in employment

patterns and other national economic factors

that would follow:

the vulnerability of radically new vehicle designs to product liability challenges; and

the potential need for substantial new investment in infrastructure (e.g., new electric capacity, charging stations).

On September 29. 1993, the White House announced the signing of an agreement between the

Federal Government and the three domestic automakers designed to create a Federal-industry partnership to develop a new generation of vehicles up

to three times more fuel efficient than current vehicles. Box 5-2 describes the proposed effort.

1 Designs Based on the Internal

Combustion Engine

The basic features that would have to be included

in a major redesign of an ICE vehicle are reasonably well known:

■ a shift in body materials, probably to carbon-fiber or other composite materials;

■ a total dedication to streamlining, bringing the

vehicle drag coefficient80 down to 0.2 or lower, compared with the current commercial state

of the art of about 0.3;

■ high-pressure, low-rolling resistance tires, perhaps similar to those in General Motors” Impact electric vehicle:

■ an advanced engine, probably either a superefficient four-stroke design with four or more

valves per cylinder, adjustable valve lift and
164 I Saving Energy in U.S. Transportation

On September 29, 1993, the Clinton Administration, together with the chief executive officers of Ford,

General Motors, and Chrysler, announced the formation of a research and development (R&D) partnership

to develop a new generation of vehicles that would be up to three times as fuel efficient as today’s models.

Broadly, this Clean Car Initiative is intended to restore U.S. leadership in automotive technologies, reduce

the environmental impact of automobiles, and reduce U.S. dependence on imported oil The specific goal IS

to develop a manufacturable prototype within 10 years that achieves a threefold increase in fuel efficiency

while maintaining the affordability, safety standards, performance, and comfort available in today’s cars

Achieving this goal is expected to require technological innovations in both the vehicle power plant and

the vehicle structure. These innovations might include replacing the internal combustion engine with fuel

cells or a gas turbine-electric hybrid power plant, and making the car body with advanced polymer composites instead of steel. Accordingly, the R&D partnership will also develop supporting technologies, such

as advanced manufacturing techniques and lightweight, high-strength materials.

The Clean Car Initiative is intended not just to pioneer technical frontiers, but also to serve as a model for

a more cooperative relationship between government and industry in the future On the government side,

many agencies will contribute, including the Departments of Energy, Defense, Commerce, and Transportation, the Environmental Protection Agency, the National Aeronautics and Space Administration, and the National Science Foundation They will be coordinated by Mary Good, Undersecretary of Commerce for

Technology. On the industry side, the effort will be coordinated by USCAR, a partnership of Ford, General

Motors, and Chrysler that also includes other ongoing automotive research consortia (such as the Advanced Battery Consortium, the Automotive Composites Consortium, and the Vehicle Recycling Partnership)

The research agenda of the Clean Car Initiative will be set jointly by a team of officials from both government agencies and industry No new money is expected to be earmarked for this effort, rather, the goals are

to be achieved through reprogramming existing funds so as to mesh ongoing research efforts more closely

Projects will be funded jointly by government and industry, with the proportion of industry funding greater for

those projects having near-term commercial applications, and the proportion of government funding greater for riskier projects with longer term payoffs. The Administration sees the initiative as an opportunity to realize a “peace dividend, ” with defense researchers and weapons laboratories contributing their expertise to

expand the envelope of available technologies. Indeed, the Administration compares the level of effort required to that of the Apollo and Manhattan Projects.

SOURCE Office of Technology Assessment, 1994

■

●

■

timing, and other low-friction measures; a two- Another possibility might be an automatic engine

stroke engine; or an advanced diesel;

extensive use of aluminum and other lightweight materials in suspension and other components (e.g., brake rotors and calipers, sway

bars, wheels);

major redesigns of seats, bumpers, and other

components to reduce weight; and

advanced transmissions, probably a five or sixspeed automatic.

turnoff at stops coupled with a flywheel for accessory power.

The ultimate capabilities of such a vehicle are

somewhat controversial. Although some advocates of advanced designs use 100 mpg as a target

and hold up existing prototype vehicles81 as demonstrations of this potential, most of these prototypes are small two- or four-passenger vehicles

E IForexamp]e, Renault’s VESTA2, which C]aims a fuel economy of 78 mpg city and 107 mpg highway, orToyota’s Axvi With 89 n~Pg citY

and 110 mpg highway. See D.L. Bleviss, The New Oil Crisis and Fuel Economy Technologies (Westpm_t, CT: Quorum Books, 1988).
Chapter 5 Policy Options for Transportation Energy Conservation 1165

with limited performance and few if any power accessories. Maintaining the performance and other

basic vehicle attributes now common to the U.S.

market presents a substantial challenge to attempts to attain very high levels of fuel economy.

Similarly, existing and new safety and emission

standards may create additional constraints on the

achievable efficiency levels.

General Motors’ new Ultralite prototype demonstrates both some of the potential and some of

the limitations of a major redesign. The vehicle

weighs just 1,400 pounds despite being comparable in interior volume to a Chevrolet Corsica,

which weighs over 3,000 pounds; is powered by a

1.5-liter, three-cylinder, two-stroke engine that

weighs only 173 pounds yet generates 111 horsepower at 5,000 revolutions per minute (rpm); has a

drag coefficient of only O.192: and rolls on high-

-pressure, low-rolling resistance tires that need no

spare because they are self-sealing. Although its

fuel economy at 50 mph is 100 mpg, the Ultralite’s

EPA fuel economy is only 56 mpg, or about 48

mpg when adjusted for on-road conditions.82 This

value, although superb, still falls far short of the

levels often touted as readily available to the farsighted vehicle designer. Perhaps backing off vehicle performance (the Ultralite can reach from O

to 60 mph in 7.8 seconds, which is sports-car performance and far better than the fleet average) and

improving on the conventional four-speed automatic transmission (from Saturn) will help, but

reaching 70-mpg levels and higher clearly will require even more radical redesigns.

B Electric Vehicles

Electric vehicles, or EVs, use either batteries. fuel

cells, or a combustion engine-generator combination to provide electricity to power electric drive

motors. An advanced EV would use small, efficient, variable speed alternating-current (AC) motors mounted at the wheels, rather than the larger.

heavier direct-current (DC) motors used on most

current EV designs: recent advances in electronics

have greatly reduced the size and weight of equipment to convert DC power (provided by fuel cells

or batteries) to AC power for the motors. This setup provides very high drivetrain efficiencies,

since AC motors can readily attain efficiencies

well above 90 percent, no transmission is required, and the engine need not run when the vehicle is stopped. Further, regenerative braking—

using the motors as generators to provide braking

force and storing the electricity thus generated in

the batteries—further enhances system efficiency

by capturing a portion of the otherwise-wasted

braking energy. The key roadblock to EVs is the

difficulty of storing enough energy on-board; the

energy density of battery storage is a small fraction of that of gasoline;83 and hydrogen (for fuel

cells) is also lacking in energy density.

Cost analyses of advanced EVs are quite speculative, and projections by advocates that EVs can

have life-cycle costs fairly competitive with gasoline-powered vehicles clearly must be viewed

with some skepticism. Optimistic estimates depend on a number of factors:

■ Vehicle lifetimes. Although advocates assert

that electric drivetrains will outlast ICE-based

drivetrains severalfold, this must be proven in

actual automotive service, and other components of the vehicle may determine scrappage

times anyway. Many analysts assume EVs will

last longer than ICE vehicles. Although this

may be likely, the uncertainty associated with

any estimates of the difference in lifetimes is

high. Similarly, most analysts assume that the

electric drive train will require significantly less

maintenance than the ICE vehicle drivetrain;
166 I Saving Energy in U.S. Transportation

this appears likely, as well, but the magnitude

of savings is essentially a guess.

■ Overall vehicle design and performance. Designs for EVs may well stress efficiency more

than competing ICE vehicles, and may downplay high performance, because the EVs will

have to maximize range to be competitive. Cost

comparisons will depend critically on whether

the competing vehicles are assumed to achieve

similar levels of design efficiency and performance, or whether the EVs are assumed to be

more efficient in design and poorer performers.

Similarly, demanding longer ranges for EVs

will raise costs, so the range assumption will be

important in the cost comparison.

■ Technology cost. An advanced EV will have

critical technologies that are not currently commercial and thus cannot be costed firmly. The

battery system will generally be the critical cost

element, although hybrids will have a complex

power control system and other elements that,

in some configurations, may exceed the battery

in cost.

Fuel-Cell Vehicles

A fuel-cell-powered vehicle is essentially an electric car, with the fuel cell84 and storage tank (for

hydrogen or for a hydrogen-carrying substance

such as methanol) substituting for the battery. If

the fuel is not hydrogen but a “hydrogen carrier”

(methanol or natural gas), an onboard reformer is

required to release hydrogen from the carrier fuel.

Because any excess electricity from the fuel cell,

as well as electricity obtained from regenerative

braking, can be shunted to battery storage, the vehicle can use a high-power-density battery (or other storage device such as an ultracapacitor or flywheel85) to provide the necessary power boost for

rapid acceleration; the fuel cell then does not have

to be sized for the vehicle’s maximum power

needs.

All advanced EVs have important opportunities for reduction in energy use and greenhouse

gas emissions. A fuel-cell-powered electric vehicle (FCEV) is especially intriguing because fuel

cells are extremely efficient energy converters and

would be coupled to an EV efficient drivetrain;

in addition, they generate no harmful emissions

(although the total system will generate emissions

if the vehicle fuel is a hydrogen carrier such as

methanol and must be converted into hydrogen on

board). And they can be refueled quickly, so that

range constraints are far less of a problem once

sufficient refueling infrastructure is put into place.

This is important because, like battery storage, hydrogen is not an energy-dense fuel: its energy density is about one-third that of natural gas, which at

3,000 pounds per square inch (psi) has only about

one-quarter the energy density of gasoline.

Three types of fuel cells may be suitable for

light-duty vehicles. Proton-exchange membrane

(PEM) fuel cells, also known as solid-polymerelectrolyte (SPE) cells, generally are considered

closest to commercialization of the three candidates, although policy makers should be skeptical

of any claims that practical fuel cells for vehicles

are only a few years away from fleet entry. The recent patenting of a method to achieve an 80-fold

reduction in the amount of platinum needed in the

cell—to levels not a great deal higher than those

used in three-way catalytic converters-has greatly enhanced the commercial possibilities of PEM

84A fuel Cc]] conve~s the chenlica] energy in i(s hydrogen fuel into electricity in a manner similar tt~ (hat (Jfa battery. H~)dro~en IS fed Into the

cell at the negative anode and gives up its electrons to the anode. becoming hydrogen hms in the process; the clcctr(ms then flow through a

circuit m the cathode, where they combine with atmospheric oxygen to foml oxygen ions. ne hydrogen ions then IIIOVe through the ele~[r(~lytei

which will alknv them to pass but will block hydrogen or oxygen in gaseous foml, to the anode v here the) combine With the O~Y gen to fom~

water.

8SAn U]tracapacllor is ~ energy S(orage device tha( stores ele~(rici(y direc(]y, rather (han transforming it into chemical cnerg~ and rec(mverting it (() electricity when demanded, as a battery does. A flywheel stores electricity as mechanical energy in the f(~ml {)f a r[)tat ing mass.
Chapter 5 Policy Options for Transportation Energy Conservation I 167

fuel cells.86 Alkaline fuel cells should have low

material cost and high performance, but CO2 will

poison the electrolyte so that a CO2-free air supply

is required; this type of fuel cell will depend for

success in light-duty vehicles on a breakthrough

in CO2 removal or identification of a CO2-tolerant

alkaline electrolyte. 87 Solid-oxide fuel cells also

should have high performance, but are far from

commercialization. 88

Aside from differences in engineering design

details and choice of fuel cell, an FCEV system

has a range of major design options. In addition to

the choice of hydrogen or hydrogen carrier as a

fuel, multiple storage technologies can be used

(hydrogen can be carried as a highly compressed

gas; a low-temperature, or cryogenic, liquid; a

metal hydride; or in water, to be released in reaction with sponge iron89) and multiple ways to produce the hydrogen or hydrogen carrier (e.g., hydrogen can be produced from natural gas, by

gasifying biomass or coal, or by electrolysis of

water with any source of electricity). Some of the

choices will be made because of the different

stages of development of the technologies (e.g.,

initial production of hydrogen would likely be

from natural gas, with water electrolysis from solar electricity following if costs of photovoltaic

cells are reduced sufficiently). Others might be

made because of variances in impacts among the

choices (e.g., although biomass hydrogen costs

may be considerably lower than solar powerbased costs, hydrogen production from solar electricity would use about one-fiftieth the land area

required by a system obtaining hydrogen from

biomass gasification because of the inefficiency

of photosynthesis and of the gasification process

90).

Technological (and cost) uncertainty, high with

any advanced EV, should be highest with an

FCEV. Sources of uncertainty include the fuel cell

itself, the reformer (if necessary), and the fuel

storage system (storage at very high pressure—

e.g., 8,000 psi—is desirable, and this requires carbon-wrapped aluminum canisters, which have

been very expensive but apparently are coming

down in price,91 and powerful compressors that

may have high initial and operating costs), as well

as high-tech materials and other efficiency

technologies needed to maximize system efficiency and thus ensure adequate range. Also, hydrogen supply costs are highly uncertain, especial] y if

nonhydrocarbon sources are used.

Battery Electric Vehicles and Electric Hybrids

The alternative to a fuel-cell-powered vehicle is

one powered either by a high-energy-density battery or by a hybrid system combining two power

sources, with at least one powering an electric motor. The range of potential power sources includes

batteries, flywheels, ultracapacitors, heat engines,

and others,

Hybrid systems generally are advanced as a

means to obtain most of the gains of an EV with

greater range. They come in a variety of configurations. One would use a small, constant-speed

ICE as a generator to power high-efficiency electric motors at the wheels, with a high-power-density battery or ultracapacitor used to provide a cur-
168 I Saving Energy in U.S. Transportation

rent boost to the motors for acceleration or hill

climbing. The ICE in this case would be sized for

average power needs, can be quite small, and can

be very efficient and clean because it runs at one

design speed .92 Alternative systems could rely exclusively on batteries for most trips, with the engine-generator for extended range only, or they

could use both electric motors and a small ICE to

drive the wheels, perhaps with the electric motors

providing higher power only when necessary.

For the simpler, all-battery alternative, the crucial element for successful commercialization is

development of a battery that combines high energy density for range, high power density to allow

competitive acceleration performance, long lifetime under relatively adverse conditions, and

moderate cost. A variety of battery types are under

development, including lithium-aluminum-iron

disulfide, a variety of lithium-based batteries including lithium polymer, nickel-metal hydride,

and others. Also, a number of variants of lead-acid

batteries are being developed that seek higher energy density and longer life through design alterations and use of new materials. Although a variety of claims about performance and cost have

been made for all battery types, virtually all of the

advanced batteries are far from commercialization, with numerous design decisions that affect

performance yet to be made and crucial problems

yet to be solved. In other words, it is too early to

know whether the batteries currently under development will perform (and cost) as claimed under

mass production and use conditions.

Optimistic estimates for conventional and hybrid EVs depend on the factors noted above. Further, analyses of all of these vehicle types may assume superefficient characteristics throughout the

vehicle, with relatively low power and fuel storage requirements because of the extreme light

weight of the vehicles, the very high efficiency of

the power train, the recovery of most of the braking energy through regenerative braking systems

(for the electric systems), the advanced aerodynamics, and extremely low-friction tires. These

characteristics do create some difficult questions

for designers, however. For example, safety may

become a critical issue for these vehicles, especially if they aim for weights around 1,000

pounds, which the Ultralite demonstrates is possible. Although the new materials used may be extremely strong, and the vehicles presumably

would incorporate extensive safety equipment

and design, the basic problem of protecting passengers in such a light structure is a difficult one—

especially if the vehicle shares the road with much

heavier vehicles. Another concern is the robustness of the vehicle’s performance, It is not clear

that optimistic design concepts for extremely

light, aerodynamic vehicles have taken fully into

account the variety of tasks for which automobiles

are sometimes used. For example, with a

1,000-pound vehicle, four heavy passengers plus

luggage will more than double the total vehicle

weight; hauling cargo on the roof of such a vehicle

could make a huge difference in its total aerodynamic drag; and so forth. Although challenges of

this nature may well be met, either through design

or through changes in the way consumers use automobiles, they add more uncertainty to fuel economy projections.

Finally, key uncertainties remain about crucial

design and manufacturing details. In particular,

the production of vehicle bodies with strong,

lightweight composite materials is still accomplished largely by hand, at great cost. Unless

manufacturing processes can be heavily automated, costs will remain prohibitive. And component efficiencies, especially for regenerative braking, remain unclear, although they are critical to

overall efficiency and cost.

‘)zLt~vins C( al., (p cii., f[~otntw 78, discusses [his c(mfigurati(m. At Idle (m (Ithcr times when power needs are low, the excess electricity

generated by the ICE recharges [he balter~ ( ~r ultracapacllor; at times when PN er requirements are high, the battery adds power to the electric

motors.”
Chapter 5 Policy Options for Transportation Energy Conservation [ 169

Z Which Technology Will Win?

A combination of varying State and Federal requirements, the existence of various niche markets. and likely preferences for their “own”’ fuel

by electric and natural gas utilities guarantees that

a variety of power-train types will be represented

in the U.S. fleet during the process of moving to

a super-efficient auto. It is far from clear which

types of vehicles will endure and gain significant

market shares over the long term. However, it is

worth noting that the development of many of the

efficiency technologies that apply to all powertrains (lightweight materials, low-friction tires,

advanced aerodynamic designs, etc.) will yield a

gasoline-fueled auto of considerable attractiveness, with a built infrastructure and built-in public

acceptance, probably capable of attaining emission reductions that might reduce some of the critical environmental arguments against it.

The use of alternative, nonpetroleum-based fuels

in vehicles, though generally viewed as a fuel substitution measure, also offers opportunities to reduce overall energy use and greenhouse emissions; in other words, alternative fuels can play a

role in energy conservation. The shift from gasoline and diesel fuel has effects that reverberate

throughout the entire fuel cycle. Feedstock materials for alternative fuels are different from those

in the oil-based system, with different energy use

required to find, collect, and transport the materials, different processes to transform them into

fuel, (sometimes) different means of distributing

the fuel, and different fuel efficiencies and possibly even different engine and storage technologies

on (he vehicle. These differences in energy use,

coupled with the alternative fuels differences in

carbon content and general chemical makeup,

yield fuel cycle emissions of both carbon dioxide

and non-CO2 greenhouse gases (carbon monoxide

(CO), nonmethane organic compounds (NMOC),

nitrogen oxides (NOX

), nitrous oxide (N2O),

methane (CH4

), and possibly chlorofluorocarbons) that maybe significantly different from the

greenhouse emissions produced by using petroleum fuels (see box 5-3).

1 Background

During the 1970s, programs aimed at developing

and commercializing alternative transportation

fuels were a centerpiece of U.S. efforts at combatting perceived problems of national security; the

aim was to reduce U.S. oil use and import dependency. Today, the primary impetus for alternative

fuels programs has shifted toward reducing urban

air quality problems, especially in State programs

such as California’s. At the national level, however, national security still plays a strong complementary role in driving legislative initiatives for

increasing alternative fuel use.

Both Federal and State governments have taken a number of policy steps to introduce alternatives to petroleum-based fuels into the transportation sector. The alternative fuels of primary

interest for the light-duty fleet of automobiles and

light trucks are the alcohols methanol and ethanol,

either “neat” (alone) or as blends with gasoline;

compressed or liquefied natural gas (CNG or

LNG); liquefied petroleum gas (LPG) and propane; hydrogen; and electricity. The fuels and

their basic characteristics are described in table

5-5.

Several important policy measures for promoting alternative fuels development have already

been undertaken. These are:

1. CAFE credits93 available to automakers who

produce alternatively fueled vehicles, allowing

them to treat the vehicles as very high mileage

cars that can be averaged into their fleets, allowing fuel economy standards to be met more

easily. These credits are unlikely to provide
170 I Saving Energy in U.S. Transportation

Efficiency

Because many of the fuel-cycle stages of alternative fuels differ significantly from their gasoline fuelcycle counterparts, the overall energy efficiency of alternative fuel vehicles can differ substantially from

that of gasoline or diesel vehicles Important sources of differential energy use Include

1

2

3

4

5
Chapter 5 Policy Options for Transportation Energy Conservation [ 171

t M A DeLuchl, Emlsslons of Greenhouse Gases From the Use of Transportation Fuels and Electrlclty, paper prepared for Argonne National Laboratory, June 26, 1991

2 Ibid

3 A ~a~ may be ~ dlrecl greenhouse gas (by exhibiting relatwetransparency to InCofnlng Ight but refleCtlvltY to Out901n9 Infrared

radla[lon) or an Indlrecl greenhouse gas (by acting to change the concentrahon of direct greenhouse gases)

SOURCE Off Ice of Technology Assessment, 1994

2.

much incentive to most automakers unless fuel areas; and section 227 requires gradually ineconomy standards are raised. creasing sales of urban buses that use clean

The Clean Air Act Amendments of 1990 fuels. The California Air Resources Board

(CAAA) establish three clean fuels programs: (CARB) believes that reformulated gasolines

section 249 establishes a pilot-test program in will satisfy CAAA’s clean fuels requirements,

California (described below); section 246 es- which would limit the extent to which the act

tablishes a centrally fueled fleet ( 10 or more ve- will actually promote alternative fuels .94 Howhicles) program in air quality nonattainment ever, the act’s Phase 11 emission standards, set

94D.E. Gushee, Ctmgressi(mal Research Service, “Alternative Transportation Fuels: Are They Reducing Oil lmports9° CRS Issue Bncf.

updated Mar. 8, 1993.
172 I Saving Energy in U.S. Transportation

Gasoline

A motor vehicle fuel that IS a complex blend of hydrocarbons and additives, produced primarily from the products

of petroleum and natural gas Typical octane (R+M/2) level is 89.

Methanol

Commonly known as wood alcohol, CH3OH, a light volatile flammable alcohol commonly made from natural gas

Energy content about half that of gasoline (implies range for the same fuel volume is about half that for gasoline,

unless higher efficiency is obtained) Octane level of 101 5, allowing use in a high compression engine Much lower

vapor pressure than gasoline (low evaporative emissions, but poor starting at low temperatures),

Natural gas

A gas formed naturally from buried organic material, composed of a mixture of hydrocarbons, with methane (CH4)

being the dominant component, Octane level of 120 to 130. Energy content at 3,000 psi about one-quarter that of

gasoline

Liquid petroleum gas, LPG

A fuel consisting mostly of propane, derived from the liquid components of natural gas stripped out before the gas

enters the pipeline, and the lightest hydrocarbons produced during petroleum refining

Ethanol

Grain alcohol, C2H5OH, generally produced by fermenting starch and sugar crops Energy content about two thirds

of gasoline Octane level of 101 5 Much lower vapor pressure than gasoline.

Hydrogen

H2, the lightest gas Very low energy content even as a cryogenic liquid, less than that of compressed natural gas

Combustion will produce no pollution except NOX

. Can be used in a fuel cell, as well as in an internal combustion

engine

Electricity

Would be used to run electric motors, with batteries as a storage medium Available batteries do not attain high

energy density, creating range problems Fuel cells are an alternative to batteries, Fuel cells run on hydrogen, obtained either directly from hydrogen gas or from hydrogen “carriers” (methanol, natural gas) from which the hydrogen can be stripped

Reformulated gasoline

Gasoline that has been reblended specifically to reduce exhaust and evaporative emissions and/or to reduce the

photochemical reactivity of these emissions (to avoid smog formation). Lower vapor pressure than standard gasoline (which reduces evaporative emissions), obtained by reducing quantities of the more volatile hydrocarbon components of gasoline Addition of oxygenates to reduce carbon monoxide levels,

SOURCE U S Congress, Offlceof Technology Assessment, Replacing Gaso/ine. A/lematwe Fue/s forLight-Duty Vehlc/es, OTA-E-364 (Washington,

DC U S Government Pnntlng Off Ice, September 1990)

to begin in Model Year 2001, are very stringent

(.075 gpm of non-methane organic gases with

5 yr/50,000 miles certification for vehicles

under 3,750 pounds95), so estimates that relatively low levels of alternative fuels will be promoted by the act should be considered preliminary.

3. The State of California’s pilot-test program under the CAAA, called the Low Emission Vehicle Program (LEVP), requires minimum

sales of vehicles in different emissions categories, ranging down to zero emissions. New

York and Massachusetts have decided to adopt

the California LEVP. As with the CAAA clean

fuels requirements, CARB believes that reformulated gasoline, perhaps in conjunction with

modified emission control systems, will satisfy

most and perhaps all of the emission categories

95u s Environnlental ~()[ectl()n Agency, C/can Air ACI Amendments of/990: Defai/edSummary of 7ir/es (Washington, ~: November . .

1990).
Chapter 5 Policy Options for Transportation Energy Conservation 1173

except the zero emission vehicle (ZEV) requirement,

96 which probably can be satisfied

only with an electric vehicle or a fuel cell vehicle using onboard hydrogen as its fuel. The

next most stringent category, for Ultra Low

Emission Vehicles, may generate alternative

fuel use even if reformulated gasoline can satisfy its requirements, because of cost considerations. (As above, these assessments of reformulated gasoline’s ability to meet stringent

emissions standards should be considered preliminary.)

4. The Energy Policy Act of 1992 establishes a

national goal of 30-percent penetration of nonpetroleum fuels for light-duty vehicles by 2010,

with definite requirements for alternatively

fueled vehicles in Federal fleets and centrally

fueled fleets operated by alternative fuel distributors, and provisions for adding requirements for centrally fueled fleets run by State

and local governments and by the private sector. The Act also provides tax incentives for vehicle purchasers and for service station operators.

The Energy Information Administration has

estimated that, as a result of all these initiatives.

alternatively fueled light-duty vehicles will consume from 1.9 to 2.4 percent of total light-duty

fuel use by 2010, with the major contribution

coming from the Energy Policy Act fleet provisions. 97 This estimate assumes vehicle sales of

. .

about a million per year by 2010, with a total stock

in that year of about 8.1 million vehicles, or 3.4

percent of the fleet.

There remain important outstanding policy issues regarding alternative fuel use, despite the important measures already in place. In particular,

neither Federal nor State fuel tax regimes take appropriate account of alternative fuels, yielding

widely different tax rates for different fuels, and in

some cases taxing alternative fuels at substantial y

higher rates per unit of energy than gasoline.98

Further, though EIA’s projected market penetration of alternative fuels is substantial, it falls short

of the high expectations expressed in the Energy

Security Act and, as well, depends on some relatively optimistic assumptions about marketplace

acceptance of electric vehicles. Consequently,

there may well be continued policy suggestions

for increased support of alternative fuels, especially if early penetration is disappointing. Evaluation of policy proposals for these issues requires

an understanding of alternative fuels environmental characteristics, economic competitiveness, and market acceptance.

I Emissions and Air Quality Impacts

Improving urban air quality was the driving force

behind much of the push to move alternative fuels

into the U.S. motor vehicle fleet--especially

California’s groundbreaking efforts. Proponents

of alternative fuels believe that their physical and

chemical makeup gives these fuels a substantial

advantage over gasoline in controlling emissions.

Electricity and hydrogen offer the most obvious

benefits: electric vehicles have no harmful emissions associated with combustion or fueling;99

and hydrogen-fueled vehicles will have no emissions if the power source is a fuel cell, and only nitrogen oxides if the power source is an ICE. In

their pure form, the other alternative fuels—natural gas. methanol, ethanol, and LPG—are chemically simpler than gasoline, which should allow

easier engine optimization for low emissions.
174 I Saving Energy in U.S. Transportation

Also, they have various attributes that appear superior to gasoline. For example, methanol:

m has a lower photochemical reactivity than gasoline. As a consequence, emissions of unburned

methanol, the primary constituent of methanol

vehicle exhaust and fuel evaporative emissions, have less ozone-forming potential than

an equal weight of organic emissions from gasoline-fueled vehicles;

■ has higher octane and wider flammability limits

than gasoline. This allows a methanol engine to

be operated at higher (leaner) air-fuel ratios

than similar gasoline engines, promoting higher fuel efficiency and lower carbon monoxide

and exhaust organic emissions;

● has lower volatility than gasoline, which should

reduce evaporative emissions; and

■ lacks the toxics (e. g., benzene) found in gas

line, relieving some issues of carcinogenic

emissions.

On the other hand, methanol emissions contain a

significantly higher level of formaldehyde than do

gasoline emissions, a cause for concern especially

in enclosed spaces such as parking garages. Natural gas, ethanol, and LPG share similar advantages

over gasoline, with each having unique characteristics. For example, natural gas has no evaporative

emissions, and direct contact with ethanol is less

toxic to humans than contact with either gasoline

or methanol.

However, the relative emissions performance

of the various alternative fuels and gasoline cannot be assessed adequately by simply comparing

the physical and chemical characteristics of the

fuels, or by relying on limited successful emissions testing of alternatively fueled vehicles.

First, gasoline, and the gasoline vehicle, are moving targets. Under pressure from both State and

Federal regulation, gasoline is being improved

and new emission control technologies are nearing commercialization. As noted above, CARB

believes that the combination of reformulated gasoline with new emission controls, especially the

electrically heated catalytic converter, ’m will satisfy extremely strict California emission requirements,101 and, apparently, place gasoline virtually

on a par with alternative fuels. On the other hand,

advocates of alternative fuels argue that emission

controls depending primarily on complicated

technological equipment may frequently fail with

actual use. Available evidence indicates that about

10 to 20 percent of current automobiles are “gross

polluters” even thought most of them are

equipped with sophisticated emission controls. 02

However, this concern affects alternative fuels

also; methanol vehicles, for example, will require

sophisticated catalytic control to reduce formaldehyde emissions.

Second, it is not practical to use most alternative fuels in their pure form, so that some of their

physical and chemical advantages will be compromised. Methanol and ethanol will most likely

need to be mixed with 15-percent gasoline to promote cold starting, since the alcohols’ lack of volatility inhibits fuel vaporization in cold weather.

Natural gas is largely methane, but 5 to 15 percent

is a variable combination of ethane, propane, and

nitrogen, thus complicating emission control. 103

Similarly, LPG is largely propane, but it contains

other constituents in varying amounts. This lack

of purity and uniformity complicates any attempt

to optimize engine design. Also, the likelihood

that the alcohol fuels will be used in flexible fuel

vehicles, with varying combinations of alcohol

and gasoline, further complicates emission control.

1OOor a slmi]ar device, e.g., a close-coupled” c(mverter (located nearer to the engine to promote rapid heating).

101 us, Depmment of Energy, op. cit., f(wtnote 96.

102D E Gushee, “A]tematlYe Fue]s for Autonlobi]es:” Are ney Cleaner Than Gasoline?” congressional Research SeWiCe Report for Con-

. .

gress 92-235 S, Feb. 27, 1992. This paper is an excellent source of infomlation about emission and air quality implications of alternative fuel

use.

lo~]bld.
Chapter 5 Policy Options for Transportation Energy Conservation 1175

Third, tests of individual vehicles often are difficult to extrapolate to conclusions about massproduced fleets because of variability among different vehicle models, important changes in

emissions as catalysts age, and uncertainties about

how vehicles will be maintained in actual use.

Fourth, the formulation of emission standards

will play a major role in the actual environmental

effects of alternative fuels because vehicle designers try to meet standards, not minimize emissions.

Alternative fuels appear to have clear advantages

over gasoline when held to the same mass emissions requirements, because their exhaust emissions are less photochemically reactive. Federal

standards are based on mass emissions, preserving this advantage.

104 California, however, is

moving towards emissions standards that correct

for the reactivity of emissions, e.g., gasolinefueled vehicles would have to achieve lower

(mass) emissions than methanol-fueled vehicles

because the gasoline exhausts produce more

ozone per unit mass. Under such a regulatory system, alternative fuels might enjoy no environmental advantage over gasoline, at least so far as exhaust emissions and criteria pollutants (carbon

monoxide, nitrogen oxides. hydrocarbons) are

concerned. 105 

Fifth, exhaust emissions are only part of the

picture. Evaporative emissions are important, and

becoming increasingly so as exhaust emissions

are subject to more stringent controls. Except for

alcohol-gasoline mixtures, the alternative fuels

have lower and less reactive evaporative emissions than gasoline.

I Energy Security Impacts

Switching to alternative fuels has complex effects

on energy security. Development of alternative

fueled systems—vehicles, supply sources, and

distribution networks-is viewed by supporters

as both a means to reduce dependence on oil, lowering the economic and national security impact

of a disruption and/or price rise, and leverage

against oil suppliers, threatening them with loss of

markets if they raise prices too high or disrupt supply. The use of alternative fuels does offer the potential to significantly enhance U.S. energy security, but the effect depends greatly on the fuel

chosen, the scale of the program, and the specific

circumstances of the supply and vehicle system

used. The security effects are complex and sometimes ambiguous, because some characteristics of

an alternative fuels program maybe beneficial and

some deleterious to energy security.

First, of course, an alternative fuels program

cannot enhance energy security unless it reduces

U.S. oil use. This potential benefit of alternative

fuels use may be compromised by the fuel economy (CAFE) credits made available to auto

manufacturers who sell alternatively fueled vehicles. In essence, these credits will allow these

manufacturers to produce a less-efficient fleet

than they otherwise would have produced, or else

allow them to avoid paying fines because they

couldn't achieve the mandated fuel economy standards. If automakers choose to produce less-efficient vehicles, alternative fuels use will save little

oil and may have no positive impact on energy security.

Assuming that CAFE credits do not negate potential oil savings, the security benefit of an alternative fuels program will likely be clearest if the

fuels can be domestically supplied. Fuels such as

electricity, hydrogen, and ethanol are likely to be

domestically produced and thus unambiguously

advantageous to energy security unless their costs

are so high as to damage the national economy.106 

Ethanol’s dependence on intensive agriculture,

which may suffer on occasion from drought, may

make it less secure than the others; successful de-

‘~lbld.
176 I Saving Energy in U.S. Transportation

velopment of economic ethanol production processes using lignocellulosic material (wood and

wood wastes, waste paper) as a feedstock would

significantly reduce this potential problem. Methanol might be domestically supplied based either

on coproduction of pig iron and methanol in steel

mills or on use of domestic gas resources. The potential of the former is somewhat theoretical; the

latter requires a continuation of low domestic gas

prices and low interest rates, with future low

prices hardly assured given increasing demands

on domestic gas resources (especially from power

production). And natural gas would likely be supplied either domestically or with pipeline imports

from Canada and Mexico, because the alternative--overseas shipment in liquefied form--

would tend to be more expensive.

If alternative fuels are imported, this does not

necessarily negate energy security benefits. An

imported fuel’s effect on energy security will depend on its physical characteristics, the characteristics of the suppliers, the type of financial arrangements made between producers and

suppliers, the worldwide price relationship between the fuel and oil (that is, will a large oil price

rise automatically raise the fuel prices?), and

other factors.

For example, two-thirds of the world’s natural

gas reserve reside in the Middle East and former

Eastern Bloc, leading some analysts to deny that

the United States would receive any security benefit from turning to methanol (which is produced

from natural gas). However, methanol use will reduce pressures on world oil supplies, and natural

gas resources are more diversified than oil resources; also, the U.S. might be able to establish

long-term trade pacts with secure methanol

sources, which could enhance security benefits.

Finally, the United States’ changing relationships

with the nations of the former Soviet Union and its

satellites may lead to a more optimistic assessment of the energy security effects of methanol

trade with these nations.

Other factors affecting energy security include

scale of the program and selection of dedicated

(that is, designed to use one fuel only) or multifuel

vehicles. The size of the program affects the magnitude of impact on oil markets, the credibility of

the program as a deterrent to intentional disruption of oil supplies, the magnitude of the financial

risks, the supply source (moderate-scale natural

gas and propane programs could be fueled domestically, large-scale programs probably would require imports ), production costs, and so forth. The

choice of multi-fueled vehicles might allow the

United States to play off suppliers of oil against

suppliers of alternative fuels (assuming they are

different), but only if the supply and delivery infrastructure is available to allow the vehicles to be

fueled exclusively with the alternative fuel if this

became necessary. Concentration on dedicated

vehicles. on the other hand, offers no ability to

play off oil and alternative fuel suppliers, but requires full infrastructure development and offers

important emission and performance benefits as

well.

In conclusion, development of alternative fuels

appears likely to offer energy security benefits if

the use of CAFE credits does not eliminate oil savings, but the magnitude of these benefits could

vary widely depending on the precise development scenario that unfolds, including the fuel

choice, method and location of production, scale

of production, and vehicle choice. There are remaining uncertainties about the direction of some

of the security effects, and some of the factors that

affect security are not really controllable by policymakers but will unfold over time as the fuels

program develops. Consequently, estimates of the

security impacts for potential alternative fuels

programs should be considered tentative, especially for programs that may require importation

of feedstocks or finished fuels.

I Sources of Uncertainty About the

Greenhouse and Energy Use

Impact of Alternative Fuels

With few exceptions, there is little practical experience with large-scale use of alternative fuels in
.

Chapter 5

the United States, and the details and the

of the fuel-cycle changes necessary to

such use are uncertain.

Policy Options for Transportation Energy Conservation [ 177

impacts

support

An important source of uncertainty is the relative immaturity of much of the necessary technology to power vehicles and, in many cases, to obtain the fuel. The rapid technological change that

will characterize such development implies that

estimates of vehicle efficiency, emission of nonCO2 gases, and efficiency of feedstock conversion

processes are all quite uncertain. Further, many of

the decisions regarding efficiency of engines and

processes involve complex economic, environmental, and vehicle attribute tradeoffs that are essentially unpredictable—for example, how will

engine designers trade off engine power, efficiency, and engine-out emissions in designing dedicated alcohol engines?

The energy balance of the upstream part of the

fuel cycle—finding and obtaining the feedstock,

processing it into fuel, and transporting the fuel to

market--depends heavily on the type and location

of the feedstock. In turn, this depends on the scale

of worldwide development, political and trade decisions, and so forth, all unforeseeable. For example, there are multiple sources of natural gas that

could prove suitable for methanol production.

Most are outside of the United States, though relatively low U.S. natural gas prices and the United

States’ low cost of capital currently make domestic methanol production look attractive.107 The

various sites have different infrastructure and labor availability. different tax codes, and different

gas prices; these translate into different tradeoffs

between, for example. capital intensive high-efficiency methanol production processes and less

expensive but less efficient plants. Each location

requires longer or shorter travel distances to move

the methanol to market, incurring higher or lower

transport energy costs. As the scale of worldwide

development increases, methanol will “move up

the supply curve, ” using more expensive feedstock natural gas sources and, perhaps, eventually

move to coal as a feedstock, with negative greenhouse implications. And to complicate this issue

further, methanol may be produced as a coproduct

with pig-iron as an alternative to more traditional

steelmaking operations involving coke ovens and

blast furnaces. This form of production apparently

would produce less CO2 than a separate conventional steel mill and methanol plant.108 

There also are a variety of straightforward technical unknowns in evaluating the fuel cycle. For

example, given the importance of methane as a

greenhouse gas, there is a critical uncertainty

about the amount of natural gas leakage in the gas

production and distribution system, As another

example, both N20 and NOX are powerful greenhouse gases that arise, in part, from the denitrification and vitrification of fertilizers. The relative

greenhouse impact of the ethanol and other biomass fuel cycles depends in large part on the rate

of emission of these gases, but this is generally unknown.

Finally, there remain important uncertainties

about the relative magnitude of the greenhouse

forcing roles played by the non-CO2 gases, Understanding of the role that each gas plays in global climate is still evolving.

1 Recent Estimates of Greenhouse

Impacts of Alternative Fuel Cycles

Despite the substantial uncertainties, clear differences in likely greenhouse impacts exist among

several of the alternative fuels. One of the most

thorough and best-documented analyses of the

fuel-cycle greenhouse emissions from alternative

I ~7D . . E GUShce, ct~ngrcss]i MM1 Rew:irCh Scr~ ice, Mem(mndum t{) the House Ct~mmittee on Energy and COnlIIIerCe, suk(~nlnlittee on

Energy and POW cr. “ Methan{~l Supply Dcnland Balance to 2000. ” June 5, 1992.

f~x[bl(l,
178 I Saving Energy in U.S. Transportation

fuel “scenarios” is the work of Mark DeLuchi of

the University of California at Davis. Table 5-6

shows DeLuchi's estimates of the fuel-cycle emissions from the use of several alternative fuels in

internal combustion engine-powered light-duty

vehicles, relative to the emissions from a baseline

gasoline-powered automobile in the year 2000.

The ranges of the estimates reflect the uncertainty

discussed above.

I Policy Issues

As discussed above, both Federal and State governments have initiated a number of important

policy initiatives to move alternative fuels into the

U.S. motor vehicle fleet, and current expectations

are optimistic that significant amounts of these

fuels—a few percent of total consumption-–will

be consumed by 2010. Some important policy issues remain unresolved, however.

First, as noted, fuel taxation policy does not appear to take rational account of alternative fuels’

unique characteristics. For example, electricity

currently is charged no Federal highway tax and

natural gas is charged very little, whereas LNG

and methanol pay significantly higher taxes than

gasoline on a dollars per unit of energy basis.109 

Although it may make sense to tax different fuels

at different rates based on differential environmental or energy security impacts, current rates

seem to bear no relation to energy policy or environmental goals. Two options that would take account of the properties of the fuels might be:

1. Tax each alternative fuel at the same rate in dollars per Btu delivered to the vehicle, possibly

with electricity rates being adjusted to account

2.

A

for energy lost at the powerplant. The rate could

be equal to or lower than current gasoline taxes,

to reflect the government’s desire to allow the

market to decide or to favor alternative fuels

over gasoline.

Tax each alternative fuel at different rates that

reflect evaluations of each fuel “nonmarket”

characteristics, e.g., energy security implications and environmental characteristics.

problem with the second approach is the substantial uncertainty that underlies the likely societal impacts of the fuels, discussed above.

A second issue is closely related to the first.

Federal policy currently is demanding that certain

fleets-its own and those of fuel suppliers—buy

alternative fuel vehicles and use these fuels. The

rationale behind these requirements is to promote

energy security and air quality. However, although the different fuels have very different impacts on these values, the requirements ignore

these differences; fleet owners will choose fuel/

vehicle combinations based only on market incentives. It is possible--even probable—that the fuel/

vehicle combinations most often chosen will have

significantly less favorable impacts on energy security and air quality than other choices. 0

Congress was aware of this issue at the time of

passage of the Energy Security Act and chose not

to try to further influence fleet owners’ market decisions. If Congress’s views change, perhaps after

the emergence of sales patterns for alternative fuel

vehicles and the fuels, it could influence sales by

using differential fuel taxes, as above, and/or by

“weighting’* sales according to estimated nonmarket impacts.

l~~)~ushc~ ~n~ Liuzari, op. cit., ff~otno[e” ~~.

] ! me ~llost ~)pu]ar ~onlblna[lons” arc Ilhcly t. ~, [hose [hat invt)l~e minor adaptations frtml current gast~line vehicles (and thus are least

costly in capital investment and most easily res(~ld into rmmxd rnarkets>primarily flex fuel vehicles. These will likely > icld imly rmdest air

qua] itj benefits (and possibly no benefits ~)ver rcf(mnulated gas[~l ine ), and their ability 10 use gasoline may translate into a relatively low c(msunqm{m t~f alternative fuels.
Chapter 5 Policy Options for Transportation Energy Conservation 1179

Fuel-cycle

CO2-equivalent

emissions

(grams/mile) b

741

713

439

346

351

117

8 0

-43

499

84

469

Change with

respect to

reformulated

gasolinec

(in percent)

58

52

-6

-26

-25

-75

-83

-109

6

-82

n a

a This analysis assumes that all vehicles would use advanced eng[nes and dnvetralns, would be optlmlzed to run on the particular

fuel shown and would meet the In-use emlssvons standards mandated by the 1990 amendments to the U S Clean Alr Act

b This IS the sum of ermss-ions of carbon dloxlde (C02), methane (CH4) nitrous oxide (N20), carbon monoxide (CO) nitrogen dloxlde

(N02) and nonmethane organic compounds (NMOCS) from the entire fuel-produchon and use cycle (excludlng the manufacture of

vehicles and equipment) per mile of travel All the results shown are from unpublished runs of an updated version of the greenhouse-gas emlsslons model developed by M A DeLuchl Emlsslons of gases other than C02 have been converted to an equivalent amount of C02, by multiplying mass ern[sslons of each gas by the followlng “global warming potentials CH4

, 21 N20 270

CO 2 N02 4 NMOCS 5 The resultant C02 equivalents of these gases have been added to actual C02 emlsslons to produce an

aggregate measure of greenhouse-gas emlsslons

c The percentage changes shown are wlfh respect to the basellne gasol[ne-vehicle gram-per-mile emlsslons shown at the bottom of

th[s table

d The conversion of coal to methanol IS assumed to be 61 8 percent efhclent

e Hydrogen [s made In centralized coal -gas[flcatlon plants at 630 percent conversion efflclency, then compressed for plpellne transport using electricity generated at the biomass planf At the station hydrogen IS compressed to 8400 psl for delwery to vehicles by a

compressor using the nahonal mlx of power sources In the Umfed States [n the year 2000 projected by the Energy Information

Admlnlstratlon

f The conversion of natural gas (NG) to methanol IS assumed to be 675 percent efflclent

9 NG IS compressed (CNG) to 3,000 psl for dellvery to vehicles with high-pressure tanks

F Hydro9en IS made at the refuellng site from natural gas delwered by plpellne and then compressed to 8400 Psl for dellvery to

vehicles The compressor uses electricity generated from the projected national mlx of power sources In the United States In the

year 2000 Reforrwng of NG to hydrogen IS assumed to be 848 percent efflc[ent

1 Hydrogen IS made In centralized biomass-gaslflcatlon plants at 68 6 percent efficiency, then compressed for plpellne transport using bloelectrlcity generated at the biomass plant At the station hydrogen IS compressed to 8400 psl for dellvery to vehicles by a

compressor usng the projected national mlx of power sources In the United States [n the year 2000

The conversion of wood to methanol IS assumed to be 628 percent efhclent

~ An advanced converson process IS assumed In which one unit of biomass energy produces O 52 units of elhanol energy and O 068

units of electrical energy for sale Thus for every energy umt of ethanol produced, 1 9 umts of biomass are required as Input and

O 12 urwts of electricity are coproduced The emlsslons displaced by the sale of this excess electr[clfy are counted as a credlf

against actual emlsslons from the wood-to-ethanol fuel-cycle (The emlsslons cred[t from the sale of the excess electricity exceeds

actual emlsslons from the rest of the fuel-cycle hence the reduction m emlsslons with respect to reformulated gasollne IS greater

than 100 percent j

1 A relatwely high productivity of 440 Ilters ethanol per metric tonne of corn IS assumed Coal IS the process fuel at the corn-to-ethanol

plant and an emlsslons credit IS taken for the production of byproducts at the plant

rr Hydrogen ,s produced from water Using solar power, del[vered by p[ pehne to the serwce station and then compressed to 8400 Psl

for dellvery to high-pressure tanks on board vehicles The hydrogen compressor at the refueling stallon runs off electricity generated from the projected national mlx of power sources m the United States In the year 2000

r) These are projected emlsslons of greenhouse gases from a light-duty veh{cle Operating on reformulated 9a SOline In the year 2000

SOURCE M A DeLuchl Unwerslfy of California at Daws 1993
180 I Saving Energy in U.S. Transportation

Expanding mass transit’s role in urban tripmaking

has long been a key part of plans aimed at reducing

transportation energy use as well as solving a

number of urban problems, especially poor air

quality, traffic congestion, and lack of mobility for

disadvantaged groups. As discussed in chapter 2,

mass transit has been fighting a generally losing

battle against automobile travel throughout the

United States, but its proponents believe that the

proper combination of policy changes and new investment could reverse its fortunes. Proposals for

transit revitalization include investment in new

services (especially light rail), provision of exclusive busways, general investments in better service and improved equipment for existing systems, lower fares, and a variety of measures aimed

at discouraging automobile travel (e.g., banning

free parking, reduced amounts of parking, higher

fuel taxes, auto-free zones). Some proponents advocate the simultaneous expansion of mass transit

service and the promotion of transit-compatible

land use—filling in underdeveloped areas in city

centers and close-in suburbs, increasing residential densities, and promoting mixed-use development. The two strategies would then support each

other. The use of urban planning as a transportation energy conservation measure is discussed in

the next section.

This section focuses on the question of whether

mass transit can play a major role in reducing energy use in the United States. The reader should

note that this is not the same as asking whether

transit service can be improved and thereby gain

some modal share (proportion of total travel) or

stop the continuing decline in modal share. It is

self-evident that there are a variety of measures

that can improve service, including improved

maintenance, investment in new equipment, restructuring of routes, and institution of new

services (including flexible paratransit services).

Instead, the focus here is on the feasibility of making major shifts away from auto usage into mass

transit, and the energy saving consequences of doing so.

New York City transit bus, Expansion of bus and other transit

services is viewed by many as a crucial part of any national

strategy to save energy in transportation.

1 Views of Transit Proponents and Critics

Although polarization is common to policy discussions about all aspects of transportation improvement, it is most pronounced in arguments

about the role of public transport in the U.S. transportation future. Opponents of expanded investment in public transportation see it as basically an

expensive and ineffective failure, neither energy

efficient nor capable of luring enough drivers out

of their cars to make a significant dent in congestion or air pollution. Proponents of public transportation, on the other hand, often see it as the only

practical solution to an inexorable rise in urban

congestion, pollution, and destruction of urban

amenities associated with a continuation of auto

dominance in personal transportation, and they

consider it to be both energy-efficient and cost-effective when total societal costs are considered. In

slightly more detail, the opposing positions are

described below.

Transit Proponents

A key to the pro-transit position is the idea that the

automobile has attained its current overwhelming

modal share in the United States only because its

true costs are hidden from view. By one estimate,

“commuters going to work in major central business districts in the United States in their own motor vehicles directly pay for only about 25 percent
Chapter 5 Policy Options for Transportation Energy Conservation 1181

of the total cost of their transport. The other 75

percent is typic tiny borne by their employers (e.g.,

in providing "free” parking), by other users ( in increased congestion or reduced safety), by fellow

workers or residents (e.g., in air or noise pollution), and by governments (passed on to the taxpayers of one generation or another in ways that

usually bear no relationship to auto use ).”111 Further, there are other incentives for automobile

travel in addition to the hidden costs discussed

above, such as the automobile-oriented land use

spurred by income tax deductions for mortgage

interest payments and zoning laws that force lowdensity development.112

Transit proponents point to transit's symbiotic

relationship with land use113 to argue that an increase in transit services can lead to very large reductions in energy use and pollution. They argue

that even on a passenger-mile basis, transit systems are more efficient and less polluting than current automobiles with their low load factors, but

that this effect is dwarfed by the ability of transit

coupled with denser land use patterns to drastically reduce tripmaking. Thus, some transit proponents evaluate the energy and pollution effects of

transit-oriented strategies by assuming a transit

“leverage’’--each passenger-mile on transit represents a reduction of four to 10 automobile

miles, 114 if expansion of transit services is

coupled with ‘‘densification" of the area served.

A point of reference often used as a model for

the United States is Western Europe. As discussed

in Chapter 3, not only do Western Europeans, with

their dense, transit-oriented cities, take

more transit trips per capita than their

counterparts, they also travel about ha

miles--creating an enormous savings

use and pollution production. 115

five times

American

f the total

in energy

Transit proponents also argue that the ever-increasing U.S. reliance on the automobile has left

large segments of the population-the elderly, the

poor, youth, the disabled—with greatly diminished mobility at the same time that the spread of

auto-oriented sprawl and subsequent loss of closeby cultural, recreational, and work opportunities

have made mobility all the more important. In European cities, these opportunities are often within

easy walking or bicycling distance, and when

longer distances must be traversed, the denser pattern of residences and destinations is highly compatible with transit service--in contrast to transit inability to efficiently serve sprawling U.S.

cities.

Final i}. proponents argue that expansion of

mass transit usage and reduction of auto use will

yield substantial environmental benefits: reductions in auto-generated air pollution; reduction in

ecosystem loss from roadbuilding and urban

sprawl; fewer fatalities and injuries from transportation-related accidents; and a reduction in the

loss of productivity and the pain and suffering that

thes cause. An extension of the above argument

about transportation's relationship to land use is

that an expansion of transit service and usage is a

critical element in revitalizing urban centers. Proponents believe that these potential benefits of
182 I Saving Energy in U.S. Transportation

transit far outweigh investment costs, especially

when reductions in required auto investments are

taken into account.

Critics of Transit Expansion

The core of most arguments that large investments

in transit in the United States are not appropriate

and will not yield significant changes in auto dominance or reductions in energy use is that mass

transit fits neither the development patterns of

U.S. cities nor the preferences of U.S. travelers,

and its pattern of failure in the United States demonstrates this lack of fit. For example, opponents

of large investments in new transit systems point

out that despite an investment of more than $100

billion over the past 25 years, urban mass transit

systems have lost modal share (i.e., percentage of

total trips) and have not succeeded in convincing

significant numbers of drivers to abandon their

automobiles. In fact, despite continuing growth in

total passenger travel, the number of trips taken on

public transit has been basically stagnant over the

past decade and is lower than it was 30 years

ago

116 when mass transit received no Federal subsidies. 117 Per capita transit usage has dropped in

all of the metropolitan areas that initiated or expanded rail systems in the 1980s--even Washington, DC, where a showcase rail system was built

at a cost of $8 billion.118 

According to those opposed to large investments in new transit systems, even the experience

in Europe (where per capita transit usage is much

higher than in the United States) supports the thesis that public transportation is unlikely to

succeed here even if we adopt many of the policies

advocated by the environmental community—

high taxes on gasoline, high parking costs, strict

land use controls, and implementation of major

new rail transit construction. Over the past few

decades, despite the reality that Europe already

has the very policies that supposedly will transform U.S. transportation, European trends have

turned sharply in the U.S. direction: per capita automobile ownership has risen three times faster

than in the United States; vmt per capita has

grown more than twice as fast; and the modal

share of transit has steadily dropped. ] 20

Critics also argue with the thesis that transit

systems, especially rapid rail systems, have the

power to shape urban areas in ways that not only

provide positive feedback to the systems themselves but also reduce total travel. They point to

evaluations in the literature of transit-urban form

interactions that have not found a strong linkage

between new transit services and subsequent

shifts in urban growth patterns.121 

Another aspect of the critics’ case against transit is the claim that it has very poor cost-effectiveness and overall efficiency, perhaps because it is

heavily subsidized. For example, public transit

operating costs have risen even faster than health

care costs: from 1970 to 1985, operating costs per

vehicle mile rose 393 percent, or twice the rate of

inflation. 122 Further, 9 of 10 recent urban rail projects evaluated by the Department of Transportation exceeded their capital cost estimates; transit

116u.s. ~pa~nlenl of Transp)fia[ltln, Federal Transit Administrati{m, Public Transpormtlon in Ihc Ufrlled Swes.’ pe@nmmce dnd

Condifion (Washington, DC: June 1992), fig. 1.1.

I 17J. Love and W. Cox, False Dreams ond Broken Pronlise~: i’”he Waste/i4/ Federal ln~’c.stment In Urban Mass Transil, pOllCy Analysis N(),

162 (Washington, DC: Cato Institute, Oct. 17, 1991).

1181bid.

119c, Lave, “cars and Demographics, “ Atcess, published by University of California at Berkeley. fall 1992.

I zoIbld During ] 965.87 “nit ~r ~aplta grew 154 percent in Europe, c(mlpared to 69 Percent In the United States; and in 1987* ‘he auto

modal share had already grown to 82 percent.

121 For example see G. Glu] iano, school” of Urban and Regi(mal planning, Unl Vcrslty of S(mth~m Cal if(~rnia, “Literature Synthesis: Transportation and Urban Form, ” report to the Federal Highway Administrati(m, October 1989.

I lZLove and Ct)x, op. cit., footnote ] ] 7“
Chapter 5 Policy Options for Transportation Energy Conservation 1183

labor productivity has declined substantially over

time (e.g., hours of bus service per constant dollar

fell by 43 percent during 1964-85); and average

annual service hours worked per employee decreased from 1,205 to 929 during the same period. 123

Finally, and perhaps most disturbingly, some

critics of expanded transit investment claim that

many urban systems do not even satisfy some of

the basic goals of mass transit—saving energy, reducing air pollution, or serving the urban poor and

disadvantaged—at any price. They claim that

whatever the potential energy efficiency of transit

may be, the low load factors and the time spent at

idle and backhaul by the average public transit

bus, and the enormous amounts of energy embodied in the roadbeds, tunnels, and railcars of urban

rail systems, make public transportation less energy-efficient than automobiles. 124 Similarly, given

the reduction in transit’s already very low modal

share over time, it is difficult to assign significant

contributions to air quality or reductions in congestion to any new transit systems. Finally, the

critics point to the low usage of transit by the poor

(in 1983, less than 7 percent of trips by low-income people were transit trips) and to studies of

transit subsidies that show a bias in Federal operating subsidies toward the affluent as evidence

that transit does not even serve its basic socioeconomic goal. 125

The discussion that follows attempts to clarify

these arguments and draw some conclusions

about transit’s potential for expansion in the

United States. However, drawing firm conclusions about this potential is exceedingly difficult,

because lessons that might be drawn from its past

performance are compromised by the harsh environment for mass transit under which past investments were made. One conclusion should be clear,

however: although there is much room for improvement in fitting appropriate transit designs

into their particular physical and demographic circumstances and for improving operational methods, any large-scale increase in mass transit’s

share of passenger travel—and thus, any significant new energy savings-cannot occur simply by

adding new services, no matter how efficient these

may be. If there is to be any possibility of such an

increase in transit modal share and new energy

savings, sharp changes will have to be made in the

policy and physical environment, both of which

are now hostile to mass transit. There will have to

be changes in urban design toward greater urban

density and a better mix of commercial and residential land uses, and economic or physical restrictions will have to be placed on the automobile

system. As discussed later, such changes would

have sharp effects on lifestyle and would be exceedingly controversial; instituting them will require major changes in the current societal consensus about transportation and urban life.

I Transit Performance

in the United States

Although there may be important individual exceptions, by most standards the performance of

mass transit in American cities during the past few

decades has not been encouraging for those who

would like to see it play a major role in a national

energy conservation strategy. Virtually all measures of performance-energy intensity, ridership

and modal share, cost efficiency, and so forth—

have either declined outright or lag significantly

behind other modes. However, some stabilization

of performance has been obtained since the

mid- 1980s.

It is certainly true that mass transit plays a crucial transportation role in many American cities,

particularly in moving workers to and from the
184 I Saving Energy in

workplace. Table 5-7

U.S. Transportation

lists 16 U.S. metropolitan

areas whose transit modal share for commuters in

1980 was equal to or greater than 10 percent.126

Because high percentages of commuting trips in

most of these metropolitan areas are from suburb

to suburb, where mass transit usage is very low,

transit’s share in these cities for commuting trips

beginning or ending in the central city will be considerably higher than the areawide average (of at

least 10 percent), and higher still for commuting

Metropolitan/metropolitan

statistical area

New York, NY

Jersey City, NJ

San Francisco, CA

Chicago, IL

Washington, DC-MD-VA

Philadelphia, PA-NJ

Boston-Lawrence-Salem -Lowell

Brockton, MA

Nassau-Suffolk, NY

Pittsburgh, PA

Oakland, CA

Newark, NJ

lowa City, IA

Cleveland OH

New Orleans, LA

Baltimore, MD

Honolulu, HI

Percent of workers

using public

transportation, 1980

49 .3%

2 5 8

221

2 0 4

148

140

126

125

11 7

11 1

109

107

106

104

102

1 0 0

SOURCE American Public Transit Assoclatlon, Trans/t Fact Boc)k (Washington, DC September 1990), table 20, p 52 from U S Bureau of Census State and Metropolitan Area L)ala Book. 1986

trips directed at the central business district

(CBD). For example, in 1980 about 15 percent of

workers in the Washington, DC metropolitan

area—but 38 percent of workers living in the District itself—used transit.

127 Given existing levels

of congestion, there is some basis for fears that if

transit service in the more transit-dependent cities

is allowed to deteriorate, the CBDs of these cities

will become unsupportable.

The key indicators of transit performance are

those that show changes in patronage. Although

subsidy levels increased 14-fold in the 1970s,

there was little change in total ridership. The number of workers who commute by transit actually

declined between 1980 and 1990 by about

100,000, or from 6.4 to 5.3 percent of all workers.

128 According to the Nationwide Personal

Transportation Survey, total mass transit person-

(rips have been relatively stagnant over the past

two decades, starting at about 4.9 billion in 1969,

reaching a high of about 5.5 billion in 1983, and

dropping to 4.9 billion again in 1990.129

The relative lack of change in total transit ridership during the past 20 years hides some interesting changes in the nature of that ridership. An important change is the beginning of a shift in focus

away from traditional service of central-city residents and toward suburbanites commuting to the

central city. In 1970, 3.7 million workers commuted from central-c it y homes to central-city jobs

by transit—21 percent of all such commuters. ’30

By 1980, although the number of central-city to

{ 2fjA]thouuh (he 1 ~go ~cn~us hiis ~.~n ~{lnlp]~[~d, data on ~O1llllllltlng hay ~ not yet “cn ‘e]eased.

1 ~7AIller1c~n ~b]lc Tr:lnsi[ Asso~iatl(Jn, /990 l}~ln.ilf ~’~ltl B(wk (W”ashingt(m, DC s~pt~nl~’r 199~), [able z 1.

I MA E Pisarski, 7}CJ,,CI B[,/l(Jl.;or /,jjJ,[,,} ,n //le ~()’.} (Washington, DC: U.S. Department of” Trans~mtion, Federal Highway Adnlinis{ra-

. .

[ion, July 1992).

I ~yps Hu and J. Y{)unG,

. . u .Swm!ary oj’ 7}mel 7}cnd,~.. 1990 Nfiiwnl~Idc Personal 7?(lrl.$]jt)r[[ltlt)tl .$ur~v]’, FH WA -PL-92-027 (Wash ingt(m,

DC: U.S. Department of Trimspmta[ion, Federal Highway Adminlsu’ati(m, March 1992), [able 16. Data fr(m} the American Public Transit

Ass{xlatitm for ali trip purp)scs, hcmcvcr. indlcaic a gradual ln(vvfJ\c in /(n/lnkcd lrans]t trips (a c~m~plcte trip may mcludc a few unl inked [np

segrllen[s) frolll abou[ 197s t. [he presCn[, fr~)n] 7.3 b]]] Ion [rips to 9. I billlt)n (Anwrican Publlc Transit Associati(m, op. cit., foom(~te” 127, table

17), or an incrcasc of at-xmt 1.6 percent annually Untt~rtunately, interpreting this increase is difficult, because a Iargc percentage of the added

trips were (m heavy rail s} sterns, id man) of these trips generate hor]lc-t(}-st:i[ion” and w fwk-to-stati(m bus Irips that are m~t Independent trips

but inflate the sclectcd sta[istic. Thus, many (~fthc nm trips are pn)bahly smtlstlcal artifacts, that is, transit users went frfml (me hmg bus trip ((me

unlinked transit trip) h) a shtlrt bus trip N) the rail station and a Itmg rail trip (tw [) unllnhcd transit [rips).

I ~~)u s ~.pa~rllcn[ of Tr:tnsp)~a[ion, Fcdcra] Transit Admln istra:i(m,

. Publl( ‘lratl\p(vt[J\ion In (he Uni!ed Sta[ei: Pcrjornron(e and

(“ond~~lon (Washingt(m, DC June 1992). Iig. 1.10.
Chapter 5 Policy Options for Transportation Energy Conservation 1185

4,000,

3,000

2,000

1,000

0

n Urban bus

_ Urban rail

I

70 72 74 76 78 80 82 84 86 88

Year

SOURCE S C Davis and M D Morris, Tramspoflation Data Book, ed 12, ORNL-671 O (Oak Ridge, TN Oak t%dge National Laboratory March 1992)

table 213

central-city commuters had increased by 29 percent, the number of these using transit had declined to 3.28 million—16 percent of all such

commuters. During the same period, workers

commuting from suburban homes to the central

city by mass transit rose from 777,000 to 1.185

million. 131 

A key attribute of transit promoted heavily by

its supporters is supposed to be its high energy efficiency. Comparing the energy intensity of alternative modes is complex and often mishandled.

However, a simple measure of performance—

changes in energy intensity of a mode over time—

shows that both bus and rail transit have increased

in energy intensity (see figure 5-1). From 1970 to

1989, bus transit increased from 2,472 British

thermal units (Btu) per passenger mile (p-m) to

3,711 Btu/p-m, 132 a 70-percent increase in intensity, primarily because lower load factors and

growing urban congestion overwhelmed increases in the technical efficiency of the vehicles.

Similarly, urban rail transit energy intensity increased from 2,453 to 3,397 Btu/p-m during the

same period, at least in part because a number of

new systems were added that are faster and tend to

operate at lower load factors than the earlier systems, most of which are in very dense older cities

on the Eastern seaboard. Recently. rail transit energy intensity appears to have stabilized: the reported 1989 value of 3,397 Btu/p-m is the lowest

intensity since 1983.133

Direct comparisons of transit and auto energy

use are complicated by the need to account for several factors aside from the average energy use of

the vehicles:

1. energy use in accessing transit (e.g., bus access

to rail, or auto access to rail or bus);

2. differences in “trip circuity’’—the relative directness of auto versus transit trips (because of

131 Ibid.

13~Dav1~ and Momis, op, cit., footnote 9, table 2. 13“

1131b]d.
186 I Saving Energy in U.S. Transportation

limited numbers of routes, transit trips tend to

be longer than auto trips with the same origin

and destination);

3. appropriate vehicle load factors (e.g., because

transit riders share similar socioeconomic characteristics with carpoolers, using average (low)

auto load factors in transit-auto comparisons

will likely be incorrect; on the other hand, some

auto trips involve the driver acting primarily as

chauffeur rather than active traveler, implying

that basing load factors solely on occupancy

may understate auto energy intensity);

4. differences in the energy embodied in system

infrastructure and fuel production and delivery;

5. properly characterizing travel conditions (e.g.,

city or highway driving, degree of congestion;

most urban transit competes with auto city

driving, much of it under congested conditions); and

6. distinguishing between national averages and

individual situations. Transit averages are

strongly influenced by New York and a few

other dense urban centers, which have very

high load factors and slower, less energy-intensive rail systems. New systems will tend to

have lower load factors and, for heavy rail systems, heavier, faster, more energy-intensive

cars.

Thus, although simplistic measures of energy intensity show the urban modes—auto, bus, rail—to

be converging, ’34 individual situations require

very careful and sophisticated analysis to gauge

the relative energy intensity of travel alternatives.

As noted above, many measures of transit productivity have fallen substantially during the past

few decades, but they have stabilized somewhat

since the mid-1980s. Perhaps the most critical

measures are labor productivity and cost, since

wages and fringe benefits make up more than 70

percent of transit operating cost. ’35 Since the inception of Federal transit subsidies in 1961, labor

productivity has fallen sharply: from 1960 to

1985, transit employment rose by 67 percent,

while vehicle revenue miles of service increased

by less than 40 percent; vehicle-miles of service

per employee fell from 14,000 to less than

11 ,000. 136 Recent performance has been better:

between 1985 and 1989, vehicle revenue miles of

service increased about 17 percent, while employment rose only 6 percent. 137

Per-hour labor costs have risen rapidly, with

public transit operators routinely earning far more

than both unionized and nonunion private bus service operators.

138 primarily as a result of this labor inflation, the inflation-adjusted operating cost

of transit service (dollars per vehicle-mile) rose by

80 percent between 1965 to 1983, with increases

in all regions and in both bus and rail transit. ] 39

Again, recent results have been better: during

1984-90, the inflation-adjusted cost per revenue

mile rose only 1 percent.140

Although part of the deterioration in transit

economic efficiency is likely due to the lack of incentive for efficiency provided by heavy Federal,

State, and local subsidies, part may be due to a deliberate policy of providing service to suburban

I ~~Acc{)r~lnO t.s c Davls and S*G+ Stron g, Tran~porra~ton Energy Lkva Book, ed. 13, ORNL-6743 (Oak Ridge, TN: Oak Ridge National

. .

Labt)rattmy, Mar~h 1993), table 2.13, 1990 energy intensities per passenger-mile of auto, urban bus, and urban rail were, respectively, 3,739,

q,7ss, and 3,453 Btu.

I J.$M Wachs b’u.s. Transit Subsidy Policy: In Need of Reform, ” Science, w]. 244, June 30, 1989, pp. 1545-1549.

‘ ~clbid.

I ~TAn~crican ~b]ic Transit Asweiatkm, op. cit., fOOtn(Xe 127.

I ~~wachs, ~)p ~lt,, f(x)tnote 135, ~ltes the total earnings of bus dfivers with the Southern California Rapid Transit District at $49,777 in 1986

c(mlpared with total earnings of $34,426 at a unionized private operator nearby, and drivers at the Washington Metropolitan Area Transit Authority earning $44,014 c(mlpared to $19,418 for a Washington area rmnunionized private operator.

I ~~lbld,

I ~F~d~ra] Transit Administrati(m, op. cit., footnote 1 ~o.
Chapter 5 Policy Options for Transportation Energy Conservation I 187

workers traveling downtown or from suburb to

suburb. As noted above, transit ridership for suburban to central-city commutes increased by 50

percent from 1970 to 1980. These trips often require nonrevenue backhauls and they are highly

peaked; the backhauls will lower recorded worker

productivity (since this counts revenue hours

only), and the need to work two peaks means that

unless drivers are part time or working split shifts

without overtime, the result will be either substantial “dead-time” for drivers or high overtime

charges. When these conditions are combined

with express service—fairly common with suburban-to-downtown commutes-the cost-effectiveness of the service is particularly problematic. For

example, Federal Transit Administration case

studies for eight cities

141 of comparative transit

costs for five types of service142 found that Express/Limited service was the most expensive (in

dollars per vehicle-hour or revenue vehicle-hour)

in all eight cities.

143 In two cases (Miami, St.

Louis), the cost of this service was twice (hat of

other transit services. 144

The move to serve suburbia with transit systems yields more negative impacts on over-all transit performance than just declining labor productivity and higher costs. The lower density of

development has meant fewer passengers per vehicle-mile. and the highly peaked nature of the

trips (mostly commutes to work) yields long periods when minimum service must be maintained

but transit users are few. Further, development has

shifted away from transit traditional service

areas, especially within central cities, at the same

time that rising auto ownership levels have drawn

customers away from transit. For example, work-

(rips that start and finish within central cities—the

trips that are easiest to serve with transit--declined as a proportion of all worktrips from 46 to

30 percent in 1960-80.145 Trips that are very expensive to serve with transit rose dramatically: for

example, the number of commuters who both live

and work in the suburbs rose from 11 million in

1960 to 25 million in 1980, from 28 to 38 percent

of the workforce.146 

The service by transit of suburban commuters

also presents the paradox of the general public

heavily subsidizing the transportation of relatively high-income individuals. Further, a large proportion of these commuters drive to the stations

and park, thus adding to pollution loads. Also, the

availability of rapid rail service into the central

city may actually have the perverse effect of increasing the attractiveness of suburban development, accelerating the centrifugal forces that are

weakening the central city. A response to this latter concern, however, may be that these systems

merely recognize the reality of suburban residential development; they follow it rather than acting

as a stimulus. Also, the systems may encourage

denser development than would otherwise occur.

The combination of higher labor operating

costs and fewer riders per vehicle-mile has driven

up operating costs per passenger and per passenger-mile. Costs per passenger rose by 50 percent

.

(inflation adjusted) from 1975 to 1990, and costs

per passenger-mile rose by 30 percent from 1980

to 1990. 147 Operating costs averaged 41 cents per

passenger-mile in 1990.148 And unlike other performance indicators, these costs have not stabilized recently: real operating costs per passenger
188 I Saving Energy in U.S. Transportation

Percent of total expenses

80,

80

40

20

0

1975 77 79 81 83 85 87 89

SOURCE American Publlc Transit Assoclatlon, Trarwt fad Book

(Washington, DC September 1990), table 8A, p 26

rose 25 percent between 1984 and 1990, and costs

per passenger-mile rose 17 percent during the

same period.149 These trends result from substantial increases in transit service without a proportional increase in passengers. 150 Because transit

revenues have not kept up with costs (operators

have been afraid that raising fares will yield sharp

declines in ridership), transit subsidies have had to

rise from 41 percent of total operating costs in

1975 to 57 percent in 1989, as shown in figure

5-2. 151

A large portion of the billions of dollars made

available to U.S. transit systems (more than $100

billion over 25 years) went to build a number of

new rail systems—rapid rail in Washington, DC,

Atlanta, Baltimore, and Miami, and light rail in

Buffalo, Pittsburgh, Portland, and Sacramento. A

recent study by the Transportation Systems Center of the Department of Transportation evaluated

the total (capital plus operating) cost of each of

these systems.

152 These are shown in table 5-8.

The rapid rail costs vary from $5,93 (1 988) per

passenger trip in Atlantato$16.77 in Miami; the

light-rail costs vary from $5.19 in Portland to

$10.57 in Buffalo. In all of these systems, operating costs represented a relative] y small fraction of

total costs. If a 10-percent discount rate to pay off

capital is assumed, operating costs in Washington,

DC, were slightly less than 20 percent of total operating and capital costs. Among the rapid rail systems, operating costs ranged from 13 percent (Atlanta) to 21 percent (Miami) of total costs; and

among the light rail, operating costs ranged from

11 percent (Pittsburgh) to 26 percent (Sacramento). As noted below, local transit agencies’ focus

on operating expenses in making service and fare

decisions, because capital costs often are subsidized by Federal and State governments and thus

are “free” to the agencies, means that decisions

that save money at the local level, by reducing operating subsidies per rider, can lead to substantial

increases in the total subsidy (capital plus operating) per rider.

1 Evaluating Costs and Benefits

The picture of U.S. transit service that emerges is

a discouraging one if viewed in the context of current travel conditions and measured economic

costs. However, what if emerging and future traffic problems, existing subsidies to the automobile, and environmental or other costs and benefits

are included in the overall cost-benefit evaluation?

First, some proponents of mass transit argue

that rapidly growing urban highway congestion

will soon cause massive gridlock in many U.S. cities, with very high costs to society as well as to

1491bid.

{~~Ibld.

is I An~erican ~b]ic Transit AssfKiati(m, op. cit., footnote 127, (able 8A.

1 f~D. .H plC~re]] urban Ral/ ~ran$f~ ProJe(.f~: Foret.~L~f verslis A(rl/~]/R;[/er.~/?//) IInd C().;f,f, D~T.T-$) I -04 (Canlhrldg~, MA: Transp)rtatitm

Systems Center, October 1990).
Chapter 5 Policy Options for Transportation Energy Conservation [ 189

Rapid rail Light rail

Washington Atlanta Baltimore Miami Buffalo - Pittsburgh Portland Sacramento —

Operating cost per passenger

(1988 dollars)

172 0 7 5 1 83 3 6 0 1 44 0 9 0 091 1 73

Total cost per passenger

(1988 dollars)

8.75 5 9 3 1292 1677 1057 7 9 4 5 1 9 6 5 3

a Not Including feeder bus costs

b Assumes a 40-year Ilfetlme and a discount rate of 10 percent per year

tems Center October 1990) table 5-1

travelers. From this viewpoint, expanding transit

ridership and reducing automobile usage would

be a critical component of an anticongestion strategy and would generate substantial societal benefits. Also, growing congestion should encourage

ridership on those transit systems that will be relatively unaffected by highway congestion (e.g.,

guideway systems and buses in exclusive lanes).

The validity of this argument depends on the

likely magnitude of future congestion problems,

the extent to which they would encourage transit

ridership, and the degree of relief that increased

transit ridership would provide to congestion. As

discussed in chapter 4, the magnitude of future

congestion problems is not easy to predict, because both travelers and traffic planners will respond to emerging problems in a variety of ways,

with many of the responses (particular] y of travelers) being essentially unpredictable. Given the

current travel time superiority of automobiles

over mass transit, a substantial increase in transit

ridership is unlikely unless a large increase occurs

in congestion delay costs for autos (or a large shift

in the relative monetary costs of the two modes,

e.g., a substantial increase in parking costs). Recent forecasts by the Federal Highway Administration do foresee such an increase, but as noted in

chapter 4, these forecasts are based on the assumption of no policy adjustments or travel reactions to

growing congestion, and their reliability is questionable. Whether additional transit service will

reduce congestion (or significantly reduce congestion growth ) is clearly a function of the magnitude of any increase in transit ridership; most new

investments in mass transit have not been able to

siphon off more than a small percentage of trips,

but the potential exists for a larger impact in wellchosen corridors.

Second, to the extent that the current price of

auto travel does not account for its true societal

cost, automobile use may be overutilized in

comparison to other options (e. g., mass tran-
190 I Saving Energy in U.S. Transportation

sit). ’53 As shown in chapter 4, even without

accounting for societal costs such as air pollution,

auto costs are substantially underpriced because

of subsidies (payment of portions of road

construction costs through general funds) and inefficient pricing (e.g., failure to charge directly for

parking). The degree of underpricing appears to be

less, however, than the underpricing of transit services due to direct government subsidies (U.S.

transit operations are heavily subsidized; fares

covered only 43 percent of operating costs in

1990,154 with all other costs paid by local, State,

and Federal governments). In other words, if a

case is to be made that further subsidies to mass

transit are warranted (or that further costs should

be added to automobile travel) to correct an imbalance in pricing, the case will have to be based on

external i ties not covered in the analysis in chapter 4.

1 Magnification of Transit Benefits

Generally, planners assume that 10 trips on a new

mass transit system will eliminate fewer than 10

auto trips, because some of the transit trips are

new trips induced by building the new system and

others have been captured from different transit

systems (e.g., a new rail system capturing passengers from buses). Assuming that transit eliminates

relatively few auto trips implies that a major portion of transit benefits (reduction of congestion,

air quality improvement, etc. ) will be estimated to

be quite low.

Some transit proponents claim that the assumption of low auto trip reductions, critical to the costbenefit calculations used to evaluate new transit

proposals, is seriously flawed. For example, the

Natural Resources Defense Council (NRDC) and

the Sierra Club claim that each new transit trip can

reduce four or more auto trips, because “the availability and usage of transit services also changes

the location of trip origins and destinations in a

way that reduces the need to travel by car, and reduces the distance of travel required by the majority of people who will continue to drive their

cars, " 155 that is, instituting new transit service

will change land use in ways that reduce the need

to travel.

Key to claims that transit has a “magnifying effect” in reducing automobile travel is a series of

analyses of different areas that show a strong relationship among the level of transit usage in an

area, its land use density, and its level of auto travel. For example, the NRDC-Sierra Club analysis

compares five areas in California that have similar

income levels but very different levels of mass

transit service and land use density. 156 These areas

have marked differences in (per capita and per

household) auto usage, with the highest level of

transit use corresponding to the lowest level of

auto use. Assuming that transit is the critical causal variable yields the relationship that 1 mile of

transit replaces from 4 (Walnut Creek versus Danville-San Ramon) to 8 (San Francisco versus Danville-San Ramon) miles of auto travel.157 The

NRDC-Sierra Club analysis does make an assumption of causality: “For California conditions, we found that inducing one passenger mile

of ridership on transit reduced community-wide

VMT by 4-13 miles, ” and “in a little over 10

years, BART [Bay Area Rapid Transit], and

1 f~othcr op[lons” arc [() for~go” (rave] alt(jgcthcr {)r to ct)ns(l]ldilte trips.

1.f~Fc~cral Transit A~minlstratl(m, op. ~1[., footnote I 30.

155D B. Gol(jsteln et a]., “ [~ffi~l~n[ Cars In Efficient Cltl~S, ”NRCD Swr-ra Club tmtim(my f(wc(mservatl(m rcpm hearing tm transp)rtatitm

issues bef(wc the State {)f Cillif{)mia Energy Resources C(msena[l(m iind Dctel(~pnlent Ctmm]issi(m. Apr. 23, 1990, rck Ised Apr. 2, 1991, p. 8.

t ‘Slbid., app. A.

‘ “hi., app, A.
Chapter 5 Policy Options for Transportation Energy Conservation 1191

mixed-use densification around its stations, has

given Walnut Creek a huge mobility advantage

over Danville-San Ramon. ” 158

The data in the NRDC-Sierra Club analysis and

similar analyses, however, do not show that mass

transit alters land use over time, or that the

introduction of transit service reduces auto travel

by more than one trip for every transit trip added.

For the most part, the analyses contain few historical data and do not show changes in land use over

time. In discussing the above two communities,

for example, the NRDC-Sierra Club analysis does

not even show whether or not the differences in

Walnut Creek and Danville-San Ramon that appeared in the 1988 estimates, and supposedly were

caused by BART, existed 10 years earlier when

BART was built. Consequently. the analysis does

not even show that there were any changes in mobility over time that might have been caused by

BART.

Further, the analysis pays only modest atten-

(ion to demographic differences among communities, focusing primarily on average income, despite the important role that demographics play in

travel behavior. Factors such as age, household

size, lifestyle choice, and so forth are important

determinants of travel behavior. To the extent that

denser urban areas with transit tend to attract

people who would ordinarily travel less than average, the role that density and transit service by

themselves play in reducing travel is weakened.

That is, it is not just the density, transit service,

and greater availability nearby of recreational,

cultural, and employment opportunities that goes

along with these areas, that contributes to lower

travel per capita; it is also the characteristics of the

people who tend to live in such areas, because

many of these people would tend to travel less

than average no matter where they lived.

Finally, statistical analyses cannot show cause

and effect. Demonstration of a statistical relationship between transit and residential density does

not, for example. imply that mass transit leads to

increases in residential density, although it is clear

that efficient transit makes high-density development more feasible. In fact, there is a strong possibility that much of the density-transit relationship

may reflect density’s influence on transit markets

rather than transit influence on density; although

man y factors affect transit effectiveness and economic viability, including management skills,

levels of subsidy, labor relationships, and so forth,

density is a key determinant of its customer base

and practicality. Thus, proponents of a transit

magnifier effect interpret comparisons between

U.S. cities that have declined in density as their

transit systems declined, and those that have

maintained viable city centers with good transit,

as showing that maintenance of good transit service has succeeded in keeping downtowns viable;

skeptics would instead argue that in U.S. cities,

many factors have contributed to downtown declines, but that one offshoot of the decline has inevitably been a concurrent drop in transit, as worsening urban economic fortunes lessened the

cities’ ability to subsidize transit at the same time

the transit systems’ customer base was decreasing. Understanding that increases in transit services may not automatically lead to land use

changes, many transit proponents propose that

added transit service be coupled with land use policies that yield higher densities and mixed uses.

The interrelationship among transit, land use, and

travel is discussed in the next section.

In conclusion, the relationships among land

use, transit services, and travel behavior found in

the NRDC-Sierra Club analysis and elsewhere are

sufficient to call into question the assumption that

an added transit trip will replace less than one auto

trip, but they do not justify replacing this assumption with that of a large “magnifier” effect for

transit (i.e., each transit trip replaces several auto

trips). This area requires further, sophisticated

analysis that examines changes in land use, travel

behavior, and transportation system performance

over time and takes careful account of differences

I $~]bld,, p, 6 and :ipp. ,+
92 I Saving Energy in U.S. Transportation

in a variety of traveler characteristics, such as age,

gender, income, and household size. Some important research into travel behavior has been conducted by Kitamura159 and Schipper,160 but much

more needs to be done.

~ What Is Possible?

What could policymakers accomplish if they were

willing to push for a future in which mass transit

played a much greater role in the U.S. transportation system? The large gap between the reality of

actual transit performance in the United States and

the vision held out by strong transit proponents in

the environmental community demands a hardheaded weighing of both the potential of pro-transit policies and the obstacles to progress in improving transit service and increasing ridership.

Clearly, it is fair to argue that despite high transit subsidies, the transportation environment in

the United States has been skewed against high

levels of transit usage. As noted above and in

chapter 2, the competing public and private transportation systems evolved during a period when

the private system—the automobile--enjoyed

strong subsidies in the form of: low-cost or free

parking; development patterns shaped by mortgage subsidies and zoning for low density that

strongly favored auto over transit; freedom from

payment of a variety of external costs (air pollu-

(ion damages, high noise levels, ecosystem losses,

and so forth): and payments of many costs (police

services, portions of road construction and maintenance etc.) by government. It can be argued, of

course, that U.S. mass transit also enjoys high levels of subsidy—an average 57 percent of operating costs plus much or all capital costs. Further,

this could create a “level playing field” for transit

in the sense that the transit subsidy, although different in form from the auto subsidy, may account

for a similar or even higher percentage of the total

cost to society of mass transit use. However, whatever the balance of subsidies now, the U.S. transportation system and most U.S. cities were shaped

during a time when the Federal Government did

not subsidize transit (although local governments

did), and the form that the system and the cities acquired as a result—low-density development,

large quantities of parking, very high levels of

road density, dispersal of jobs throughout urban

and suburban areas, lack of centralization—heavily favors the automobile over transit.

This argument implies that given a different set

of incentives, one that established a balanced

playing field from the beginning, the United

States might have ended with urban environments

and transportation systems quite different from

those we have now. This thesis would be attacked

vigorously by many analysts on the grounds that

the primary forces behind the automobile's conquest of the U.S. transportation system were, quite

simply, its vastly superior mobility and the growing income levels that allowed Americans to afford an auto-oriented system. However, from the

standpoint of current policy choices, the validity

of either thesis is not relevant. Rather than being

interested in what might have been, policymakers

addressing U.S. transportation problems must ask

what is possible and desirable given the physical

system that we have--at least as a starting point.

In other words, policy makers must take as a

starting point the United States’ actual autooriented physical infrastructure, societal attitudes, demographic balance, and interest

groups, and ask what is possible from this

starting point.

The U.S. urban environment is not one that is

easily served by mass transit, and over time, it is

moving in a direction that will make it still less

amenable to successful transit service. And the

natural advantages in convenience, privacy, and

travel time of automobiles over transit are enhanced considerably by an entrenched network of

I V)SCC ~,g,, R, KIImura, ““LItc-Sty k ond Tray cl Dcnmd,” /! I.od A/Ic(IJ )’car 2020, Tr:inspmatl~m Research Btuird Special RepJr-I 220

(W’;i~hlngt(~n, DC Niitioniil Ac:iLIcn~j Prcs\. 1988).
Chapter 5 Policy Options for Transportation Energy Conservation 1193

U.S. laws and customs that reduce the cost of auto

use. Thus, if policy makers hope to make mass

transit a major factor in a national energy conservation initiative, they must be willing to attempt to reverse the current course of urban development (i.e., continuing suburbanization) and try

to create denser, mixed-use urban environments;

they must also drastically shift government expenditures and other economic incentives away

from auto use. Further, they must find a way to improve the general management of mass transit systems in this country, because the recent history of

transit service has been one of rapid cost escalation and declining efficiency.

Will the Political Impetus Exist?

The willingness to attempt such a course of action

is likely to depend on the degree to which a national consensus can be reached that very strong actions are justified to achieve a reduction in transportation energy use. The most likely driving

forces behind such a consensus are:

1.

2.

3-.

the extent to which objections to other transportation and land use-related problems—

growing travel congestion, the environmental

impacts of continuing suburbanization—add to

the consensus for change;

national security issues (since the energy in

virtually all U.S. transportation use, except rail

transit, is oil energy) and greenhouse warming;

and

the extent to which the public comes to recognize the linkage between urban form and transportation needs and abilities.

It is difficult to make the case that the current

policy environment is “ripe” for any attempt to

change the course of U.S. urban development or

of auto use. For example, although both Congress

and the general public are concerned about energy

security and greenhouse warming, over the past

several years neither has shown much interest in

taking substantive measures to deal with either issue. Of course, advancing scientific knowledge

about greenhouse warming and unpredictable

world events could easily thrust these issues to the

forefront of public consciousness and significantly increase the probability that strong initiatives

will be taken.

As discussed in chapter 4, OTA believes that

current forecasts of growing congestion are overstated; although the importance of congestion as a

transportation problem is undisputed, there are

doubts as to whether the problem will become sufficiently acute within the next decade or so to

create the necessary impetus for drastic changes in

basic transportation and land use policy. Instead, it

seems more likely that pressure will be exerted for

a host of more moderate measures—including

congestion pricing for key routes, high-occupancy vehicle (HOV) lanes, ridesharing initiatives,

and possibly an end to free parking—that may, in

concert with continued suburban and exurban development patterns, limit the growth of congestion. These measures are discussed later.

Reaching a consensus that continuing suburbanization is unacceptable and that auto use must be

restricted may be extremely difficult, although

there are examples—Portland, Oregon, for one—

where such a consensus appears to have begun.161 

The issue here is not the actual magnitude of the

adverse impacts of unchecked suburban growth

and increased auto use—these are large and welldocumented—but their perception versus the perception of suburban benefits-that is, the relative

privacy, safety, and quiet of living in a suburban

environment. For example, many planners believe that suburban development is an important

16 I Howe.er ~\,cn in ponlan~, ]and use res[raln[s have not ye[ prcven[ed new low-density development from being built—though these

res(ralnts prx~bahly have affected the Iocati(m of this devel(~pment. The strength of the consensus will begin to be tested when residents discover

that !he~ canm~t Ilk e In such dc~ elopments or when restricti(ms (m low-density building begin to drive up the prices of existing low-density

dm cl~~pnwn[s.
194 I Saving Energy in U.S. Transportation

cause of inner-city decline. Whatever the truth of

this, however, it is not the perception of most urban residents. The current negative state of most

large-city downtowns leads many urban area residents to shun the inner city as “dirty, polluted,

overcrowded, decaying, and downright dangerous, "

162 and they tend to view these conditions as

a cause of suburban flight, not an effect. The actual truth of this or other such views is not relevant to

the political truth: there is little sign that voters are

so unhappy with any perceived negative impacts

on downtown areas, or with the energy inefficiency, capacity to absorb prime farmland, and other

problems of suburban development, that they are

ready to take drastic action against such development.

In other words, whatever the truth of arguments

that society would benefit if large amounts of auto

travel were replaced with mass transit, there is no

discernible outline of a political coalition that

could accomplish the changes in land use, fuel

costs, capital investment, and other factors that

would lead to such a replacement. Instead, areas

with transportation and air pollution problems are

more likely to adopt incremental improvements in

transit services and relatively moderate changes in

incentives for using private vehicles: in turn, these

may yield small additions to transit share and

small reductions in auto use, with correspondingly low impacts on energy use.

Will Ridership Be Available?

Demographic factors will play a critical role in defining potential ridership for a major expansion of

transit services. Although an attempt to increase

mass transit ridership would certainly aim at new

constituencies, increasing transit’s share among

its traditional constituencies—the urban poor,

women, and the old and young-would take first

priority. There are substantial concerns associated

with attracting additional ridership among these

groups.

Transit use has dropped substantially among

poor households; basically, the same travel trends

that are occurring nationally are occurring among

people living in poverty, particularly an increase

in driving alone—from 55 to 60 percent of all trips

during 1985-89. 163 This trend may be very fragile,

however; virtually any increase in driving costs

associated with strategies designed to shift travel

away from single-occupancy vehicles or toward

transit could have an especially powerful effect on

the travel habits of the poor. Also, the Clean Air

Act Amendments demand that cities with inspection and maintenance programs raise their” waiver limits” (the dollar amount of repairs necessary

to qualify a vehicle for a waiver from emissions

requirements) to $450. This change conceivably

might reduce the access of lower-income households to automobiles, since presumably many of

the vehicles they currently own are old and in poor

repair.

Women have traditionally been more inclined

than men to use transit; for example, in 1977,

women used transit for about 2.7 percent of their

trips versus men’s 2.4 percent share. This higher

share was probably due to a combination of

women’s lower income levels, lower access to automobiles, and lower incidence of auto licensing.

These factors are changing, and women now appear to be a less inviting target for transit use.

Having a driver’s license is a particularly powerful indicator of transit use: although women

with driver’s licenses travel much more than

women without licenses (twice the number of daily trips and three times the daily travel mileage),

women with licenses use mass transit for about 1

percent of their trips, whereas those without licenses use transit for more than 13 percent of their

trips. 164 Over time, the percentage of adult

162L.S. Btmme, “Self-Fulfilling Prt)phcclcs’? Dectmtralizatkm. Inner Cily Decline, and the Qualit> of Urban Life, ” Ameri(’an P/arming

A t.foclarlon .lwrnd/, autumn 1992, pp. 509-5 I 3.

I tllpis.~rs~], t~p, ~i[,, ft)(m)te I ~~.

‘ ~~lhld.
Chapter 5 Policy Options for Transportation Energy Conservation 1195

women with licenses has risen rapidly, from 77

percent in 1983 to 85 percent in 1990,165 and thus

the propensity of women to use mass transit has

dropped. Indeed, transit use has followed this

trend. By 1990, both men's and women’s transit

shares had dropped substantially, to an average of

2.0 percent for both, but women’s share had

dropped more radically, presumably as a consequence of their increased attainment of driver licenses as well as their increased independent income and auto ownership. The difference between

men’s and women’s transit use is now only about

0.1 percent, because women’s transit share declined more than 20 percent from 1977 to 1990.

whereas men’s declined less than 10 percent in the

same period.

Mass transit may be losing its traditional market among the old and very young, but may be

gaining a market among young adults. Although

transit’s declining share of travel is spread broadly

across age groups, it recently ( 1983-90) increased

in share among the 20 to 29-year-old group.166 

This may be a promising indicator of future transit

potential. As a guess, this rise in transit share

might reflect declining prospects for high-paying

jobs among this age group. Continuation of this

trend may depend on the economy's ability to provide good jobs to this age cohort. Another reason

for the rise in share among this group may be the

increased number of singles and childless couples

in the group, and their willingness to live in highdensity urban areas during this stage of their lives.

To the extent that this is true, the prospects for

transit potential will depend on their future lifestyle decisions.

On the other hand, transit share declined markedly in the age group over 50 and the age group

from 5 to 15, both traditional transit markets.167 

Among the older groups, this trend probably reflects an increasing income, as well as driving

ability: many in this group grew up with automobiles, in contrast to past years. The declining share

among the young may simply reflect continuing

suburbanization of households with children, and

perhaps also growing concerns about urban crime.

Parents appear far less likely to let their children

travel alone than in past years: thus they may prefer to drive them to activities rather than let them

use transit.

What Are the Physical Circumstances?

The Urban Mass Transit Administration's168

1984 Report to Congress

169 identified four different types of urban areas that any attempt to expand

transit services would have to address (note that

these descriptions are of the status quo, with no

major policy changes):

1.

2.

The largest, older urban areas. New York, Chicago, Philadelphia, Washington, and San Francisco are typical: most are in the North, but a

few are in the South and West. The structure of

these metropolitan areas includes a relatively

dense central city with a stable or growing CBD

(in terms of both floor space and economic ac-

tivity, and sometimes in jobs), moderate-density older suburbs, and lower-density newer suburbs around the perimeters. Little change in this

basic structure is anticipated over the next 15

years. The CBD should remain important, albeit with continued population dispersion from

the central city. Annexation of new territory is

often difficult.

Large, older urban areas in decline. These

areas—Buffalo. Cleveland, and St. Louis are

examples—have the same basic structure as the
196 I Saving Energy in U.S. Transportation

previous group but both the central city and the

CBD are in marked decline, largely because of

the erosion of the city’s traditional industrial

base. Since the ability of such places to attract

compensating growth industries has frequently

proved limited, continued decline is to be expected for many of them.

3. Newer large urban areas. Los Angeles, Denver, Houston, Phoenix, and San Diego are representative. Such cities are predominantly in

the South and West, because the existing density of major cities in the North inhibits the emergence of new centers there. The rate of growth

of the newer cities will probably decline from

that in the 1970s. Since the major growth of

these areas has occurred relatively recently,

there are often substantial sections of the central cities that contain housing and commercial

activity at suburban densities. Annexation by

the central cities of new territory is often possible.

4. Smaller urban areas. Many urban areas in all

sections of the country (with populations up to

about 750,000) will experience growth, the

bulk of which will be in MSAs (metropolitan

statistical areas) of about half-million population in the Southeast and Mountain States, and

MSAs between 50,000 and 100,000 in the

Northeast and North Central areas. The reasons

for the growth of each are different. In the South

and West, growth results from the expansion of

energy-related industries, the search for a “better lifestyle,” and the process of filling out the

pattern of regional centers. In the North and

East, the growth is due to continued dispersion

of population from the largest metropolitan

areas.

New or expanded transit will have to be shaped

to these individual circumstances. For the large,

older cities with dense central cores and vigorous

CBDs, conventional fixed-route services make

sense for the downtown-oriented worktrip market, with high-capacity fixed-guideway systems

(rapid rail, dedicated busway) where densities are

very high and most trip distances are long enough

for a high-speed system to provide some real travel time advantage. Many of these cities already

have rapid rail systems, but several of these are deteriorating or losing patronage because of fare increases. As discussed below, the budgetary arguments for fare increases often ignore the huge

investment in capital embodied in these systems.

If the original premises upon which the systems

were built remain correct, it makes little sense to

let these systems deteriorate or lose patronage to

avoid operating losses when the effect is to greatly

increase the total (per-passenger) subsidy. On the

other hand, supporters of new rapid rail systems

have to recognize the extremely high per-passenger costs of such systems, which become even

harder to defend when it is recognized that many

of the passengers will have formerly traveled in

buses or carpools.170 

For those cities where trip distances are shorter

and existing rights of way are available, light rail

systems provide a more cost-effective choice than

rapid rail. Express bus service also can play an important role in serving outer areas although, as

noted above, this service tends to be expensive. 71

For “cross-town” travel in larger central cities

serving work and nonwork travel needs for lower

income or other transit-dependent residents, conventional bus systems may be the most feasible

service choice, although this type of service is expensive and will continue to require substantial

subsidies.

Finally, for service in smaller central cities and

trips to suburban subcenters, paratransit opera1701bid.

IT] Federa] Transit Administrati{m, op. cit., fOOtnOte I so.
Chapter 5 Policy Options for Transportation Energy Conservation 1197

(ions (e.g., vanpools, demand-responsive services. jitneys) and ridesharing make considerably

more economic sense than conventional bus services.

Bookkeeping Problems and

Transit Patronage

One reason for the stagnant or declining patronage

on existing rail transit systems is the combination

of rising fares and declining service, fed by the reluctance of local jurisdictions to increase operating subsidies as costs rise. The cost-benefit decisions of these jurisdictions in setting fare and

subsidy policies bear little relationship, however,

to the overall cost-benefit calculus of the original

decisions to build the systems. These original decisions offered very high subsidies per new transit

passenger. both planned and actual,172 presumably because the system planners placed a high societal value on moving trips from auto to transit.

Because the Federal Government supplied most

of these subsidies, however, local jurisdictions

tend to ignore the sunken (already spent) costs of

the systems and treat their current subsidy calculations as if the total costs of the system were operating costs. Thus, their decisions do not consider the

reality that losing passengers spreads the very

large capital costs of the system across fewer riders and incurs large costs to society if the original

value of moving tripmakers from autos to transit,

as assumed in the system construction decision,

was correct. In other words, raising transit fares

and/or decreasing service may decrease the perpassenger operating subsidy, but greatly increase

the per-passenger total (operating plus capital)

subs id>.

If current decisionmakers maintained the original view of the value of increasing transit ridership, they would realize, with but one possible

point of dissension, that reducing fares and increasing maintenance and service levels, rather

than increasing fares and reducing service, is the

more cost-effective strategy. The dissenting point

is that system efficiency may be a function of the

level of the subsidy: the efficiency of heavily subsidized systems has been poor.

It is worthwhile to examine quantitatively the

alternative cost -benefi t choices available to transit

decisionmakers--whether or not to incorporate

capital costs into decisions about raising fares.

Two key values are important to this issue:

1. The elasticity of transit ridership in relation to

transit fares is generally thought to be about

-0.3; that is, a 10 percent fare increase will decrease ridership by about 3 percent.173 

2. In rail systems, the function of total costs

associated with capital charges is quite variable, but a typical value might be 80 percent.174 

Box 5-4 describes the effects of the alternative

choices for a hypothetical rail transit system with

100,000 daily passenger trips, a total (capital plus

operating) cost per trip of $10, a $1 fare, and a

$1-per-trip operating subsidy. For this system,

raising fares by $0.50 per trip leads to a loss of

15,000 passenger trips a day but yields a significant reduction in the total and per-trip operating

subsidy: from the perspective of total costs, however, this is a situation in which society previously

had been willing to subsidize each trip by $9 but

will save only $1.83 for each trip lost to the system.

1 Conclusions

Although there will be intense disagreement about

the potential for success of any plan to greatly enlarge transit service in the United States, there

would likely be general agreement with the proposition that with a few’ exceptions (e.g., rehabilitation of some systems in very dense cities). funnel -
198 I Saving Energy in U.S. Transportation

In urban rail systems, capital subsidies are typically much higher than operating subsidies It is not

unusual for capital charges to represent 80 percent of total system costs Despite the magnitude of

these charges, however, local decisions about transit agencies’ operating budgets may take Iittle consideration of capital costs. There are several potential reasons for this the Federal Government heavily

subsidizes these costs; the costs are “sunk,” that is, already spent, and/or local governments accept

the proposition that the costs cannot be repaid out of the fare box Where capital costs are not carefully

considered in operating decisions, however, decisions about fares may be based primarily on concerns

about operating subsidies This narrow focus can create inconsistencies between societal objectives

and transit operating strategies

A sample case will illustrate the problem A hypothetical rail system serves 100,000 passenger trips

daily and has operating costs of $2.00 per trip and capital costs of $800,000 per day The capital costs

are covered by a capital subsidy of $8 per trip, and operating costs are covered by fares of $1 per trip

and an operating subsidy of $1 per trip ($100,000 per day)

The transit agency, if it is concerned that the operating subsidy IS too large, may examine the possibility of raising fares to $1.50 per trip. In focusing on the operating subsidy only, this looks like a reasonable move If ridership has a price sensitivity of O 3, the 50-percent fare increase might reduce passenger volume by (50 percent O 3), or 15 percent—1 5,000 passenger trips daily. The new passenger

volume will generate fare revenues of $127,500 daily, reducing operating subsidies by at least $27,500

daily (and more if operating costs are reduced because of the lower volume of passengers) The operating subsidy per passenger trip is reduced to about $085

If the capital subsidy is included in the calculations, the results look somewhat different, however.

The capital subsidy will rise to about $941, and the total subsidy from $9 to $1026 per passenger trip

In other words, although passengers are paying more in fares, the per-passenger subsidy is actually

higher than before

Another way of looking at the results is that the system has lost 15,000 passengers to save $27,500

a savings of $1 83 per passenger lost. With a focus only on operating subsidies, this seems to make

sense the agency previously placed a value of $1 on having a traveler use transit presumably instead

of driving, so it ended up saving more than each lost passenger was worth However, with a focus on all

subsidies, society was paying $9 to have a traveler use transit. Saving only $1 83 for each passenger

lost to transit looks like a bad bargain from this vantage point

The math in this example will change somewhat if the lower passenger volume allows both operating

and capital savings from either or both reduced service frequency and train length, but it is unlikely that

the change will be substantial enough to alter the basic conclusions

This example also provides ammunition for proposals to reduce transit fares substantially where excess capacity exists. If society really does value shifting auto riders to transit as highly as implied by the

subsidies pay to rail systems, reducing fares would be an extremely cost-effective method of “buying”

additional passengers Other issues that might arise in evaluating a fare reduction proposal include the

desire to avoid frivolous use of the system (otherwise, there is a clear basis for arguing for elimination of

fares) and the need to clearly Identify what the system’s primary goals are The latter issue arises in

examining questions about fares for off-peak periods If society makes no value distinction between

peak and off-peak ridership, sharp fare reductions for off-peak use make excellent sense However if

society values the transit system primarily as a way to ease congestion and the need for new highway

capacity, off-peak ridership may be valued considerably less than peak ridership In this case. there may be

less Incentive to lower off-peak fares—and increase the operating subsidy—to increase ridership

SOURCE Off Ice of Technology Assessment, 1994
Chapter 5 Policy Options for Transportation Energy Conservation 1199

ing large amounts into public transportation will

not shift large numbers of trips from autos and will

not save large amounts of energy unless it is

coupled with intense efforts to restrain automobile

travel and shift development to more transitfriendly patterns.

It is, however, unwise to point to previous

(poor) experience and conclude that mass transit

cannot work in the United States. The only conclusion offered by our previous experience is the

one above. Whatever transit good points, it is not

preferred by most travelers under the current system of incentives. Thus, any failure of previous attempts at funneling resources into transit proves

only that transit cannot succeed very well within

the existing system, but does not indicate what

might happen with changes in the system.

For most rail transit systems, capital expenditures are subsidized 100 percent and operating expenses are subsidized partially, with authorities

trying to get as much of the operating expenses as

possible out of the fare box and focusing primarily

or exclusively on operating expenses in trading

off fares versus ridership. This funding system

creates incentives to raise fares and accept lower

ridership in order to reduce operating subsidies,

even though capital subsidies per passenger

would go up sharply’. Increasing fares 10 percent

produces only about a 3-percent drop in ridership

and thus seems to make sense from an operating

cost standpoint.

175 The fare increase probably

does not make sense from a total costs standpoint,

however: minimizing the total subsidy per rider

would, under most circumstances, require a fare reduction (and an increase in ridership ), maybe even

to the point of making the system almost free.

Transportation analysts point to the structure of

most American cities—the low population density, the importance of suburbs and exurbs, and the

separation of residential and commercial development, as well as the enormous land area and investment given to roadways and parking facilities—as a principal cause of the very high gasoline

usage, low proportion of transit trips, and low use

of walking and bicycling modes characteristic of

U.S. urban transportation.

The general relationship between transportation and land use is widely recognized in the transportation and urban planning community and

among environmental groups, but different individuals draw widely varying conclusions from

this relationship. Some view the processes of suburbanization that have dominated the development of U.S. c i ties for decades as being essential] y

unchangeable and a natural response to a confluence of interrelated factors: the mobility provided

by the automobile; Americans’ preference for

single-family, low-density development; the lessening of the economic advantages to businesses

of close proximity to each other; the desire of

businesses to gain better access to a growing suburban workforce; and a continuing drive to escape

growing congestion. In this view, continuing suburbanization will cause the automobile to remain

the dominant mode of transportation for the foreseeable future, with travel demand continuing to

grow. These individuals conclude that urban and

transportation planning agencies should accept

the continued dominance of the automobile and

should seek to reduce adverse environmental impacts through technical and administrative improvements (improved emission controls, higher

fuel economy, improved inspection and maintenance programs) while maintaining auto mobility

through a combination of transportation initiatives (to increase vehicle load factors, initiate intelligent highways, including congestion pricing

to rationalize highway use, and increase highway

capacity) and planning flexible enough to allow

land use shifts that will reduce congestion (e.g.,

removal of zoning constraints that artificially separate business and residential land uses).
200 I Saving Energy in U.S. Transportation

A second group believes that U.S. suburban

growth patterns and automobile dominance are

not inevitable but are instead the result of flawed

public policies: that low-density development

carries with it very large societal and environmental costs; and that changes in public policies, focusing on new transit services and denser land use,

can shift U.S. land use and transit ridership toward

European norms (i.e., higher densities and more

balanced transport patterns). From their perspective. major shifts in land use toward denser urban

and suburban centers can be achieved through

suburban-rural development restrictions, minimum-density rules, restrictions on parking, fuel

taxes, changes in income taxes, and so forth.

These changes would then promote transit use as

well as walking and bicycling, and would reduce

overall tripmaking. At the same time, the

introduction of new transit services would help to

push land development patterns toward increased

density, especially around the stations. In other

words, the new transit services and land use controls would interact synergistically, each assisting

the other-dense land use making transit work

better, transit promoting denser land use. 176

This section explores the role of urban structure

in shaping, and being shaped by, the transportation system.

1 Evidence for a Strong Relationship

Between Urban Form and

Transportation Energy Use

Demonstrating quantitative relationships between land use characteristics and transportation

is made exceedingly difficult by our inability to

examine the “control” case (what would have

happened if the transit system had never been built

or if the land use controls had never been applied?), the impossibility of proving cause and effect through statistical analysis, the complexity of

land use and transportation interactions, and the

great variability among cities that complicates

cross-sectional analysis.

Although arguments favoring the ability of

public policy choices to transform urban form and

urban transportation patterns come from a variety

of sources, one of the most prominent is a crosssectional study of the urban structure and transportation systems of many of the world’s medium

and large cities performed in 1980 by Peter Newman and Jeffrey Ken worthy of Murdoch University in Perth, Australia (hereafter referred to as

N& K). 177 This study concludes that there exist

statistically significant relationships between

transportation variables and variables describing

urban structure, and highlights differences between “auto-oriented” U.S. cities and the more

transit/walking/bicycling-oriented cities of Europe and Asia. This analysis cannot prove cause

and effect, it does not account for some important

city-to-city differences that affect transportation

(e.g., differences in income levels and stage of development), and it is extremely sensitive to the

manner in which boundaries are drawn defining

cities’ components (central business district, central city, metropolitan area, etc.). Further, it does

not account for differences in the age of cities and

the dominant transportation technologies present

when the cities were formed. However, many of

the relationships described (especially those that

remain strong when the range of cities is narrowed

to the subset of prosperous European, North

American, and Australian cities) appear to transcend these differences and analytic problems and

to express truths about transportation-urban structure relationships that should be robust over time.

176Stx E.A. Deakln. “’JtJhs, Htmslng, and Tr;inspmiitl\m T?wtmj iind Evidence tm In(cr:ict](ms Between Land Use and Transp{wtati(m,”

7}~~t~\/~{~rr{JI/~Jt?, [ ‘rb(in F“(~rni, (ind Ihc }in~ Ir(mnlcnf, Transpmalitm Reseat-ch Boiird Spwial Rep)rl 231 (Washingt(m, DC: National Academy

Press, 199 I ).
Chapter 5 Policy Options for Transportation Energy Conservation 1201

And despite criticisms from a number of transportation analysts, many of N&K’s numerical results for U.S. and European cities agree well with

other sources. 178

Density and Job Balance

Although there are some conspicuous exceptions

(e.g., New York City), N&K found that the U.S.

cities in their sample could be characterized generally as low density—residential densities below

20 persons per hectare (ha, or 8 persons per acre),

compared with European cities’ 50/ha and Asian

cities’ 150/ha. Whereas European and Asian central cities tend to have balanced job and residential

concentrations, U.S. central cities tend to have

high job concentrations with few residents. If a

few of the old U.S. cities such as New York and

Chicago are excluded, the remaining U.S. inner

cities in N&K’s survey are one-half to one-third as

dense as European inner cities, and one-tenth as

dense as the Asian cities they examined. And the

outer areas of the U.S. cities have very low density, perhaps one-fourth of that in Europe. Finally,

despite the dedication of U.S. central cities to jobs

rather than residences, these cities are less centralized in jobs than European and Asian cities; in the

United States, jobs are scattered throughout the

metropolitan areas.

Automobile Orientation

Along with the above differences in basic structure, the U.S. cities in N&K sample are far more

automobile-oriented than their European counterparts. In 1980, the U.S. cities had three to four

times the road area per capita of European cities,

80 percent more parking spaces per 1,000 workers, and considerably less public transport service—about 30 vehicle-kilometers (19 vehiclemiles) per person versus 79 vehicle-kilometers

per person in Europe. Not surprisingly, measures

of auto and transit use are substantially different,

as well. In 1980, only about 4 percent of passenger

miles in the U.S. cities were captured by public

transport, versus about 25 percent in Europe (65

percent in Asia). In commuting, about 12 percent

of worktrips were on mass transit in U.S. cities

versus 35 percent in Europe and 60 percent in

Asia. Furthermore, in U.S. cities, most of the nontransit trips were by automobile; only about 5 percent of workers walked or bicycled to their jobs,

versus 21 percent in Europe and 25 percent in

Asia.

Travel Volume

Besides traveling more often in private vehicles,

Americans also traveled much farther than Europeans or Asians. In 1980, people in U.S. cities averaged about 13,000 kilometers of travel in highway vehicles, versus 7,400 kilometers per person

in European cities and 4,900 kilometers in Asian

cities. Presumably, the cause of these travel differences is a combination of the higher density and

more mixed residential-employment development of European and Asian cities (i.e., less need

to travel long distances to obtain services, reach

jobs, or visit friends) and, perhaps, some amount

of lower “mobility” in the European and Asian cities, where mobility might measure in part the opportunity to travel but might also reflect free

choice to travel based on lifestyle differences.

Energy Use Per Capita

In any case, the differences in per capita annual

travel distances and modal choices create a large

disparity between U.S. and European or Asian cities in the amount of energy per person expended

on transportation. N&K estimated that in 1980,

the U.S. cities averaged nearly 59,000 megajoules

(MJ; about 55 million Btu, or 450 gallons) per

capita of gasoline use versus 13,000 MJ for the

17~E,x, pllchcr, Pts:irskl.

.
202 [ Saving Energy in U.S. Transportation

European cities and 5,500 MJ for Asian cities. 179

Although the European and Asian cities probably

use more electricity y for train transport, and the per

capita energy values do not include air travel,

there remain huge disparities in total energy use

for transportation between the United States and

Europe or Asia. For example, the Lawrence

Berkeley Laboratory estimates that total per capita transportation energy use in 1987 was 57,700

MJ for the United States and only 21,200 MJ for

France, 13,200 MJ for Italy, 18,300 MJ for Great

Britain, and 12,400 MJ for Japan. 180

Vehicle Efficiency

Part of the disparities in transportation energy use

between U.S. and European or Asian cities reflects differences in the technical efficiencies of

the vehicle fleets in these cities (e.g., the average

fuel economy of the auto fleets). For example, in

1980, the U.S. light-duty vehicle fleet averaged

14.9 mpg, versus 19.6 mpg for Japan, 27.5 mpg

for France, 28.7 mpg for Italy, and 22.6 mpg for

Great Britain.

181 In 1987, the disparity of efficiencies had lessened somewhat: Japan’s fleet averaged 21.4 mpg, France’s 26.9 mpg, Italy’s 29.9

mpg, and Great Britain’s 25.3, that is, in general

a modest increase in efficiency over 1980, whereas U.S. efficiency levels had increased 17 percent

to 17.5 mpg.

182 Thus, while Italy total per capita

transportation energy use in 1987 was but onefifth that of the United States, its auto fuel efficiency was only 70 percent better. An examination

of the other values indicates that most of the transportation energy differential between the United

States and Europe must be accounted for by factors other than technical efficiency.

Residential Density and Gasoline Use

Urban structure, with its effect on a variety of

transportation variables, appears to be a major explanatory factor in the differential energy use.

N&K believe that urban population density is a

key explanatory variable for per capita gasoline

usage. Their plot of gasoline use versus urban densit y in figure 5-3 appears to show a strong relationship between population density and gasoline use.

In the graph, per capita gasoline consumption

rises steeply at population densities of about 30

persons per hectare (12 persons per acre); N&K

consider this to be a breakpoint for the success of

nonautomobile modes. N&K further assert that a

strong role of density in influencing gasoline use

appears within single urban areas as well as across

different cities: according to their data, in 1980 the

average resident of the New York Tri-State region

used 44,000 MJ (42 million B(u); residents of the

less-dense outer area of the region used 60,000

MJ; residents of New York City used 20,120 MJ;

and residents of Manhattan used 11,860 MJ. For

comparison sake, they cite the exurban residents

of the outer Denver area, who they claim used an

astonishing 137,000 MJ—more than a thousand

gallons-of gasoline per year.

An examination of the curve reveals some

problems with the concept of a simple density-energy use relationship, however. First, the entire

right-hand side of the curve consists of only two

points (for Moscow and Hong Kong), the first of

which represents a city that exercises an extraordinary authority over transportation choices—an

authority not possible in most of the cities in the

sample. Second, for cities with annual per capita

gasoline usages greater than 20,000 MJ, there apI mne~c ~ ~lucs ~pp.tir 10 he ,)keres(irllalc~ ~~lthou~h [he r~la[it,e values appear atx)ut right. N()[c that the LBL values for 1987 (~lt)w) for

c

naI/on~// per capita encrg) usc iut lower than the f$&K vii]ues for gasoline {rely mm (ht)ugh 1987 per capita energy usc was higher than 1980

energy USC. The LBL values include n(mgas(}l ine energy. and cily per capita transportati(m energy use seems likely to be lower than nati(mal per

capita use (since, accxmiing to N&K, higher density areas such as c]ties are associattx.i w lth less trak c1 than knver density rural areas.

I ~[JL Schlpv.r ‘. En~r~J (Js~ in p;isscnger Tr;lnspollin OECll c’~)untries Changes Between ] 970 and 1987, ” Trans/wrfa(ion: 7-/Ie /nlerna -

[ioml Journal. April 1992.

I X I Dii~ ,s ~ind Morris, ~Jp, cit., footnot~ 9. ttiblc I .7

1‘Zlbd.
Chapter 5 Policy Options for Transportation Energy Conservation 1203

+

Houston

I

1

Phoenix

. Detroit

Denver

1

. Los Angeles

. San Francisco

Boston

Washington DC

‘Chicago

1

● New York

\

.Toronto

. erth

. risbane

. . Melbourne

‘de Sydney

\

\

mhagen.

Amsterdam”

Singapore”

Hong Kong

Moscow. ●

I 1 I I I I 1 I I I I 1 0 25 50 75 100 125 150 175 200 225 250 275 300

Urban density (person per ha)

SOURCE PG Newman and J R Kenworthy, Cities and Automobile Dependence A Sourcebook (Hants, England

Gower Pubhshing Co 1989)

pears to be virtually no relationship between den- “spread” among the data points is very large. Fisity and gasoline use; cities with very similar nally, some of the data appear suspect—for exam-

(1ow) density development have an extraordinari- ple, Los Angeles is shown to have approximately

ly wide range of gasoline usage. And between the same urban density as New York. The reason

about 32,000 and 6,000 MJ per year, although presumably is that N&K have included very large

there appears to be a functional relationship, the geographic areas in their definition of “urban
204 I Saving Energy in U.S. Transportation

area, ” thus incorporating a wide range of highdensity inner-city and low-density suburban

areas. It is difficult to believe that merging such

areas does not weaken the reliability of the relationships uncovered.

Role of Other Variables

N&K contend that other urban and transportation

attributes, some related to population density but

not in lockstep with it, also influence gasoline use

and overall transportation energy consumption.

For example, they assert that an area’s orientation

to private vehicle usage impacts gasoline use.

This orientation is measured by variables such as

the length of road available per vehicle, the parking spaces per 1,000 vehicles, and the average

speed of highway travel. Interestingly, cities with

the highest average traffic speeds tend to have the

highest per capita gasoline consumption even

though their ability to keep traffic flowing freely

leads to an efficiency advantage per vehicle-mile.

One interpretation of this relationship is that travel

demand is encouraged by greater ease of travel, so

that providing more road space and more parking

spaces encourages increases in auto trips. This, in

turn, would imply that measures designed to reduce congestion by increasing capacity, which are

supported by arguments that they will save time

and energy, may instead increase energy use and

time spent in travel by encouraging auto travel and

urban sprawl. And the converse might be true:

congestion may be useful in encouraging behavioral and land use changes that reduce energy use.

The argument that providing more road capacity

will tend to increase travel and energy use is

strongly disputed by some analysts, who claim

that it applies only to situations where there is unmet travel demand and that this is not now the case

in the United States.183 Further, there is an alternate explanation of the relationship between travel speed and gasoline usage: that it is low density

(and the resulting separation of destinations) that

is actually driving travel demand and gasoline

use. The apparent speed/gasoline use relationship

could be a statistical artifact caused by the strong

collinearity between speed and density.

Another important variable closely associated

with energy use is the degree of centralization of

the city. Maintaining a strong central focus allows

alternative modes, including walking and bicycling, to function, while diffusing population and

employment throughout an urban area actively

encourages private vehicle use and makes efficient transit difficult or impossible.

Public transport performance represents another set of variables that are strongly correlated to

gasoline use and overall transportation energy

consumption. In this case, gasoline usage is negatively associated with variables such as the

amount of transit vehicle service, measured in vehicle-miles per capita. This relationship seems almost a tautology rather than a cause-and-effect

relation, however, because the existence of an intensive transit network is most likely in those cities with high densities and centralization of activities-cities likely to have relatively low levels

of both vehicular travel and gasoline usage.

The conclusion N&K draw here is that major

savings in transportation energy use beyond those

achievable with improvements in the technical efficiency of vehicles will require both improvements in mass transit systems and significant

shifts in land use configurations. The land use

shifts can be termed “reurbanization,” designed

to increase the density of residential and commercial activity, to centralize this activity, and to mix

the two activities together. Specific physical shifts

include in-filling vacant land that has been “leapfrogged” in the rush toward suburbanization; redevelopment of industrial and warehousing sites

to more suitable uses; rezoning and rebuilding

old, declining low-density districts; building intensive mixed-use developments; developing the

air rights over rapid transit uses; developing unI R3c A Laye “Future Grow[h Of Auto Travel in the U. S.: A Non-Problem, ” paper presented at Energy and Environment in the 2 I St Centu- . .

ry, Massachusetts Institute of Technology” C(mference, Mar. 26-28, 1990.
Chapter 5 Policy Options for Transportation Energy Conservation 1205

used highway rights of way; physically restricting

outer area growth (e.g., by preventing the subdivision of rural land); and expanding housing development in the central city.

For this report, the obvious question raised by

N&K’s work is, what does it imply for U.S. prospects for reducing transportation energy use? This

question breaks down into three components:

1. Are the relationships described by N&K reliable?

2. Do the relationships represent cause and effect,

that is, will changing urban structure lead to

changes in transportation energy use, and will

changing transportation systems tend to lead to

changes in urban structure?

3. If the answers to question 1 and 2 are yes, can

we effect the necessary changes? The latter is

an issue especially when changes in urban

structure are contemplated.

1 Reliability of the Data

As discussed above, questions can be raised about

N&K’s data. Anybody who has worked in transportation analysis knows that data on travel behavior are highly variable from country to country

and often between different cities within the same

country, including the United States. Further.

most data are collected by political jurisdiction

rather than by agreed-upon segments in urban

structures (e.g., central business district or central

city). In reality. urban analysts have no quantitative agreement about where urban boundaries

should be drawn. Thus, it is difficult to know how

reliable N&K’s data are or whether their boundaries have been selected in a consistent analytic

framework; N&K themselves take care to discuss

the numerous data problems they faced. One of

the more disturbing problems that N&K (and

most other analyses of transportation energy use)

faced was getting accurate measures of per capita

gasoline consumption in cities. For the most part,

consumption has been measured by using data

from gasoline sales. but these sales may be poorly

related to actual consumption within urban

boundaries. OTA draws no conclusions about the

reliability of the data and the relationships drawn

from them, but notes that the latter generally agree

with conventional thought about transportation

and urban structure.

u Cause and Effect

Cause and effect is a critical issue for the policymaker, because it clearly is important to know

whether policies that tend to yield increases in urban density can be a useful part of a transportation

energy conservation strategy. Also, it is useful to

know whether adding a transportation system

such as rapid rail will tend to increase urban density

, yielding a synergistic impact—reduced travel

requirements and better conditions for economic

success of the new system.

Although cause and effect cannot be proved by

examining statistical relationships, case studies

can provide strong prima facie evidence for or

against such a relationship. Unfortunately. most

Western cities are reducing, not increasing, their

densities, so case studies of increasing density are

not readily available. It seems logical that increasing density and increasing the mix of land uses

would reduce travel requirements by providing

closer access to goods and services, but this must

be treated as speculative (though probable).

As discussed in the previous section. studies

that examine differences in transit usage, land use

density, and auto travel at a single point in time184

cannot show cause and effect or even demonstrate

a relationship between land use changes and travel

behavior (or between added transit services and

travel behavior) over time, even though they may

claim to. Further, the role of demographic differences among different land uses, and the impact of

these differences on travel behavior, further complicate the issue of cause and effect; as discussed

earlier, to the extent that people with” low-travel”

characteristics are attracted to urban areas, part of

the “cause” of low rates of travel in denser land
206 I Saving Energy in U.S. Transportation

uses will be the characteristics of the people living

there, not the density per se.

Can changes in transportation systems have

significant effects on urban structure, that is, can

the introduction of new systems encourage development into forms that would support increased

use of that system, creating positive feedback between the transport system and urban land use?

Because new roads and transit systems have been

added to cities, there is opportunity for obtaining

better evidence about the effects of such systems

on urban structure. Nevertheless, documenting a

transport-created impact is difficult, because land

use is affected by many factors and changes slowly. In particular, studies of past changes in transportation systems tend to suffer from a range of

problems:

. . . lack of explanatory power for observed correlations, difficulty in distinguishing cause and

effect, failure to distinguish economic shifts

within a region from (transportation) investment-induced growth, double counting of benefits, (scoping too narrow) to identify possible

shifts in production processes and changes in

economic and social organizations that might

occur as a result of important new transportation

investments. 185

Recent attempts to document such impacts appear

to indicate, however, that transport system shifts

in the early history of U.S. cities had major impacts on urban form (e.g., the introduction of freeways greatly abetted the decentralization of U.S.

cities), but that in recent times there has been less

linkage between new transportation system

changes and shifts in urban structure. 186 In general, the studies indicate that transportation availability and quality are only two of a number of

critical factors in location and development, and

by themselves, investments in transportation will

do relatively little to change land use, especially

if the hoped-for direction in land use is counter to

general market trends.

Investigations of new rail transit investments

have identified localized benefits, but regional

benefits are described as “quite modest. ” 187 For

example, higher-density development will tend to

be attracted to land around rail transit stations, but

only when other conditions are right-and in some

cases, such development might other-wise have occurred elsewhere in the area (e.g., at a freeway intersection). Further, some suburban-oriented rail

systems have worked in ways opposite to the densification hoped for by transit proponents; by easing the difficulty of commuting to the central core

from some distant suburban locations, thus spurring development at these fringe locations. 188 A

key to understanding the likely impacts of transportation system changes is that in most cases, urban residents in modern U.S. cities already have

very high levels of mobility; new systems cannot

offer the huge increases in mobility that they

might have in the early history of cities.

An important variation of the above issue is

whether or not the building of new highways—or

expansions of existing ones—might lead to land

use changes (e.g., shifting development from

high-density to low-density areas) that would tend

to “use up” the new travel capacity they create.

The idea that adding highway capacity to combat

congestion is essentially a self-defeating exercise

is a common theme of antihighway arguments.

Although there is evidence to support the thesis

that new highways do create land use shifts that

will add to the call on their capacity, the evidence

is not sufficient to support reliable estimates of the

magnitude of this effect. 189

1 Can We Hope To Change Land Use?

Without important shifts in land use, leading to

denser, more centralized, more “European-style”

I gs~~ln, Op. cit., footnote 176.

I EbGlu]lano, Op. cit., footnote 12 l; and ibid.

I ET~&ln, op. cit., footnote 176.

1881bid,

t 891bid.
.

Chapter 5 Policy Options for Transportation Energy Conservation [ 207

urban areas, improvements in transit service are

unlikely to have a major effect on transportation

energy use. This automatically leads to the question, will Americans support such shifts and find

the results desirable? This question, although perhaps unanswerable, can be illuminated by the following observations.

Lack of Examples

Few American cities have actually initiated a series of strong measures to focus development on

the central city and restrict it in the suburbs. One

is Portland, Oregon, which has established a number of planning measures to maintain compact development, including an Urban Growth Boundary

to direct new development into the city rather than

its suburbs, development of a light rail system,

prohibition of automobiles in a key downtown

corridor served by bus transit, and restrictions on

parking spaces incorporated into new office development. 190 Claims for success of this effort include a constant volume of cars entering the

downtown since the early 1970s, despite a 50 percent employment increase and a 43 percent transit

share for commuters to downtown. 191 However,

a focus on the city as a whole shows a distinctly

different picture: from 1980 to 1990, the overall

transit share in Portland dropped from 15.9 to 10.9

percent.

192 In addition, the number of persons

driving alone increased by more than 30 percent,

while the absolute number of transit users declined.193 In fact, driving alone actually increased

more than the increase in workers during this time

period. 194 Further, much of the development

channeled within the urban boundary has been

low-density, suburban-type development; in response, Portland is now considering adopting

minimum densities of development, ] 95 an unusual approach in a nation where zoning is virtually

universally regarded as establishing maximum

densities and land uses.

It maybe too early in the process to expect major improvements to show up in Portland. The Urban Growth Boundary still has within it enough

developable land to allow 20 years of growth at

suburban sprawl densities, and the light rail system, at this stage of its development, serves only

about 15 percent of the population.196

What the Portland experience seems to show is

that, in some cases, a reasonable local political

consensus can be reached that radical and perhaps

painful measures must be taken to solve transportation and land use problems; that these measures can make a positive difference in limited

areas; and that it remains unproven whether these

local measures will succeed on a citywide basis,

but in an y case success will not come swiftly. The

problem with Portland and other models is that at

best, they are “swimming in an automobile-oriented sea”; that is, they must overcome a national

policy that seems designed to promote automobile

travel by keeping gasoline cheap, encourage

single-family home ownership, and build lots of

roads.

Convergence of European and

U.S. Transport Patterns

Although European cities, which are more oriented toward transit, bicycling, and walking than

most U.S. cities, are often held up as models for

the United States to emulate, in reality European

} !WM, D, Lowe, ,~’/lfl,),nR ~-lflef: ~/lc L7nilronnlenfa/ and }/l{nlan {);lllenrlon,f, Worldwa[ch pa~r 105 (Washingttm, DC: Worldwatch institute, Octt)ber I 99 I ).

1‘) 1 Ibid.

I ‘)2A E pisar~kl, ,~c)$. pcr$,)d(.l, ,*C$ ,,1 C-

(),? l)lll,llnr (Washlng[on, DC U.S. Department of Trmspoflatif~n. OfiCe of HighwaY ‘nfomlat’[)n . . .

hlanagemcnt. July 1992).

1

9Tlbid.

‘941bid.

I g~s. Sadler< oregon” Depaflnlent of Energy, Pers(mal cxmmlunicatl(m, D~c. 9 1992.

I %El}za~th ~>akln, (_Tn i~erslt} f~f ~allft~mia at Berkeley, Pers(ma] COnllllUnlCati(~n. 199~.

.
208 I Saving Energy in U.S. Transportation

land use and transportation patterns are moving

somewhat in the U.S. direction, with growing automobile dependency, growing transportation energy use, and increasing levels of suburbanization

(this is discussed more fully in chapter 3). For example, between 1970 and 1989, U.S. light-duty

vehicle (auto or light truck) ownership per capita

went from 0.438 to 0.575, a 31-percent increase.

In contrast, France’s went from 0.242 to 0.410, an

increase of 69 percent; Italy’s increased by 140

percent, the United Kingdom’s by 79 percent, and

West Germany’s by 98 percent. 197 Similarly.

whereas U.S. travel energy grew only 13 percent

between 1973 and 1988, European growth during

that period was 55 percent, and Japanese growth

was 76 percent.

198 This does not mean, however,

that the United States and Europe are moving toward the same developmental and transportation

future, although clearly they are converging. It

seems quite likely, given their different starting

points, basic transportation and urban planning

policies, and geography, that European urban

structures and transportation patterns will reach

an equilibrium point closer to U.S. cities than they

are now, but still be substantially more transit-oriented, of higher density, and lower in per capita

travel.

Preferences of Residents Themselves

A critical component of a strategy to undertake the

significant changes in urban form needed to make

cities more transit-friendly and reduce urban tripmaking is the extent to which the goal of the

changes—much denser cities with greater centralization and substantial blending of land uses—is

desirable to urban residents. Americans may have

serious reservations about the value of dense urban areas, but at least some of their reservations

are based on false premises or on examples of inner-city life that do not accurately reflect what

might be accomplished with proper planning and

urban policy. For example, despite some perceptions to the contrary, there appears to be no positive relationship between population density and

violent crime in cities: the less dense, automobileoriented U.S. cities have just as much (and sometimes more) crime per capita as the old transit-oriented cities. On the other hand, the distribution of

crime throughout a city may be as or more critical

than its frequency, especially in influencing those

groups most likely to wield political power. In

low-density cities, high-crime neighborhoods

may be well-separated from the upper- and upper

middle-class neighborhoods whose residents

wield the preponderance of political power; in

denser cities, crime may be less easy for these residents to avoid.

There is no doubt that the quality of life in very

dense, European-style cities is intensely different

from that in the spread-out, automobile-oriented

cities so prevalent in the United States. It may be

fruitless to place some abstract value on each urban form, even though they clearly will have different travel consequences. What is important is

the perception of the residents, and most important, the perception of those residents most likely

to influence the political process. For example,

there can be little doubt that residing in the suburbs or in the lower-density portions of auto-oriented cities such as Houston allows residents to

have larger houses and often allows private open

space and gardens, amenities that are impossible

in a dense city except for the extremely wealthy.

Similarly, residing on a cul-de-sac in a suburban

neighborhood devoid of commercial enterprise allows residents to sustain a relatively “low and

slow traffic”’ environment and to avoid the traffic

concentration and changes in aesthetic values that

often accompany commercial development. Although these amenities may come at a price—perhaps less access to cultural amenities and near-total dependence on the auto for mobility—the

197Dak,5 ~~~ s[r:~n:, op. ~lt., f(~(~tn(~t~ 134.

1 (ML SchlpP.r ~t ~l., Law r~n~~ Bcrhcley L:tht~rat(W’, .’Hlst(mc Trends in Transp(mtatitm Encrg~ Use An lntematicmal Ptm~ctive,” paper

prcscntcd at the Asil(mlar C{mfmmcc (m Transpwtati(m and Gl(dMl Clinuitc Change, 1991.
Chapter 5 Policy Options for Transportation Energy Conservation 1209

majority of Americans have appeared willing to

pay this price up to now. And although the price of

continuing this style of development will increase

in the future (e.g., with higher levels of congestion), one can only guess at the likelihood that

these increased costs will great] y alter Americans’

apparent preference for spreading out their cities.

Incentives for, and Time Frames of, Changes

Reductions in energy use hardly qualify as strong

incentives for individuals to favor changes in their

transportation choices. The cost of energy is a relatively minor part of both the monetary (quantitative) and the total personal costs of transport, and

for auto travel, it is at a historic low in proportional

terms.

199 Consequently, transportation choices

are less likely to be based on energy than on factors such as travel time and comfort. This makes

the attractiveness of different urban forms and different travel modes less easy to characterize. For

example, although high urban density and concentration lead to generally shorter-length work

trips, work travel time in these cities is often longer than in cities with lower population and employment densities because of the differential levels of congestion200 and because sprawl “offers

more diverse opportunities for faster commutes

through changes of residence or jobs, the relocation of firms, or the choice of uncontested

route s.” 201 On the other hand, because worktrips

represent only about one-quarter of all trips, the

lower overall number of trips per capita in denser

urban areas will likely yield significantly lower

total travel time budgets for their residents than

for the residents of lower-density, auto-oriented

cities. As for the differential lifestyles and accessibility to alternative activities offered by different

urban forms, the subjective nature of these differences prevents a fair comparison.

Because energy costs are highly visible to motorists (i.e., they see them at the gas pump every

week), however, large increases in gasoline price

may have an impact on travel behavior somewhat

disproportionate to their impacts on total travel

costs. Fuel cost is not irrelevant.

With regard to the improvement of public

transport, N&K observe that only cities with extensive rail transit networks have succeeded in

maintaining a high proportion of total trips on

mass transit.202 The authors relate this to the ability of trains to maintain comparatively high

speeds—average speeds for urban buses are low

(about 13 mph in both the United States and Europe, less than 10 mph in Asian cities), whereas

train systems are much faster everywhere (typically about 25 mph).203 In Europe and Asia, trains

have substantially higher average speeds than private vehicles, although door-to-door times still

suffer from time spent waiting for them and getting to and from stations, and it is likely that commuters “weigh” minutes of waiting time more

heavily than minutes spent in a vehicle.204 On the

other hand, the relative success of rail transit may

occur only because the majority of rail systems

have been built in very densely populated cities

where auto ownership is expensive, auto (and regular bus) traffic is extremely congested, and

guideway transit is a particularly viable option for

travel.

1‘)<)LJ .S. C{jngrcs\, oflcc of Techn{~lt~gy Assessment, lmpro~ irr~A14t~mrobile Fuel Etonmn>: New Stondords, Ne~\Appr(Jache~, OTA-E-504

(W’ashln:t[m, DC’. LI. S. G{)iemnwnt Pr-lnt)ng office, oc([)h>r 1991).

2(K)Glulm(l, op. CII.. foo[n~)tc” 121.

201 P. Gordon” et al., “TIN Ct)nln~u[ing Paradt)x: Evidence Frxml the Top Twenty, “ Arncricon Plonnin,c Associo[lon Journal, autumn 1991,

pp. -116-420.

‘[)2Newnm and Kcnw(mthy, op. cit., fo(m(~tc 177.

‘OTlbId. N&K do rx~t sa) whc[hcr thclr ~ alucj for trains applj (rely [() mass transit, or to all trains In an area including c(lnln]uter rail.

2(J4E~pCCIall) for mlnulm spent slttlng in a car sea--if the} are standing (m a bus (Jr train, Y chicle time ma) be just as (merous as w aitlng

IImc. hu~ the V)lnt to bc made here li Cl cn stronger then.
210 I Saving Energy in U.S. Transportation

Because station waiting times and required

transfers are weighted heavily in travel decisions,

a bus system that allows neighborhood collection

coupled with travel on exclusive rights of way

might offer strong competition to trains even

though top speeds are lower.

Another key question here is the time frame in

which potentially significant changes in urban

form could take place. Critics of transportation

analyses that rely on changes in urban form to alter

the transportation system note the long life of urban structures, the significant expected slowdown

in U.S. population growth, and the highly developed nature of the existing auto-oriented transport

system, as well as the multitude of factors aside

from transportation considerations that play an

important role in household and business locational decisions.

205 On the other hand, projections

of growing urban congestion, with substantial increases in travel times and, presumably, with

transportation considerations playing a renewed

role in locating residences and offices, imply that

transportation characteristics could become a major focus of locational decisions. As noted in chapter 4, the available forecasts of future congestion

levels are likely to be overestimates, in part because they ignore likely changes in travel patterns.

Policy Questions

As a final point, support for changes in urban

structure clearly will depend on the nature of the

policy mechanisms necessary to achieve the desired changes. Although it is easy to draw up lists

of measures that would contribute to denser urban

forms and improved transit services, it is far from

obvious how much money will have to be spent

and how draconian the various taxation and zoning measures might need to be. If the differences

in cities observed by N&K could be attributed to

differences in urban and transportation policies

among the cities, this knowledge would help

quantify the measures necessary. Unfortunately,

statistical analyses cannot identify cause and effect, as noted earlier.

The causes of the U.S. pattern of suburbanization are matters of considerable disagreement.

One point of view holds that government policy is

not the major cause—that the most powerful

forces affecting urban land use in the United

States and worldwide are more likely to be consumer preference, income, geography, and time

(i.e. when was the city, or section of the city, developed?) than land use policies and economic incentives, although the latter are important. There

are strong empirical arguments for this point of

view: for example, the densest cities in the developed world are old cities whose land use patterns

and densities were shaped by reliance on pedestrian travel. Portions of cities built during the era

of horse-drawn carriages, trolleys, rail systems,

and autos appear to reflect the availability of these

new transportation systems more than they reflect

the price of gasoline; in looking at the different

districts of older cities, the more recently developed districts generally are substantially less

dense. And residential densities, especially as reflected in the size of homes and propensity for

high-rise apartments rather than townhouses, appear to reflect income as much as they reflect zoning, as implied by the extreme densities of cities in

developing countries.

A contrary point of view does not necessarily

deny that single-family homeownership is a widespread goal of families throughout the developed

world, but considers the pattern of public policy

choices to be a critical element of the extent to

which this desire is satisfied and the extent to

which high-density living represents a satisfactory alternative.

It is certainly true that there are substantial differences between the United States and other,

more densely developed Western nations in both

land use and those public policies that might potentially affect land use. Aside from obvious dif-
—

Chapter 5 Policy Options for Transportation Energy Conservation 1211

ferences in urban residential density, even the suburban developments of Europe and Canada are

more densely developed and more planned than

those in the United States.206 As for policy differences, U.S. local zoning policies tend to strongly

favor separation of residential from commercial

uses and low densities, whereas European policies

favor mixed use and compact development. In Europe, much urban land is publicly owned, so government directly controls development of this

land. U.S. State and local governments often provide essential capital infrastructure and services

for suburban development, whereas European

governments tend to provide selective infrastructure support to channel growth into compact development. Some European authorities simply

prohibit low-density, scattered development,

whereas this type of prohibition is extremely rare

in the United States.207

Some analysts also question whether market

surveys that show widespread preference for lowdensity over high-density environment truly demonstrate anything more than the natural result of

policies that have undermined central cities and

transformed them into places that are intensely

undesirable.208 Because most residents of urban

areas cannot afford the few places remaining in

central cities that are relatively safe, physically attractive. and socially vibrant, it is not surprising

that they gravitate toward the low-density alternative. The argument here is that policies to nurture

central cities, including provision of excellent

transit services, restrictions on freeways, parking

limits, and provision of open space, would allow

virtually the entire central city to duplicate what is

available only in small enclaves today, and would

allow these areas to be affordable enough to reverse suburbanization trends and, in consequence,

substantially reduce travel requirements and auto

use in urban areas.

9 Conclusions

Policy makers wishing to make significant

changes in urban areas and their transportation

systems+. g., increasing urban density and degree of centralization, and increasing the role of

mass transit—are faced with substantial uncertainty about the effectiveness of various policy options. In particular, there remains substantial controversy about the role government policy can

play in shaping urban structure and transportation,

and about how the patterns of urban development

and urban transportation systems interact with and

help shape each other. This uncertainty means that

policy makers will have to accept substantial risk

that the results of expensive and politically difficult policies will be less than they hoped for. The

available evidence does strongly imply, however,

that attempts to achieve large changes in urban

transportation are unlikely to be successful without policies that integrate transport changes—for

example, development of new mass transit systems—with conscious efforts to direct development into patterns that will support the changes.

Thus, new rail transit systems are unlikely by

themselves to transform urban areas or even to

make large inroads in private vehicle use. On the

other hand. a strategy that combined new transit

systems with strong development controls and incentives, and changes in the travel incentives that

currently favor private vehicles (parking restrictions. removal of free parking incentives, congestion charges, and so forth) represents a far more

credible potential for success. However, many of

the necessary policy changes will be politically

controversial, and the trends in urban development and travel they seek to change are long-established and accepted in this country, and indeed

are beginning to take hold, albeit in modified

form. in Western Europe and elsewhere. This de-
212 I Saving Energy in U.S. Transportation

gree of controversy, coupled with the uncertainty

about the results of the policies, will mean that

elected officials may have a difficult time winning

political approval for such strategies.

Although the great majority of passenger trips are

local, the greater length of intercity trips means

that a much larger percentage of passenger miles

traveled are intercity. According to data from the

1990 National Personal Transportation Survey,

only 1.2 percent of all personal trips in private vehicles are at least 75 miles in length, but these trips

represent 26 percent of all person-miles of personal travel. Similarly, only 1.2 percent of all personal trips using all modes of transport are at least 75

miles in length, but these longer trips represent

nearly 28 percent of all travel.

The automobile is the dominant intercity travel

mode in the United States, with commercial aviation also having a strong share. The automobile’s

primary advantages are low cost, especially for

group travel, door-to-door service, and convenience—it provides continuing transportation service after arrival. For trips less than 100 miles, the

automobile is generally faster than other modes,

since there is no need to reach a station or to wait

for a ride. For longer trips, air travel may offer a

significant time advantage and accounted for

about 17 percent of intercity passenger miles in

1989;209 it undoubtedly captured a much higher

percentage of passenger-miles for trips greater

than 100 or 150 miles. Bus and rail play minor

roles nationally—in 1989, 1.2 and 0.6 percent, respectively

210—but rail service is significant in

some Northeast and California markets.

As discussed in chapter 2, intercity travel is expected to continue to grow strongly well into the

next century. It is not clear, however, how well the

road and air networks will accommodate increased travel. For example, during the past decade, road congestion has grown significantly in

major metropolitan areas, especial 1 y Los Angeles,

Washington, DC, San Francisco, and San Diego,

and urban congestion is widely expected to increase substantially during the coming decades.

Unfortunately, data on intercity highway travel are

crude, and travel patterns and congestion severity

frequency are uncertain, making projections of future congestion problems quite difficult.

Similar problems exist with forecasts of air

traffic congest ion. The Federal Aviation Administration indicates that the average delay time per

flight increased by one-third during 1980-88, and

it projects that the number of congested airports

(those experiencing annual flight delays of at least

20,000 hours) will nearly double, to 41, by

1998.21 However, these forecasts are based on

rather poor data and the assumption that airlines

will continue to funnel passengers into saturated

airports. Much airport congestion is due to airline

routing strategies rather than to an outright shortage of facilities. For example, at Chicago O’Hare,

Dallas-Fort Worth, Atlanta, and Denver, the critical congestion trouble spots, most passengers are

making connections rather than arriving at their final destinations. If the airlines using these airports

as their hubs were to change their operating practices, they could substantially lower congestion

levels. 212

2W)MtmJr Vehicle Manufacturers Association (m~w American Automobile” Manufacturers Associati(~n), F“aft.i & }-fgurc.r ‘9/ (Detrt~i[, Ml

I 991), p. 55.

‘I”lbd.

z 11 U.S. Department of Transpmation, Federal Aviati(m Administrati(m data, repmcd in U.S. C(mgrcss, office of Technology” Assessment,

NeN Wa?s: 7i//rt~lor Air(raj[andMagnef i(cj//)’ Le]’i/ared Vehic/cs, OTA-SET-507 ( Washingttm, DC U.S. Gt)t crnment Printing Office, oc[oh>r”

I 99 I ).

~ Il]bld,
Chapter 5 Policy Options for Transportation Energy Conservation 1213

Despite these uncertainties, it is likely that both

auto and air travel will experience significant increases in congestion over the coming decades.

These potential problems may offer an opportunity to shift travelers to more energy-efficient

modes in the denser and more congested intercity

corridors. This is the thesis behind current attempts to promote HSGT (high-speed ground

transportation) systems in several markets—Miami-Orlando-Tampa, Cleveland-Columbus. San

Diego-Los Angeles-San Francisco-SacramentoReno-Las Vegas, Atlanta-Columbus/Macon-Savannah, the Northeast Corridor (Boston-New

York City-Washington, DC), and others. These

systems are either high-speed steel-wheel-onsteel-rail trains capable of speeds well in excess of

100 mph (the French TGV—Train a Grand Vitesse--can go about 185 mph, and speeds of 200

mph or more are anticipated soon) or magnetically y

levitated (maglev) trains capable of even higher

speeds (the fastest systems are expected to be able

to achieve more than 300 mph). Ideally, such systems would be linked to major airports and would

serve trips primarily in the 150- to 500-mile range,

freeing airport capacity for longer-range trips

where the superior speed of air travel is critical.

These systems are described in more detail in box

5-5.

The potential of high-speed ground transportation systems for intercity trips less than 500 miles

long has been studied by the Transportation Research Board213 (TRB) and by OTA.214 The results of the studies are quite similar.

Both OTA and TRB found that high-speed

ground transportation systems were technically

feasible but expensive: there are very few intercity

corridors in which an HSGT system is likely to

pay for itself. so government subsidies would be

Amtraks Metroliner IS the fastest train in North America,

reaching 125 mph. Proposals for new U S high speed rail

systems envision much higher speeds to 200 mph or even

higher

necessary. TRB also concluded that “considerable development and testing remain before maglev systems can be shown to operate safely and

reliably in revenue service,"215 whereas highspeed rail systems are available today. TRB found

that new HSGT systems would require ridership

levels between 2 million and 17 million per year to

cover their capital and operating costs, with the

range associated with differences in capital costs,

 216 operating costs, and fare levels. The “most

likely” break-even passenger volume for a HSR

system was estimated at 6 million riders annually.

At present. only one city pair in the United

States—Los Angeles-San Francisco--has air ridership greater than this. By 2010, only four city

pairs are expected to exceed this mark—Los Angeles-San Francisco. Boston-New’ York, Washington, DC-New York, and Los Angeles-Phoenix.
214 I Saving Energy in U.S. Transportation

The two primary candidates for high-speed ground transportation (HSGT) systems in the United

States are steel-wheel-on-steel-rail trams and magnetically levitated (“maglev”) systems The two systems are described below

High-speed rail (HSR) systems range from Improvements to conventional rail systems producing

speeds of up to 125 mph to new train technologies operating on exclusive, grade-separated tracks that

can achieve speeds close to 190 mph in actual passenger service and have achieved speeds greater

than 300 mph in prototype testing Improvements to conventional systems include eliminating grade

crossings, switching from diesel to electric motors, straightening curves and Improving track quality,

improving overhead power transfer systems, introducing advanced trains that run on conventional track

(e g , tilt trams with improved suspension/wheel tracking systems that allow high speeds on curves

without compromising safety or discomfiting passengers), and improving signaling and train controlling

systems A//-new HSR systems demand a new track and more radical technology to achieve speeds

considerably higher than the 125-mph limit for upgraded conventional systems The current state of the

art is represented by the latest Japanese Shinkansen (“bullet tram”), at about 170-mph top speed, and

the French Train a Grande Vitesse (TGV), at about 185 mph.1 These systems have completely gradeseparated, very high-quality track dedicated to high-speed service, with rights-of-way that have mlnlmal curvature and grades Propulsion systems are electric, cars are lightweight and aerodynamic, and

signaling, communications, and train control systems are automated and very precise Although a version of the TGV has achieved more than 300 mph, the costs of speed in terms of energy use, costs,

and, potentially, safety are extremely high, and many consider 200 to 220 mph a more Iikely goal for

sustained service

Maglev systems are trains that operate suspended in air on fixed, dedicated guideways, held up by

magnetic forces and propelled by linear electric motors High-speed versions are considered capable

of speeds of 300 mph or greater The two most advanced high-speed systems are quite different: a

German system wraps around its guideway and uses ordinary electromagnets onboard to Iift the lower

portion of the vehicle up toward the guideway by attraction, and a Japanese system uses onboard

(continued)

I Transportahon Research Board, In Pursu/tofSpeed New Opt/ens forlnlerc[ty Passenger Transporl Spec[al Report 233 (Washington, DC Nahonal Research Council, 1991)

For most proposed corridors, HSGT breaks even speed systems, and maglev capital costs maybe as

only if costs are low compared with typical esti- much as twice as high (per seat-mile) as highmates, fares high compared with current air fares, speed rail systems. OTA found that infrastructure

and ridership at least as great as current air travel for a high-speed rail system in the Northeast Corvolume—all of which is unlikely. ridor based on the French TGV system would cost

Although maglev systems may well have lower about 9 cents per seat-mile versus about 18 cents

operating costs than HSR systems (see below), per seat-mile for a maglev system based on the

capital costs are the primary components of high- German Transrapid.217

2 “Office of Technoh)gy Assessment, op. cit., fw)tnotc 2 I I, table 5-2. Assumes 20-year arm)rtizati(m, 6-percent interest, 3.4 billi(m seatmiles per year.
Chapter 5 Policy Options for Transportation Energy Conservation 1215

superconducting magnets to repel the vehicle upward from the guideway The German system maintains a

very small (3/8 inch) gap, which requires a very precisely built guideway and a sophisticated control system

to maintain the correct gap width;2 the Japanese system maintains a much larger (4 inch) gap and can use a

guideway built to less stringent standards The Japanese system must use wheels at speeds less than 60

mph because it cannot maintain the gap below these speeds

The high speeds of maglev systems demand minimum curves and very gradual grade changes,

complicating the assembly of a suitable right of way

There are no commercial high-speed maglev systems in operation The most advanced system IS

the German one, which has been in testing since 1989 and has reached speeds of 270 mph However,

low-speed maglevs are in commercial service in Berlin, Germany and Birmingham, England

HSR and maglev systems wiII compete in basically the same markets and in many ways are quite

similar Although maglev systems probably will be faster than HSR systems, for the faster HSRs and for

most trips, the speed differential should not make much difference in total travel time Both systems will

require dedicated rights-of-way with few curves both will be electrically propelled, and both will require

sophisticated control systems Maglev systems may require less maintenance than HSRs because

there are no moving parts, and no physical contact occurs between vehicle and guideway A potentially

critical advantage of HSRs is their ability to operate on existing track, giving them easy access to urban

centers Conceivably, the Japanese system might gain similar access if the wheels required for less

than 60-mph travel were designed to be compatible with existing track This would however create

some challenging engineering problems (e g protection of the guideway induction coits from stresses

exerted by ordinary rail traffic)

zA~Y~t~rn based on aftracflon as lsthe German train IS Inherently unstable, because lheforceattractmg thetraln totheguldeway

gels stronger as the train gels closer to the guldeway This creates the need for the sophisticated control system

SOURCE Transportation Research Board /n FkmM of Speed New Op[lons for /ntercJ[y Passenger Transporl Special Reporl 233

(Washington DC National Research Council, 1991)

Why have high-speed rail systems been so successful in Europe and Japan but not appeared in

the United States? Although proponents of these

systems argue that the only reason is the failure of

U.S. transportation policy to promote them, the

actual reasons are more complicated (though it is

true that the U.S. government has not made much

of an institutional commitment to rail service). In

particular, intercity corridors in the United States

generally are less densely populated, with cities

farther apart, than in Europe and Japan; therefore

the potential ridership market in the United States

is considerably smaller than in these regions. Further, both the European and the Japanese systems

were built to add capacity to preexisting heavily

traveled rail links, so they had a built-in baseline

market. In contrast, a United States system would

have to claim a huge percentage of the airlines’

current market in 150- to 500-mile trips to have

any chance at all of succeeding.

European HSR systems have other advantages.

In particular, European and Japanese high-speed

rail networks connect to well-established networks of intracity trains, enabling them to capture

passengers who might be more likely to drive if

(as in the United States) they needed an automobile once their destination was reached. Also,

competition from autos and airlines is far less in

Europe and Japan, because governments there

have made a conscious policy decision to keep

fuel prices very high and to limit air flights and

keep air fares high,

The close spacing of European cities will provide into an even stronger advantage over the

United States in the future. Completion of proposed European HSGT routes will yield a unified
216 I Saving Energy in U.S. Transportation

network, offering enormous options to train travelers throughout Europe; completion of proposed

U.S. routes will connect, at most, only a few cities

in any one network.2

18

Although U.S. HSGT systems maybe unlikely

to break even financially, many would argue that

this is scarcely a sufficient reason for ruling them

out. As discussed in chapter 4, the competing

highway system enjoys considerable subsidies

and generates external costs (air pollution, energy

security impacts of oil imports) that HSGT systems may be able to avoid. Also, although the

costs of expanding highway or air networks may

be quite high, their users generally pay average,

not marginal, costs (except in the case of new toll

roads). In contrast, a new HSGT system will rarely have any existing infrastructure with which to

average costs, and its customers will face full marginal costs. For the highway and air networks, this

represents a subsidy of new capacity by users of

the current systems.

If governments chose to subsidize the capital

costs of new HSGT systems—as is done with new

urban transit projects—the financial prospects for

these systems would appear attractive. Like urban

rapid rail systems, the capital costs are the largest

component of total costs. TRB estimated operating and maintenance (O&M) costs for an HSR and

maglev system in a hypothetical corridor to be 9

cents per passenger-mile for either system; the

range of estimated operating costs computed by

various corridor studies is 8 to 26 cents per passenger-mile for HSR and 4 to 20 cents per passengermile for maglev.219 Although all of these estimates are uncertain, if they are connect, HSGT

systems with full capital subsidies would be competitive with air travel and even low-occupancy

automobile travel. However, the principal competitor with an HSR or maglev system is likely to

be air travel, which is essentially self-supporting;

there will be substantial challenges to a complete

capital subsidy for such a system.

I Key Issues

As discussed in chapter 4, motor vehicle users do

not pay all the social costs of such use, nor do they

fully account for the expenditures they do make in

their travel decisions. In some instances, governments pay highway costs out of general funds

(e.g., in the case of police and fire services) rather

than from such user fees as gasoline taxes; in other

instances, costs are hidden in the price of other

goods (e.g., when “free” parking costs in shopping malls are hidden in the prices of the goods

sold). Also, motor vehicle use creates nonmonetary costs that affect either other motorists on the

road (uncompensated pain and suffering inflicted

on others) or society as a whole (air pollution,

global warming damages). Even when motorists

pay their share as a class and account for the costs

in their travel decisions, they may not be seeing

the correct price (e.g., gasoline excise taxes may

be meant to pay for highways, but tax charges per

unit of travel bear only a modest relationship to

the highway resources consumed by that travel).

The effect of motor vehicle user prices that are

too low or are unaccounted for is an excess of travel; the added travel that occurs because of inadequate pricing costs society more to produce than it

is worth. The effect of motorists’ paying the

wrong price, one that bears little relationship to

costs, may be either too much or too little travel. In

general, the greatest share of inefficiently priced

highway expenditures identified in chapter 4

would tend to lead to excess travel, and most analyses of social costs conclude that more efficient

2

‘8S.J. Thtmlps(m, Hig}l Speed Ground Trcln.ywva!i’on (liSG7”): Prospc(~.s and Publi( POIIC?S, 89-221 E (Washington. DC: Congressi(mal

Research Service, Apr. 6, 1989).

2

19Transp(wtati(m Research Board, op. cit., ft)otn(~te 213.
Chapter 5 Policy Options for Transportation Energy Conservation 1217

pricing of motor vehicle use would lead to lower

overall use and lower energy consumption. Therefore, the concept of “full social cost accounting”

for motor vehicle use is general] y viewed as an energy conservation strategy. Another potential effect of incorrect prices is the neglect of alternative

travel modes that may have higher net societal value than motor vehicles, e.g., rail transit. Such neglect cannot be established, however, without

careful analysis of the full social costs of all travel

modes. This is not attempted here.

Four critical issues associated with applying

social cost accounting to motor vehicle use are

those of marginal versus average costs, accuracy

in measuring and valuing costs, incorporation of

social benefits into the accounting scheme, and

identifying appropriate mechanisms for capturing

the previously unaccounted for (or inefficiently

accounted for) costs.

Marginal Versus Average Costs

As noted in chapter 4, the social costs calculated

in this report are the total costs of all motor vehicle

travel, not the marginal costs. In other words, if

the estimates are accurate, we would know how

much could be saved if all motor-vehicle travel

were eliminated. Unless every increment of additional travel costs the same amount, however, it

cannot be assumed that reducing motor-vehicle

travel by 10 percent will save 10 percent of the total costs, even in the long run. Actually, a 10-percent reduction in travel will likely save much

more than 10 percent of the total congestion

costs; 220 much less of the costs of ecosystem destruction by highway building, at least in the short

run; more than 10 percent of travel-related air

pollution damages; 221 and so forth. Also, the marginal cost savings of a travel reduction will depend critically on what types of travel are reduced;

for example, reductions in urban commuting will

have cost savings implications very different from

those associated with reductions in recreational

travel. In other words, these estimates cannot automatically be used to calculate the cost savings

associated with a policy measure that promises to

reduce travel by a certain amount. On the other

hand, the estimates discussed in chapter 4, and

others of this kind, represent a good first step in allowing policy makers to begin to correct inefficient pricing in the transportation sector. In at least

some scenarios of relatively large changes in motor vehicle use, the average costs derived from

these estimates should be a serviceable approximation of the actual marginal costs.

Accuracy

Accuracy in measuring and valuing costs is particularly problematic for external costs such as air

pollution damages, global warming impacts, and

so forth. The only remedy for reducing existing

uncertainty about these costs is continued research and analysis, which will require time and

resources. However. problems with accuracy may

be of less importance than meets the eye unless

policymakers wish to capture all unaccounted-for

social costs immediately. Given the general U.S.

reluctance to raise transportation prices, it seems

clear that the “universe” of politically feasible

policy measures does not go beyond gradual

moves to capture some of these costs. If this is so.

the critical short-term need is to get a strong sense

of their lower limit and a reasonable sense of the

relative magnitude of different cost categories.

Benefits

The need to incorporate social benefits into an accounting system is obvious: the analysis of costs

presented in chapter 4 indicates that motor vehicle

use costs considerably more than is generally realized (i.e., the total social cost exceeds by a substantial amount the commonly recognized private

cost). This is not necessarily enough information

to set policy, however. Even if the estimate of unaccounted-for costs is correct, it does not mean

2~OBecause congestl[m costs remam mro until a threshold of [ravel is reached.

~~ 1 Because heal[h-rcla[ccl and (~thcr damages appear to hake a threshold behjw which damage is mln)mal.
218 I Saving Energy in U.S. Transportation

that motor vehicle use is underpriced to the extent

implied by these costs. It is conceivable that there

are large unaccounted-for benefits222 in motor vehicle travel in which case the degree of underpricing is associated with the net of unaccounted-for

costs and benefits. However, most analyses of the

social costs of transportation assume implicitly or

explicitly that the social benefits of transportation

are equal to the sum of the private benefits. That

is, they assume that there are no benefits of transportation that are not accounted for by the relevant

decisionmakers. The FHWA, in a landmark study

of highway cost allocation, stated that “the preponderance of expert opinion probably lies on the

side of saying that there are no external benefits of

highway consumption beyond the benefits to users “223 

. However, this complex issue deserves

further evaluation.

Policy Mechanisms

A final and critical issue is the selection of mechanisms for capturing the previously unaccountedfor (or inefficiently accounted for) costs. A key

point is that no one measure can effectively incorporate all of these costs. For example, it is definitely not efficient to incorporate these costs into,

say, the cost of gasoline and use a tax to capture

them. In fact, as shown below, the most effective

way to deal with some of these costs (e.g., parking

costs in some shopping areas) is to ignore them or

simply to educate travelers about them. On the

other hand, it may be worthwhile to incorporate

some costs into transportation services even when

the match between costs and services is not

strong; a weak linkage between the pattern of incurring costs and the pattern of paying for them

may be better than leaving the costs entirely unpaid.

Policy prescriptions for

social cost accounting

The goal of introducing social cost accounting

into transportation policy is to find ways to price

transportation so that a potential traveler accounts

for the full marginal cost to society of transportation. The key word is accounts; if a user does not

take a cost into account, it does not matter if the

user pays it or if nonusers pay it; the nature of the

inefficiency is the same, regardless of who pays.

Consider the case of unpriced commercial parking, wherein the cost of parking is incorporated

into the price of goods and services. Because drivers face no parking charge, they do not account for

the cost of parking in their travel decisions.

Hence, there is too much parking and, as a consequence, probably too many trips. Now, those who

buy the goods and services pay for the parking

whether or not they use it. It may turn out that

those who pay for the parking indirectly are the

ones who use it (this is usually the case at suburban malls, where virtually all shoppers drive and

park at the mall, with the possible exception of

teenagers dropped off by their parents). Yet even

if the users pay, this does not eliminate the inefficiency—if the users do not face the cost and account for it, they will over consume parking.

Table 5-9 summarizes the causes of inefficient

or unaccounted-for costs and prescriptions for

dealing with them, based on the classification

scheme introduced in table 4-1. Each class of cost

has unique features and requires particular policy

solutions.

Efficiently Priced But Often Overlooked Items

Several important costs of motor vehicle use are

priced fairly in the market and are paid for by

‘l%at is, benefits aside from private benefits such as access, reliability and flexibility of service, and carrying capacity, which are acc{mnted f(m in travel decisions.

223U s, ~.paflnlent of Tmnsp)flation Federal Highway Administration, Finu/ Report on !he Federal ff@WY COS~ A//o@ion S~~~dY

(Washlngt(m, DC: 1982), p. E-9.
Public infrastructure and services

Efficiently priced items (government subsidies)

Why there IS not an efficient price

What should be done economically

“Classical” externalities

Why there IS no price

ul

KEY MC marg r-al cost MV fwtw VPIIIr IP

SOURCE M DeL uch Url versty of Cdl forr’ IK-Davs

—

N

CQ
220 I Saving Energy in U.S. Transportation

users, yet may not be accounted for in travel decisions. The more prominent are monetary accident

costs not paid by insurance (generally lost productivity and some types of medical, legal, and property costs) and the costs of garages and driveways.

These costs are definitely costs of motor vehicle

use and generally efficiently priced, but they tend

not to be considered when individuals account for

their costs of travel. For example, in most jurisdictions there are sufficient housing choices that

homebuyers can purchase the amount of garage

space they desire224 (or if they want, they often

can convert garage to living space or add garage

space), so it is likely that garages are reasonably

efficiently priced. Thus, most people probably

recognize an implicit cost of garages, e.g., they

know their house cost $10,000 more (less) because of the presence (absence) of a two-car garage. Similarly, people will face squarely the uncompensated costs of accidents they cause. Yet,

many people do not make either short- or longterm travel choices based on these costs.

No clear solution is apparent for the problem of

overlooked internal costs, except education—

continually reminding people of the risks they

bear and the investment decisions they have made

in response to their travel choices. It makes no

sense to tax garages, because the problem here is

not price at all, but accounting for a correct price.

Public Infrastructure and Services

Two separate factors create efficiency problems in

paying for public infrastructure and services: government subsidies and inefficient pricing. According to the analyses discussed in chapter 4, in

1990, motor vehicle users paid for only 62 to 72

percent of public expenditures for highway infrastructure and services (53 to 68 percent if military

expenditures are counted as motor vehicle service

costs), with governments at all levels paying the

rest. Further, much of the private payments are

collected at rates that are poorly related to the

costs incurred.

Correcting the problem of government subsidization of motor vehicle use is relatively straightforward, at least at a general conceptual level: it

necessitates shifting expenditures from general

revenues to some form of user fees. Establishing

an appropriate form for the user fees is n ot

straightforward, however. Most of the established

pricing mechanisms were never meant to maximize economic efficiency because governments

tend to be far more interested in other values: generating revenue; ease of collection: political feasibility, including values such as simplicity and attractive distribution of cost burden; and so forth.

Unless there is widespread consensus that economic efficiency is a critical goal of transportation

pricing, there will be little support for measures

that correct inefficient pricing mechanisms. Further, some important costs of motor vehicle travel—the cost of protecting vulnerable oil supplies,

for example—probably cannot find an efficient

pricing mechanism, because small-to-moderate

changes in travel demand are unlikely to affect defense expenditures at all; defense costs either are

not divisible or will change only in large steps,

with significant changes in gasoline consumption.

Also, there is no agreement about the magnitude

of these costs.

Some interest groups would like to increase

taxes on gasoline to cover the subsidized costs of

public infrastructure and services (as well as other

items). If the total revenues collected by gasoline

taxes were equal to the magnitude of the subsidized infrastructure and services, equity among

transportation alternatives would be served, but

not economic efficiency.

225 For example, the current Federal excise tax on gasoline is designed to

raise revenue to build new Federal highways, but

the costs incurred for these highways depend primarily on the capacity required during peak hours

2241n some jurisdictitms, it is virtually impossible to purchase housts withimt two-car garages, but this is m~t the n(wnl,

225Ec{mimlic efficiency is a concept of how effectively the ec(mtmly transfom~s available restmrccs to (wtputs dcswed by nwn~bcrs of [hc

cc{m(m}y. Ectm[mlic e~ciency is served by prices that reflect the lrue marginal ct)sts tt~ si)cicty of the goods” and scrvwes pur~hii\~d.
Chapter 5 Policy Options for Transportation Energy Conservation 1221

and the types of vehicles that must be served (with

heavy trucks requiring far more expensive roadways than light-duty vehicles) and secondarily on

vehicle-miles traveled. The revenues collected

from the excise tax do not correspond well to highway costs; they are proportional to gasoline use,

which depends only mildly on miles of travel (because of the very wide range of fuel economies

among road vehicles) and hardly at all on peak

hour travel. Similarly, gasoline tax revenues do

not track well with highway service costs such as

law enforcement, which depend more on vehiclemiles traveled, level of congestion, and mix of

trucks and autos than on gasoline use. Consequently, raising the price of gasoline to cover currently subsidized infrastructure and services may

improve economic efficiency somewhat, by eliminating the subsidies, but it leaves much to be desired on other grounds. However, gasoline taxes

remain attractive because they are extraordinarily

easy to collect (the mechanism is already in place)

and they are at least moderately tied to road usage.

Economic efficiency will be best served by

pricing travel at the long-run marginal costs of

public goods and services provided. For example,

the costs of expanding highways to combat congestion might best be paid for by charging congestion tolls using electronic sensors; this should

minimize transaction costs (collecting tolls mechanically exacts very high public and private

costs) and focus payments on that travel most responsible for creating the costs. Congestion pricing is discussed in more detail below.

Much work remains to be done in both defining

the marginal costs of various government services

and devising pricing mechanisms that track these

costs. The relative infancy of policy research on

these subjects may explain the attraction of using

a gasoline tax as the collection mechanism for

public highway costs.

“Hidden” Private-Sector Costs

Private-sector costs that are inefficiently priced

include: parking, which is usually provided free to

users; local roads provided by developers and included in home prices; and monetary costs of accidents to those not responsible and not covered either by insurance or by those responsible.

Parking

Nobody forces businesses to provide free parking,

and there is in fact a theoretical benefit to charging

separately for parking: it would lower the price of

goods and increase consumption, as well as increasing the efficiency of travel. That businesses

do not charge for parking is likely due to their perception that the cost of setting up and administering a pricing system exceeds the benefits to themselves, especially if the “costs” of customer

annoyance and inconvenience are thrown in. The

striking preponderance of free commercial parking is evidence that this is in fact the case.

There are benefits to both businesses and consumers from charging separately for parking, but

businesses count only the benefits to themselves

in their decisions. Therefore there is an unaccounted-for external benefit to pricing parking. To

account for this external benefit, governments

could subsidize the cost of establishing a paid

parking system, with the subsidy set at the marginal external benefit (not at the amount required

to induce producers to price parking ). With such a

subsidy, businesses would institute priced parking

only where the private plus external benefits exceeded the costs. Also, future widespread institution of electronic billing for other services (e. g..

for paying congestion charges or bridge tolls)

would likely help achieve priced parking at low

transaction costs and eliminate one of the roadblocks to unbundling parking costs from the costs

of goods and services.

The provision of free parking to employees

stems from a different cause than free commercial

parking: the U.S. tax system counts free parking

as a nontaxable employee benefit and a tax-deductible expense for employers, providing a clear

incentive for businesses to substitute free employee parking for its equivalent in employee income. There are at least two ways to correct this:

tax the value of free parking as income and dis-
222 ] Saving Energy in U.S. Transportation

allow parking costs as a business deduction, or

else simply force employers to offer cash in lieu of

parking. California has chosen the latter approach,

as discussed later.

Local roads

There may be little reason to try to “correct” the

inefficiency caused by embedding some local

road costs in the prices of homes. The marginal

cost of an additional car or vehicle-mile on a local

road is very small, because these roads are rarely

congested, which implies that there is no efficient

short-run price to charge users. Further, it seems

unlikely that any pricing arrangement to charge

for the use of local roads would be worth more

than it cost. Simply leaving the cost of the roads

embedded in the price of the houses served by the

roads may be as good an arrangement as any.

Uncompensated accidents

The appropriate solution for uncompensated accident costs is to make those who cause accidents

pay. Of course, this is easier said than done; the

justice system already tries to do this, and the existence of these uncompensated costs is due less to

a lack of trying than to flaws in the system that

cannot be corrected easily.

A corollary to this solution is that according to

economic theory, victims should not receive direct compensation from those responsible but

instead should pay for insurance against the risk of

accidents. This follows from the economic reasoning that a potential victim who expected to be

compensated fully for any injury would not take

injury risk into account when making a travel decision; paying insurance is one way of accounting

for the risk.

Externalities

From the standpoint of economic efficiency, the

appropriate hierarchy of treatment for externalities (nonmonetary damages that motor vehicle users impose on others without accounting for themselves) is first, if possible, to assign true property

rights to the resources that are damaged by external i ties (e.g., breathable air and clean water); next,

if this is not possible, to try collective bargaining

among the parties affected; and finally, to enact

taxes that raise costs to account for the marginal

external costs (but without compensating victims).

The assigning of property rights to resources

such as clean air and water, if it were possible,

would allow a market in these resources to be

created. Polluters would have to buy the rights to

use up the resources from individual sellers, in the

same way that industries in some areas must buy

water rights from farmers if they wish to divert

water from a local river. Theoretically, individuals

would measure the risks to themselves of giving

up a clean air or clean water resource, and decide

whether or not to accept a particular monetary offer.

Assignment of individual property rights

might be possible in rural areas where the number

of parties is small, but under most circumstances it

would be extremely difficult to implement, especially attempting to keep track of damages to each

individual allotment of clean air, clean water, or

other “property.” A more likely solution in most

areas is collective bargaining: a would-be polluter

would negotiate with a town council or citizen

group about the extent to which it would accept

degradation of group property rights (in clean water, in the absence of noise, etc. ) in exchange for a

payment. Although this is more practical than a

system of individual rights, it also allows some individuals to bear costs much larger than the payment they receive (e.g., individuals with asthma

would value clean air far more than the average

resident and would lose more if pollution were allowed).

The third option is to collect a tax that raises the

price paid by the persons creating the externalities

to the marginal cost to society,226 without compensating victims. One example of such a tax

2Z6A tax that w tmld accxnnplish this IS called a “Pigtmk ian tax.
Chapter 5 Policy Options for Transportation Energy Conservation 1223

would be an air emissions tax that exactly compensated for the damage the emissions would cause.

With such a tax, polluters would seek to control

emissions up to the point at which the cost of controlling the next bit of pollution was higher than

the cost of the tax for that pollution; this would be

the economically optimal level of pollution.

The idea of not compensating victims seems

abhorrent at first glance, because they are innocent

parties. The reason for avoiding compensation is

that assurance of compensation theoretically

would cause potential victims to fail to avoid dangerous situations and to engage in riskier behavior

than they would otherwise consider (because all of

the risk is borne by others). For example, even

though the risk of accidents caused by others

might add $10 per trip to society’s cost of travel,

travelers would ignore this cost if they knew they

would automatically be fully compensated. If the

traveler (potential victims) has to bear the “accident risk cost, ” that cost would presumably be

considered in travel decisions, and trips would be

taken only when the benefits of the travel outweigh the full societal cost-which is socially optimum.

The clash between the above viewpoint and

that generally held by social norms is the clash between strict economic efficiency and a wider view

of social justice. This clash might be lessened by a

more lenient view about the rule of avoiding victim compensation: that it apply only to direct participants in motor vehicle travel (e.g., other drivers and passengers), and not to victims outside the

system (e. g., pedestrians).

The values for externalities estimated in chapter 4 may serve as the starting point for constructing Pigouvian taxes,227 with the following caveats:

1. The values are preliminary and controversial,

and will change as environmental restrictions

change. For example, new emission regulations for automobiles should gradually reduce

the level of air quality external costs, as cleaner

automobiles infiltrate the fleet.

2. As pointed out in chapter 4, inclusion of externalities into travel costs should lead to more optimal levels of travel, but failure to apply external costing systems to other sectors of the

economy may sabotage this. All sectors of the

U.S. economy, and all economic activities

competing with transportation, generate external costs; “internalizing” these costs only in

the transportation sector risks overpricing

transportation in relation to competing activities. The only justification for introducing Pigouvian taxes solely into the transportation

sector would be if transportation generated external costs that are so much higher than those

in competing sectors that ignoring the latter

would not greatly affect activity levels. This

may well be the case, but OTA is aware of no

analytical demonstration of such a conclusion.

3. Instituting taxes on externalities should not be a

question simply of computing the total external

costs of motor vehicle travel and calculating a

simple tax, such as a tax on gasoline and diesel

fuels, that will produce revenues equal to these

costs. To have travelers incorporate into their

decisions the full marginal costs of their travel

to society, taxes must closely track the generation of actual costs. For example, damage to

roadways depends on miles traveled, type of

vehicle, and type of roadway; a tax on fuels to

compensate for road damage would not closely

track this damage and therefore would not exert

a strong influence on travelers to take actions

that would minimize such damage. T he

construction of a set of taxes to” internalize”

the external costs of motor vehicle travel is a

major analytical undertaking that goes well

beyond calculating the magnitude of external costs.
224 I Saving Energy in U.S. Transportation

This section examines the desirability of gasoline

or fuel use taxes in terms of their impacts on the

macroeconomy and on economic efficiency. Little

attention is given to issues of distributional equity

among geographic regions or income classes,

since other tax and expenditure policies can more

than compensate for any broad distributional impacts of gasoline taxes. Estimates of the short-run

and long-run economic consequences of gasoline

taxes depend on how the tax revenues are spent (or

which taxes they are used to offset), the magnitude

of externalities, related macroeconomic policies,

and the variability of externalities from vehicle to

vehicle, at different locations, and over time. One

must examine each of these issues to analyze the

economic impacts of increased gasoline taxes.

Impacts on unemployment and gross national

product (GNP) must be central to the assessment

of short-run economic impacts of a gasoline tax.

Although the overall economy would be damaged

by any tax increase in the first few years after the

tax is imposed, these impacts are temporary and

will disappear as the economy adjusts to the new

tax regime.

The magnitude of driving-related externalities

and unpriced inputs must be central to an evaluation of the long-run economic consequences of

motor fuel taxes. Taxes can change the overall efficiency of the economy. The direction of this

change depends on the magnitude of these externalities and unpriced inputs relative to the magnitude of the tax. And these impacts are long-term,

or permanent, in nature.

In addition, even with externalities, one must

examine the degree to which the instrument—gasoline taxes—is matched to the problem being addressed-externalities associated with driving.

Gasoline taxes are matched well with some. but

poorly with most, of the externalities associated

with driving. Thus to address most of the very real

externalities, gasoline taxation is not the appropriate instrument.

I Impacts on Economic Variables

In addition to providing a source of Federal revenue, increasing gasoline taxes would impact the

overall economy. Some impacts would show up in

standard statistics published by the Federal Government, such as the national income and product

accounts, whereas others will not be directly measurable based on standard statistics.

In the first few years after a gasoline tax increase, in fact, after any large tax increase, overall

economic performance would decline relative to

performance expected absent the increase. One

central measure of overall performance is the

monetary value of the total output of the economy.

GNP would be reduced for several years by an

amount comparable to the total additional gasoline tax revenue. During that period, unemployment and inflation would increase.

There are several pathways by which gasoline

taxes influence GNP. Increases in gasoline tax directly reduce the demand for gasoline and for new

cars. In addition, the gasoline tax reduces aftertax

income for most people. With less income, demands for goods and services decline. This reduction in aftertax income reduces demand for new

cars, gasoline, and other goods and services.

These two direct effects together reduce the overall demand for goods and services in the U.S.

economy. Automobile manufacturers, oil refiners, and other companies react to declines in demand by reducing production of goods and services. This reduction in output throughout the

economy would translate directly into a GNP reduction.

The reduction in output also implies that U.S.

companies will need fewer workers: the demand

for labor will be reduced. As people are laid off

and others are simply not hired, unemployment

increases. The reduction in employment implies
Chapter 5 Policy Options for Transportation Energy Conservation 1225

that incomes decline. Again, income reductions

reduce the demand for most goods and services in

the economy, which leads to even more reductions

in output, further reductions in GNP, and so forth.

This so-called multiplier effect thus amplifies the

initial direct impacts of the gasoline tax on GNP.

A similar effect operates through corporate

profits. Reductions in demand for various goods

and services and associated reductions in their

outputs lead to reduced corporate profits. But corporations are owned collectively by people. Thus

reduced corporate profits imply reduced total aftertax income, which in turn implies reduced demand for goods and services produced in the U.S.

economy and leads to further reductions in labor

demand, labor incomes, and corporate profits.

This “feedback loop” further amplifies the GNP

reduction caused by a gasoline tax increase.

Gasoline taxes also have a direct impact on

inflation, since they directly increase gas prices.

Businesses whose vehicles use gasoline will find

their costs increasing, and there will be pressure to

increase the prices of their outputs. The net result

of these price increases is increased inflation.

While the overall economy would be damaged

by a gasoline tax increase taken alone, it is not

meaningful to estimate short-term macroeconomic impacts of a fuel tax increase without examining impacts of the linked changes by the government and by the Federal Reserve System.

Short-run macroeconomic impacts will depend

on: 1 ) whether motor fuel tax revenues are linked

to reduction of other taxes, and which other taxes;

2) whether tax revenues are linked to additional

expenditure programs, and which expenditure

programs: 3) whether revenues are linked to deficit reduction; and 4) the degree to which the Federal Reserve System accommodates the tax

changes with monetary policy. Thus a gasoline tax

increase that reduces the deficit will have a very

different impact than one that allows more government spending. This in turn will have a different impact than a gasoline tax whose revenues allow a reduction in other taxes.

If motor fuel tax revenues were linked to a reduction of other taxes, then the short-run impacts

of reducing these other taxes must be added to the

impacts of raising gasoline taxes. Economic modeling suggests that changes in personal income

taxes will normally impact the economy less than

changes in corporate taxes, and that changes in

general corporate taxes will impact less than

changes associated with investment, such as investment tax credits. For example, the models predict that if a gasoline tax were coupled with an

equal-revenue increase in investment tax credits,

short-run macroeconomic losses resulting from

the motor fuel tax increases would be more than

offset by the short-run macroeconomic gains resulting from the investment tax credit increase. In

other words, there would likely be short-run macroeconomic gains from the package of tax

changes.

Monetary policy can have important impacts

on GNP, employment, and inflation. Monetary

policy changes may be directly coupled to

changes in taxes and spending. In particular, in response to a gasoline tax increase that would increase unemployment, the Federal Reserve Bank

may use accommodating monetary policy to reduce the unemployment impact, although at the

expense of more inflation. With such accommodating monetary policy, the short-run impacts of a

gasoline tax on GNP can be greatly reduced or

even eliminated, while the short-run inflationary

impacts would be amplified.

A gasoline tax, not coupled with any other tax

change, would increase revenues by about $10 billion for every 1O-cent increase in the per-gallon

tax rate, or about $1 billion for every 1-cent increase. But with the short-run increase in unemployment and the reduction in GNP, Federal expenditures for unemployment compensation and

other “safety net” programs will increase and tax

collections will decrease. Thus in the short run,

the actual Federal deficit will be reduced by far

less than the $10-billion increase in tax revenues.

In the longer run, the reduction in the Federal defic it will be roughly equal to the increase in gasoline

tax revenues, since the unemployment impacts

will disappear over time.

A gasoline tax would reduce gasoline consumption through reductions in total miles driven
226 I Saving Energy in U.S. Transportation

and possibly through increased sales of fuel-efficient vehicles. Unless the reduced consumption is

large enough to affect world oil prices, there

would be virtually no impact on the production of

oil in the United States, and thus almost all of the

reduced consumption would be from imports.

A tax-encouraged increase in gasoline price of

10 percent would reduce vehicle-miles between 1

and 2.5 percent from the “no tax increase” gr owth

path. 229 The fuel efficiency of old cars would be

virtually unaffected. Under the current CAFE

standards, for small tax increases there probably

would be no increase in average fuel efficiency of

new cars, while large enough price increases

would increase average fuel efficiency.230

The reduction in total miles driven would imply a reduction in the environmental damages

associated with driving, although emissions per

mile of travel would not change substantially.

Traffic accidents would decrease by a small

amount. Congestion on highways could decline,

very slightly, since driving during congested

times would decline far less than total driving.

A second measure of the effect on the economy,

one applicable particularly to the longer run, is

economic efficiency. Economic efficiency is a

theoretical concept of “goodness” of resource allocation, a concept designed to indicate how effective the economy is in transforming available resources to outputs desired by its members.

Changes in economic efficiency include all

changes that influence how well off individuals

are, including their attitudes about environmental

impacts and the value they place on time spent for

leisure and other activities within the home. In

practice, economic efficiency cannot be measured

directly and one can only discuss changes in economic efficiency or economic efficiency losses

associated with some policy or arrangement.

If there were no externalities or unpriced economic inputs associated with driving, and no other

taxes in the economy, competitive markets would

lead to the economically efficient use of gasoline.

In that case, increases in gasoline taxes, taken

alone, would always reduce economic efficiency.

On the other hand, with externalities or unpriced economic inputs associated with driving,

competitive markets would lead to an underpricing of driving costs and thus to more driving and

more gasoline use than would be economical] y efficient. In this case, absent distortionary income

taxes or other taxes, a gasoline tax equal to the

marginal value of the unpriced inputs plus the externalities would bring competitive markets back

to economic efficiency by correcting the underpricing problem. Thus if the existing motor fuel

tax were initially lower than the marginal externalities (measured on a basis of external costs per

gallon of gasoline used) plus the marginal value of

unpriced inputs, an increase in the tax could reduce economic efficiency losses. If the existing

motor fuel tax were initially higher than the marginal externalities plus marginal value of unpriced

inputs, then a decrease in the tax could reduce economic efficiency losses.

However, there are, in fact, income taxes and

other distortionary taxes in the economy. A gasoline tax increase would raise revenue, revenue that

could allow government to reduce other distortionary taxes, increase expenditures, reduce the

fiscal deficit, or take some combination of these

actions. Thus in assessing actual motor fuel taxes,

one cannot escape assessing the effects of whatever other actions are linked to those tax revenues.

If fuel use taxes are coupled with reductions in

the “typical” bundle of preexisting taxes, then

economic efficiency would still increase as the

gasoline tax increases, up to the level at which the

~20Sec C.A. Dahl, “Gas\dine Demand Sur}e}, ” The Ener~y Journal, kt)l. 7, N{). 1, 1986, pp. 67-82.

2 ~°CAFE standards appear I() be maintaining fleet fuel ccommly values at higher levels than current low gasoline prices wtmld produce ~

~here II erc no $fmdm-ds. Small gasoline price increases w (mid be less I ikely to raise fuel econ(mly ltn els than U) allow automakers 10 relax their

current eff(wts to bo{)st market shares of smal 1, fuel-efficient cars. See J.L. Sweeney, “Effects of Federal Pt)l icies (m Gas(jl ine C(msumpti~m, ”

Rcsourccs ond h-net-g?, vol. 2, September 1979, pp. 3-26.
Chapter 5 Policy Options for Transportation Energy Conservation 1227

gasoline tax is equal to the value of the marginal

externalities plus the value of unpriced inputs.

Further gasoline price increases linked to the reduction of other taxes would reduce economic efficiency. Similarly, if imposition of fuel taxes

were linked to Federal expenditure programs, economic efficiency would increase with gasoline tax

increases (above the value of the marginal externality plus the value of unpriced inputs) if and

only if the additional expenditures would be economically attractive when financed by an equally

distortionary mix of taxes. However, once the gasoline tax rate is increased to equal the marginal

cost of externality plus marginal value of unpriced

inputs, any further tax increase would be less economically efficient than a broadly based tax that

raised the same additional revenue.

In general, three key elements determine the

impacts of additional gasoline taxes on economic

efficiency: 1 ) the marginal value of externalities

and unpriced inputs in motor fuel use; 2) linkages

between revenues raised from motor fuel taxes

and governmental expenditures, other tax reductions, or deficit reductions; and 3) the existing

gasoline tax magnitude. One cannot examine the

consequences of gasoline tax increases in terms of

economic efficiency without examining each of

these three issues.

1 Using Gasoline Taxes To Address

Externalities

When externalities or unpriced inputs are

associated with the use of motor fuel, taxes on motor fuel can motivate individual drivers to account

for costs and thus increase economic efficiency.

Gasoline taxes could be increased, and other distortionary taxes simultaneously decreased, so as

to have minimal short-term macroeconomic

losses. To strive for maximum economic efficiency, the gasoline tax rate should be made equal to

the marginal value of externalities plus unpriced

inputs, but to do so requires understanding of

these externalities and inputs.

Unpriced Highway Services

Driving requires the use of roads and highways. In

the absence of motor fuel taxes, the costs of roads

and highways are typically not borne by the vehicle driver. Historically, Federal gasoline taxes

have provided revenues for the Highway Trust

Fund. On average, however, for trucks and cars

taken together, current motor fuels taxes are lower

than the unpriced costs of highway and roadway

services: the current tax rates cover only part of the

unpriced inputs associated with driving (see the

discussion in chapter 4).

Unpriced highway services are only imperfectly linked to the fuel consumed in an automobile or

truck; motor fuel taxes typically are proportional

to fuel use. Although two different cars might require the same highway services per mile of driving, the old car with a fuel economy of 10 mpg

faces three times the per-mile tax as the new car

having a fuel efficiency of 30 mpg. The problem is

even more severe when heavy trucks are compared with automobiles. Trucks probably cause

the majority of highway damages yet pay the minority of fuel taxes.

231 Since average taxes cover

only part of the costs, the driver of the heavy truck

would be paying considerably less than costs. But

automobile drivers may be paying more or less

than costs, even though the average cost of all vehicles (cars and trucks) exceeds the current average tax revenues.

With this high variability across vehicles, additional Federal gasoline taxes are not particularly

good instruments for addressing unpriced highway services.

Subsidized Parking

Federal tax code allows employers to provide free

parking to employees as a tax-free benefit. These
228 I Saving Energy in U.S. Transportation

parking services represent unpriced inputs for employees. Free parking encourages more people to

drive alone to work than would otherwise be economically efficient.

The subsidy may be larger than the cost of gasoline needed to drive to work. But this subsidy, in

terms of dollars per gallon of gasoline, is highly

dependent on automobile efficiency, distance between a person’s home and work, and current use

of the vehicle (the subsidy is available only for

trips to work and does not apply for other vehicle

uses).

Although the subsidy may be large, this problem would be difficult to address with a gasoline

tax, since the tax would apply to all vehicles in all

uses, not simply to vehicles being driven to workplaces with subsidized parking. Other instruments

(e.g., changes in the Federal tax code) are more appropriate for addressing this problem. Thus although current practice implies an unpriced input,

a gasoline tax would be a poor instrument to address the problem.

Congestion

Highway congestion is an important and growing

externality in urban and many suburban areas.

Whenever roads are congested, more driving imposes costs on other drivers and passengers. But

congestion is very time and location dependent.

Thus this externality leads to too much driving

during periods of congestion and too little driving

during off-peak periods. Optimally more people

should shift their driving times from the more congested periods to the less congested.

If a gasoline tax were used for addressing problems of congestion, the tax would be zero for fuel

used in noncongested times or locations, but

might be $10 per gallon or more for fuel to be used

in congested times. However, the motor fuel marketer has no information about whether the fuel

would be consumed during highly congested

times, times of no congestion, or some combination of the two. A gasoline tax cannot track the

congestion variability over time and location.

Thus a gasoline tax is not a useful instrument to

deal with time-varying or location-varying congestion.

Environmental Harm: Air Pollution and

Carbon Dioxide Emissions

A large portion of urban air pollution derives from

motor vehicle evaporative and tailpipe emissions.

The cost of these externalities, per gram of emissions, depends heavily on the air basin dynamics

and the affected population. The amount of emissions per mile driven depends on the age of the car

as well as its maintenance history. And the amount

of emissions per gallon of gasoline depends on

both the auto vintage and its fuel efficiency. These

three factors, taken together, imply that the variation in external costs, measured on a per-gallonof-gasoline basis, varies radically among vehicle

vintages and fuel efficiencies, as well as across

locations. Therefore, although these externalities

are important, a national gasoline tax is not an appropriate instrument for dealing with this problem. A regionally specific State gasoline tax could

be more effectively matched to the particular air

basins, but even such a vocationally specific tax

would not be vehicle-specific.

A second environmental externality is carbon

dioxide released into the atmosphere. Carbon

dioxide, working through the greenhouse effect, is

expected to lead to global climate change. Each

gallon of gasoline consumed releases about the

same amount of carbon dioxide, independent of

automobile efficiency, and each ton of carbon

dioxide has the same impact, no matter where it is

emitted. Therefore impacts per gallon are the

same across geographic area, time, and vehicle.

Thus Federal fuel taxes could readily incorporate

the costs of this externality, once the appropriate

cost per additional kilogram of CO2

-equivalent

emissions was determined. For this purpose, fuel

use taxes, differentiated by particular fuel, would

be very appropriate.

Energy Security

Increases in oil use increase expected economic

losses from world energy market disruptions.
Chapter 5 Policy Options for Transportation Energy Conservation [ 229

First, such increases reduce worldwide spare oil

extraction capacity, at least temporarily. Decreases in spare capacity exacerbate price jumps

during disruptions, if the spare capacity would

have been located in nondisrupted regions. Second, oil use increases magnify economic losses

stemming from a given magnitude oil price jump.

Thus reduced economic security is an externality

associated with additional gasoline use.

In addition, if world oil prices are increased in

response to increased U.S. oil imports, that increased price would apply to all oil imported into

the United States. Thus, there are “terms of trade”

costs to the United States associated with increases in oil use.

Each of these externalities changes over time as

the “tightness” in the world oil market changes,

but the rate of change is often gradual (except during oil supply disruptions). When there is little

spare oil production capacity, the externality is

large, and conversely, in times of much worldwide

spare capacity, the externality is small. Currently.

with a large worldwide excess capacity and the

reasonably large U.S. Strategic Petroleum Reserve, these externalities are small.

The magnitude of this externality is the same

for each gallon of gasoline used, independent of

location (in the United States) and the specific vehicle in Which it is consumed. Therefore, a timevarying national gasoline tax could be an appropriate instrument for dealing with this

externality.

Automobile Accidents

A significant component of driving cost is the expected cost of automobile accidents. The more a

person drives, the greater is the probability of an

accident. Risk and mileage ratings in automobile

insurance include only part of the marginal accident costs of additional driving. To the extent that

the marginal accident costs of additional driving

are not reflected in increased insurance rates, there

is an accident-related externality.

This externality, expressed on a per-gallon-ofgasoline basis, differs widely by automobile and

by individual driver. Since there is so much variability measured on a per-mile basis, and even

greater variability in the externality measured on

the basis of cost per gallon of gasoline, a gasoline

tax is not an efficient instrument for dealing with

this problem.

Alternative Fuel Technology

“Chicken-and-Egg” Problem

Recently there have been efforts to promote "alternative fuel” vehicles, vehicles fueled by methanol, compressed natural gas (CNG), ethanol. or

electricity. Behind policies to promote these

technologies is the idea that the unaided market

will not invest sufficient funds in the development

of technologies that might underlie a fundamental

transformation to alternative fuels, so individuals

will buy fewer alternative fuel vehicles than

would be economically efficient. Part of the argument is that alternative fuels face a chicken-andegg problem: it is not economical for individuals

to purchase alternative fuels absent sufficient refueling stations, and it is not economical for fuel

dealers to open stations absent sufficient alternative fuel vehicles.232 The argument is that a large

change, involving many refueling stations and vehicles would be beneficial to the overall economy.

but that market forces will not move the economy

past the “hump,” This problem creates a type of

dynamic externality. in that the history of past investment and vehicle use tends to constrain future

use.

Contrary to this argument is the observation

that such chicken-and-egg situations can be overcome by individual firms and people willing to

take risks based on their own beliefs or guesses

about the future. Examples include the transition
230 I Saving Energy in U.S. Transportation

to compact discs in preference to records or musical tapes and the development of the personal

computer and associated software. Although there

is real disagreement about the magnitude of the

externality, it could be addressed either through a

subsidy for the alternative fuel vehicles or through

a tax on gasoline or gasoline-fueled vehicles.

These externality differentials could appropriately be addressed through differences in motor fuel

taxes.

Matching the Instrument With the Externality

Fuel use taxes could motivate consumers to account for externalities associated with the use of

gasoline and other motor fuels. Some externalities

are fairly stable over time, location, and vehicle,

and could be addressed through the use of a fuel

tax. Others are highly variable, and this mechanism would be less appropriate. Although several

externalities are important, only the externality

components associated with unpriced road services, carbon dioxide, energy security, and the

chicken-and-egg problem could appropriately be

addressed with a Federal gasoline tax.

1 Model-Based Results

The various impacts can, in principle, be estimated by using mathematical models. Three general classes of models typically are available for

such estimation: 1 ) partial equilibrium models of

the energy sector or parts of the energy sector, 2)

computable general equilibrium models of the

overall economy, and 3) aggregate macroeconomic models.

Partial equilibrium models of the energy system may represent one market such as that for gasoline, many linked markets (e.g., for each of the

refined petroleum products), or the entire energy

supply and demand system. Partial equilibrium

models generally can have the most detail about

the particular energy markets being examined.

Computable general equilibrium (CGE) models represent the economy as a complete system,

including each major factor of production: labor,

capital, energy, materials. Such models typically

allow less detail about the structure of particular

energy markets.

Macroeconomic models typically represent the

entire economy, focusing particular attention on

determination of the overall level of economic activity as measured by GNP or gross domestic

product (GDP), on employment or unemployment of labor; money supply and demand; interest

rates; and inflation. Such models typically allow

even less detail about particular components of

the energy system, although some of the commercial macroeconomic models have incorporated

extensive energy sector details.

None of the model classes is suitable for examining all of phenomena discussed above, as

suggested by table 5-10, which summarizes the

variables typically represented in the three classes

of models. Rather, each class has its own particular strengths.

The three classes of models should be used in a

complementary fashion in order to examine the

relevant issues. The OTA contractor report on

which this section is based provides several examples of the use of these models to examine the impacts of gasoline tax increases.233

Transportation demand management (TDM) entails any effort to improve the efficiency of the

transportation system by reducing traffic volume,

especially during peak travel times, increasing vehicle occupancy, improving traffic flow, and encouraging modal shifts. Recent Federal legislation has pushed the development of TDM

programs. The Clean Air Act Amendments of

233 Sweeney, t~p. cit., footnote 228.
Chapter 5 Policy Options for Transportation Energy Conservation 1231

Computable

Partial

Variables

general

equilibrium equilibrium Macroeconomic

GNP No

Unemployment No

Inflation No

Tax revenues Yes

Federal deficit No

Total driving Yes

Fuel efficiency of automobiles Yes

Gasoline consumption Yes

Oil Imports Yes

Economic efficiency Yes

Environmental harm Yes

Automobile accidents Yes

Congest Ion Yes

-.

SOURCE J L Sweeney Stanford Umverslty

1990 (Public Law 101-549) prohibit Federal

agencies from approving or funding State transportation plans that do not include transportation

control measures.234 In addition, the Intermodal

Surface Transportation Efficiency Act of 1991

(Public Law 102-240) established several TDM

requirements and programs, including a congestion pricing pilot program; occupancy requirements for HOV lanes; State requirements for managing traffic congestion; and a six-year,

$659-million intelligent vehicle-highway system

program (IVHS).235

TDM approaches include economic incentives,

regulatory mandates, and public investment and

information programs. TDM measures, such as

employee ridesharing programs and congestion

pricing, may reduce traffic congestion, gasoline

use, and vehicular emissions, but measuring these

outcomes in an entire metropolitan or regional

area can be extremely difficult. Because most current programs are concerned with reducing traffic

congestion not gasoline use, the gasoline savings

potential of many TDM options is still undetermined.

Yes

No

No

Yes

Yes

No

No

Yes

Yes

Yes

No

No

No

Yes

Yes

Yes

Yes

Yes

No

No

Yes

Yes

No

No

No

No

Because congestion may discourage some travel, relieving congestion through successful TDM

strategies—such as parking pricing, staggered

work hours, and HOV lanes—may stimulate

some additional travel, thus canceling part of the

potential savings. In some extreme cases, especially with IVHS programs, net travel may increase. The rapid onset of congestion on many

newly constructed roads indicates that limits to

the existing road supply may indeed suppress

travel demand. Thus, reducing traffic congestion

could in some cases lead to more trips, miles traveled, and gasoline use.

This section reviews primarily U.S. experience

with various TDM efforts. The discussion is

meant to be illustrative rather than comprehensive; in most cases, these, options have not been attempted on a large scale or have not been evaluated for their impact on gasoline use. Given the

limited experience with TDM and the large number of factors that determine worker travel behavior (e.g., travel time, vehicle and fuel costs, parking costs, day care requirements, and travel

requirements during the workday), calculations of

2

‘%hllc L’lW 1()1 -549. I 04 stat. 24 I o, sec. I o I ( f-), see 42 (1.s,(-. 7506(C)(2),

~ “~lcw prf)~ Islorlf arc ctxIlticd ii{ 2 ~ [1. S C. I 02( a). 149 n{llc, ~().l(c), and 307 nt~lc
232 I Saving Energy in U.S. Transportation

congestion and travel demand reduction and gasoline savings based on theoretical calculations or

extrapolations from case studies should be considered preliminary and highly uncertain.

1 Economic Incentives

Economic incentives are potentially powerful

strategies to improve the efficiency of the road

transport system. Not surprisingly, travel choices

(frequency, mode, and timing) are strongly affected by prices, including those of fuel, parking,

mass transit, and other transport-related costs.236

Unlike regulatory mandates, economic incentives—including congestion and parking pricing

options--allow consumers to choose their best

combinations of mode choice, travel times, travel

frequency, and vehicle occupancy; mandates, on

the other hand, predetermine those choices.

There are several kinds of economic incentives

designed to manage transportation demand: pricing parking, pricing travel (congestion and road

use pricing ), and other financial options related to

travel demand (parking fees, automobile ownership and use fees, employee mass transit allowances). (Gasoline taxes also fit into this category,

although generally they are used in this country to

raise revenue rather than to depress demand; they

are discussed in the preceding section.) Major options within each group are discussed here.

Pricing Parking

Among all TDM options, pricing parking may

have one of the most significant impacts on travel

demand, because parking is a valuable transport

service paid only partially (if at all) by drivers.

Roughly 95 million civilian commuters in the

United States drive to work, and an estimated 90

percent of them do not pay for parking.237 For

commuting trips, the value of free parking often

exceeds ownership and operating costs combined. 238 As a result, by substantially reducing

commuting costs, free parking encourages solo

driving, which increases traffic congestion and

gasoline consumption.

Increasing parking costs to match prevailing

market prices would reduce the incentives for solo

driving. One study found that an average of

27-percent fewer auto trips were made by employees who paid for their parking at work

compared with those who did not pay.239 When a

Los Angeles government agency introduced market rates for employee parking, solo driving

dropped substantially (from 42 to 8 percent) and

ridesharing increased substantially (from 17 to 58

percent). In Washington, DC, parking charges representing half of the local market rates were imposed briefly at several Federal buildings in 1979

and 1980, and solo driving decreased as much as

40 percent.240

Employers offer free parking as an employee

benefit, in part because these costs are currently

treated as a normal business expense, deductible

from corporate income taxes, and employees are

not taxed for free parking. One way to eliminate

parking subsidies, therefore, is to tax employees

for the value of parking; employers could be reJ ‘hhl. W’ii~h\, ‘“ f%iclng ~~rtxm Transptwtatltm A Critique o~Clmrcnl Pol]cy,’” Jwrnal oj’Ihc Amcrlc[in Plonnlng Association, vol. 47, July

I 98 I , pp. 24--245.

~ ‘7D.C. Shoup and R. W’. W’i Ils(m. “En}pl(~~cr-Piild Parking: The I%t)blcm and Pr(yxwd Soluti(ms,” ” Transportatlun Quarterly, vol. 46, No.

2, Apr-1 I I 992, pp. 169. 185. ‘Ells s~mr-cc chxs m)t clarlf) whether these figures arc actual (w estimated.

~lxAi cr:igc ~Ju ncrshlp (dtprcclallon. Iinanclng, liccnslng, tind rcgislr:iti(m lees) dnd operali(ms costs (gasf~line at $1.50 per gallon) total

iih( JUI S4. ()() pcI I( lurid [II p C( Jmn}u Ic, u h I IC da i Iy park in: costs in both urban and suburban ar~iis common]” y exceed $5 per vehicle. D.H. Pickrcl 1, tc$tlnlt)n~ AI hcarlngs Iwt[ II c the Scnalc C[mmllttcc (m Ehvir(mnwnl and Public Nrorhs, Subc(~mmittm (m Water Resources, Transp(wtati(m,

and 1 nfrastructul c, hl ar. 2 I , 199 I , p. 2.

2“)Shoup and W’lllvm, op. cit., f~~t~tnt)tc 2.37, p. 181. The rcsul[s are corrected for lncomc, since higher paid employees are both more likely

[{) rccclj c paid piirhing and nlt)]c Iikc.l! to drl~ c al~mc regardless (bccaLIse of both their income and their greater I ikel ihood of having erratic

Schc’dulcs ).

~J’)Pi~hrcll. t~p, ~tt,. tt}~)tnotc 2 3X, p. 4.
Chapter 5 Policy Options for Transportation Energy Conservation 1233

quired to determine the value of a parking subsidy

and report that value as a taxable employee benefit. Eliminating the tax exemption of free parking

would be politically unpopular, but it would reduce auto travel demand and could raise between

$3 billion and $4 billion in Federal revenues annually, although those revenues would decrease with

time as solo driving decreased and mass transit

use increased.241

Alternatively, employers could be required to

offer their employees the cash value of their subsidized parking spaces. This option could be implemented without changing the current tax exemption on employer-subsidized parking, and it

would allow employees to determine which alternative represented the greater value for them: using free parking or receiving its cash equivalent. A

cash option has the advantage of being voluntary

and still raising significant revenues, if the cash is

taxable as income.

Shoup and Willson estimate that if 20 percent

of the 85 million U.S. auto commuters who currently park free at work chose a cash option and

ceased to drive (carpooling or using mass transit),

Federal tax revenues would increase more than $1

billion, 242 and gasoline consumption would decrease by an estimated 4.5 billion gallons annually,

243 or about 4 percent of the national total.244

However, aside from being a rough extrapolation

from limited experience, the gasoline savings estimate given here is overstated to the extent that any

workers with access to free parking currently

commute by means other than solo auto travel

(e.g., transit, walking, biking). In addition, drivers

using a cash option might still drive but use their

money to park on streets or less expensive lots.

Better data on the availability, use, and value of

subsidized parking could improve estimates of

potential gasoline savings from taxing or cashing

out free parking.

Pricing Travel

Congestion (or peak) pricing is designed to capture the added costs of road use during peak periods, which are generally the rush commuting

hours. A basic principle behind this and other pricing strategies is that traffic congestion imposes

costs not captured in existing travel prices. During

peak travel periods, each marginal user imposes

costs on all other users by increasing travel times.

fuel use, and air emissions. These costs increase

as the number of vehicles increases, but marginal

users do not pay the marginal (incremental) costs

of the congestion they impose on others.

A major policy concern with congestion pricing (like other transport pricing options such as

gasoline taxes) is the potential for regressive impacts. As with gasoline taxes. however, the total

impacts of congestion pricing depend critically on

how revenues are used. According to one analysis,

if revenues are used to reduce gasoline taxes and

vehicle registration fees or to subsidize transit

costs, a congestion pricing program may have

positive economic impacts on all income groups

24’ Abt~uI 28 mllll{)n U.S. ut)n~muters w or-h In cenlral cities v ith Populatifms exceeding 500,000. Given an estimated average nltjnthl) i ;iluc

~ ~t $58 ~’r park lng space i n th{ w arca~. [hc annual added tax I iabi 1 ity per commuter totals ahmt $167, with taxat l{~n al the margln:il federal

]IIc( )mc t:i~ rate t J( 24 pcrccrit ( 199 I ). 1 f 75 percent of these C( )mmuters receive free parking, taxing this benefit W(WICI generate annual rc~cnucs

t)t tik~ut 5 ~, 5 hl 1 I I( m, 1 blil,. pp. 3, 6. Note. ThIs s(mrce lists annual revenue gains of $4.7 bi II i(m, because the author mu][lpl ]cd the :innuiil tak

I]:ibll]t> ( S 167) by iill 28 mllll{m commuters. Here. however, the t)riginal assumpti(m is used that only 2 I milli(m c(~nlmuters (75 percent ) rccel~ c

tree p:irhlng, w hlch explalns the discrepancy fr(m~ the original s(mrce.

~~~’1111 \ cs[lnuitc a~funws i~ alcragc rmmthly parking value of $30 f(w all U.S. auto cimmluters, equaling an increase in total taxable )nct)nw

(}I ‘$6. 1 h]] I]( )n :irllllliitt). With ;in cffcctlvc marginal tax rate of 20 percent, federal revenue gains would total $1.2 billi(m. Ibid., pp. 179-181.

247 B:iwd (In DC. Sht)up, “C:i\hlng out En~pl{)yer-Paid Parking, ” f(mthc(mling, as cited in J. Kessler and W. Schnxer, U.S. Enk lnmnwntal

Prt)[cctl[m Agcnc), ()~ficc ( )~ P[dlcy An:ilJ sls, ‘

L Meeting Mobility and Air Quality Goals Strategies That Work,’” draft repmt, Apr. 20. }993, p.

‘lo. .

‘JJln 1991, t~~tal L’. S giiv)llnc c(m~un]ptl(m u as approx]nlatcl} 112 bill i(m gallims. U.S. Department of Transp)rt:itlfm. Fcder:il H ighw :i}

iAdll~lnl~tratt(ln, /1/,~/I\\~I} .SIa/ijI/~ i /99/, F}{ W’.A-PL-92-025 (Washlngtt)n, DC 1992), p. 6.
234 I Saving Energy in U.S. Transportation

by reducing both travel times and other costs of

using the transportation system.245 Reducing gasoline and vehicle registration costs, however, is

likely to increase travel demand, during both onand off-peak periods, resulting in some rebound

(i.e., loss) of the expected gasoline savings from

congestion pricing.

Modeling studies of congestion pricing for major cities in North America and Britain have concluded that peak period travel could be reduced

between 10 and 25 percent, depending on the site

and the study assumptions. Such studies estimate

that economically efficient charges during peak

periods would range from 5 to 30 cents per mile, or

about $1 to $2 per day for typical commuting disThe studies estimate that daily congestion

charges of this magnitude would reduce round-

(rip commute times 10 to 15 minutes on congested

routes and would generate tens of billions of dollars in annual revenues nationally. Estimating 247

the impact of peak pricing schemes on gasoline

consumption, however, is more difficult. largely

due to expected changes in vehicle speeds and efficiencies with changes in road use. Congestion

pricing would likely shift some auto use to other

routes and reduce overall use and travel time, and

average commute speeds could increase with

mixed effects on gasoline use. The net effect on total gasoline consumption from congestion pricing

is uncertain and deserves further study.

In some circumstances, such as major highway

corridors, travel demand may be relatively unresponsive to price changes (price inelastic) during

peak periods, particularly if travel alternatives are

limited or unavailable. For example, New York

City bridge and tunnel tolls doubled several years

ago, but there was no major traffic reduction. For

Southern California, one estimate suggests that

congestion pricing of 65 cents per mile in urban

areas and 21 cents per mile in suburban areas is

necessary for effective demand management, a

cost far higher than normal toll road rates of 2 to 4

cents per mile.248

Imposing high congestion fees (such as 65

cents per mile in the example above) is likely to be

politically difficult. The annual added cost of driving could be almost $900 with a fee of 65 cents per

mile.249 Implementing effective suburban-based

congestion pricing schemes based on the same

Southern California estimate (21 cents per mile)

may be difficult as well; the added cost under the

same operating conditions would be about $290

per year.

A summary of the major advantages and disadvantages of congestion pricing is given in table

5-11. Although congestion pricing has been advanced by many economists since the 1960s, the

strategy has not been applied on any major U.S.

highway, and international experience is also very

limited, 250 Several recent developments, however, have revived interest in this strategy: increasing levels of traffic congestion and

associated air pollution;251 increasing political

acceptance for market-based over regulatory approaches to address public policy problems such

‘J$K.A, Small ct. al., Road Wbrh: A ,trCIi }lI,ch\ifJy Prlc~ng and Im”cslmenl Po/If’y (Washinghm, DC The BrtJ(Aings Institution, 1989), pp.

95.98.

~~lbld., p. 94.

~J71bld., p. 98.

248C. K. orshi. “Ctmgcstitm Pricing Pnmlise and Llmltations, ” Transportation Quarterly, JOI. 46, N(). 2, April 1992, p. 165.

24’) Assunl)ng an average work c(m~nmtc td’ I I m]les (the national average length ofthc w(~rktrlp in 1990). P.S. Hu and J. Young, Swvnary(?t

TraIc/ Trend.f: 1990 JV(JfIomt Idc Persona/ Transportarum Sur~vy, FHWA-PL-92-027 (Washingt(m, DC U.S. Department of Transportation,

F~d~riil Highway Administratl(m, March 1992. p. 18). Also :issunun: that urban dri~crs [rakcl half this distance in a peak-priced roadway for

half {)t thclr trips to wwk and w orh 50 weeks per year.

~ioJ. A. G(mw/-lbanc/, “T(w P~~litlcal Ehmonly of Hi.ghwa>f Tolls and C(mges[ltm Prwing, ” Transportation Qltar!erl>, L 01.46. N(). 3, July

I 992, p. 344.

2$1 Itlld,, p. 345.
Chapter 5 Policy Options for Transportation Energy Conservation 1235

Advantages Disadvantages

Allocating and rationing limited (congested) Due to potential price inelasticity of commuter travel

road space efficiently. demand, limited change in work travel

Capturing market externalities associated with traffic Potential scarcity or absence of alternate, less excongestion pensive routes or modes

Reduction in demand for new road construction.

Retaining consumer flexibility in travel decisions Reduction in competitiveness of one locality versus

another by uneven application

Fixing market distortions that discourage the use of other

modes

Providing revenues for road maintenance and new Difficulty (or impossibility) of implementing effective or

construction. optimal pricing schemes politically

SOURCE Adapted from C K Orskl, “Congestion Prlcmg Promlseand Llmltations, ” Transpotiallon C?uarter/y, VOI 46, No 2 April 1992 pp 157-167

as environmental degradation; and the development of technologies such as electronic toll

collection that improve the feasibility of implementing congestion pricing by avoiding the delays imposed by stopping to make toll payments. 252

The first congestion pricing program began in

Singapore in 1975, with the imposition of a flat

morning peak permit fee of $2.50 per day for autos

driving to the central business district. Participants display permits in their windows. Technically, a flat fee is not the most efficient pricing

scheme because there are no price adjustments for

differing levels of peak travel, but the effort in Singapore led to an immediate decrease of nearly 60

percent in morning peak automobile trips. At the

time the program was introduced, auto trips declined from 56 to 23 percent of total CBD worktrips. A decade later, CBD traffic levels remained

lower than predicted. Congestion pricing has also

been implemented in Bergen, Norway (6 to 7 percent travel reduction) and Milan, Italy (50 percent

peak travel reduction in the city center) and is being developed in Hong Kong (postponed); Oslo

and Trondheim, Norway (imposition of flat fees);

the Netherlands (testing stage); and Cambridge,

England (proposed).253

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) authorizes up to $25

million annually for a Congestion Pricing Pilot

Program to fund a maximum of five congestion

pricing projects.

254 However, the national impacts of a congestion pricing program on travel

demand nationwide and gasoline use are difficult

to assess, because the most effective congestion

pricing schemes will vary greatly by community.

depending on road volumes, patterns of auto ownership and use, job distributions, commute distances, and other factors.

Nonpeak road use pricing

The rationale for regular (nonpeak) road pricing is

similar to that for congestion pricing: to reflect

better the costs of building and maintaining roads,

as well as the costs of vehicular emissions and other potential market externalities associated with

road use. Similar to congestion pricing, tolls are

commonly discussed in the context of nonpeak

‘520rski, op. cit., footnote 248, p. 159.

zssIbid,, pp. 163-] 64.

254Public Law 102-240, 105 Stat. 1938, sec. 1012(b).
236 I Saving Energy in US. Transportation

road pricing scenarios, including the use of private

toll roads. However, there are fewer data on the

impacts of nonpeak pricing. If nonpeak pricing is

based on current national average toll road rates of

2 to 4 cents per mile, travel demand could be affected significant] y because these rates translate to

between 40 and 80 cents per gallon of gasoline

consumed (based on an average fleet efficiency of

20 mpg). The net effect of nonpeak pricing as a

strategy to reduce total travel demand and gasoline consumption warrants further study.

Ridesharing Incentives

Ridesharing (or carpooling) for all trips (work,

shopping, recreation) has declined for more than

a decade. Between 1977 and 1990, average vehicle occupancy for all trips decreased about 16

percent (from 1.9 to 1.6 per vehicle), and occupancy for work commutes declined about the same

amount (from 1.3 to 1.1, about 15 percent).255 Ridesharing incentives to slow or reverse the recent

historical decline in vehicle occupancy may apply

to either peak or nonpeak travel and may take the

form of subsidized van pools, free parking, or subsidized tolls. In addition, as noted above, parking

charges and congestion pricing would encourage

ridesharing.

The most extensive metropolitan ridesharing

program stems from a regulatory program initiated in December 1987 in the Los Angeles area.

The program, known as Regulation XV, requires

employers of 100 or more people to develop and

implement plans to increase vehicle occupancy

for commute trips to their sites from 1.13 (the

1987 average) to 1.25-1.75, depending on the site,

which represents an average increase in occupancy of 11 to 55 percent.256 Bonus credits are

awarded to telecommuting programs. The 8,900

2SSHU and Ytmng, op. cit., footnote” 249. p. 20.

affected employers are required to develop their

own incentive programs and submit plans and

progress reports annually. The plans commonly

include economic incentives to rideshare. For example, employees of the city of Pasadena receive a

monthly travel allowance of $20 but pay a $45

“trip reduction fee” each month they drive

alone.257 Employers are subject to fines if they fail

to submit or implement plans, but not if they fail to

achieve the ridership goals.258

Early results of the Regulation XV program

vary greatly by work site, but there are several major trends. First, ridesharing increased significantly when parking subsidies were reduced and mass

transit subsidies increased. Second, the use of onsite transportation coordinators improved performance. Third, a survey of more than 1,100 sites after the first year of the program indicated that

ridesharing increased about 33 percent and solo

driving decreased about 6 percent; telecommuting, walking, and biking, on the other hand, actually decreased somewhat but not significantly.

Based on these early results, total daily trips in the

area declined between 0.5 and 2 percent. The net

impact of Regulation XV on gasoline consumption for the Los Angeles metropolitan area, however, is not known.

I Regulatory Mandates

Regulatory mandates are enforceable provisions

designed to ensure that transportation demand

goals are attained. Implementing such options,

however, may be politically difficult, and may reduce the amount or kinds of economic activity

otherwise expected from a less restricted transportation system. Of course, where congestion is

severe enough, the transport system already imposes economic costs (delays, accidents, poor air

256 Unless mmxl otherwise, all inf(wmatilm tm the Regulation XV program given here is from R, Guensler and D. Sperling, “Solving the

Pmblcm Thnmgh Behavioral Change, ” unpublished manuscript, June 1992, pp. 6-12.

~s7C. K. Orshi, “Can Management of Transp{wtation Demand Help Solve Our Growing Traffic C(mgesti(m and Air Pollution Pn)blems’?”

Tr~n.$por/ation Qunr[cr/~, vol. 44, N(). 4, October 1990, p. 489.

‘Sxlbid., p. 492.
Chapter 5 Policy Options for Transportation Energy Conservation 1237

quality). The feasibility and efficacy of managing

transportation demand by regulator-y mandates

will depend on the severity or perceived severity

of the traffic problem, as well as public acceptance

and response to any proposed mandates.

Major TDM options in this group are discussed

below. Many of these strategies are currently used

in Europe and Japan, areas with high standards of

living and similar but not identical traffic problems.

Restrictions on Automobile Ownership

and Use

Restricting auto ownership or use can be accomplished by imposing higher age requirements for

auto licenses, restricting automobile ownership in

highly congested areas, limiting driving days, and

restricting driving times or vehicle use in congested areas (such as central business districts). In

a nation where restricted access to road travel is

politically difficult to consider, imposing higher

age requirements for auto licenses may accomplish little travel reduction and may offend many.

The percentage of licensed drivers who are very

young is low: less than 3 percent are aged 16 to 17,

and only about 7 percent are 18 to 21.

One argument for restricting licenses for these

first two age groups is that they account for a disproportionate share of auto deaths, about 5 and 14

percent, respectively.259 When compared with

their relative share of licensed drivers, however,

auto fatalities occur disproportionately in all census age groupings up to age 34.260 Even if younger

drivers consume a disproportionate share of transportation energy, outright bans on their automobile use seem drastic as a means of saving energy

in transport, especially as historical land use and

transportation policies tie mobility to automobile

travel. In addition, most men and women aged 16

to 19 already work261 and presumably must travel

to their job sites on a regular basis; restricting vehicle licenses for these age groups. therefore,

could seriously complicate or prevent their ability

to work, particularly if they live in rural areas. As

an alternative, restricted licenses for young drivers that limit auto use to work-related travel may

be more politically acceptable and fair, although

they could create difficult enforcement problems.

Other options to reduce vehicle use are potentially inequitable and regressive, particularly if affordable and accessible transportation alternatives

such as mass transit are not available or are limited. For example. uniformly increasing auto registration fees will consume a greater portion of

earnings from lower-income households. Restricting driving days will have the greatest impact

on one-car households, which are probably predominantly lower-income households. Another

problem is that multiple-vehicle households,

which will be less affected by driving restrictions,

are becoming more prevalent. For example, between 1969 and 1990 the number of households

wit h two or more vehicles more than doubled, and

those with three or more vehicles increased fivefold. whereas the number of one-vehicle households increased only 1 percent. 262 Selectively

raising registration fees for second and third vehicles may be a less regressive option.

Mandatory Ridesharing

Some jurisdictions may determine that ridesharing requirements are appropriate for highly congested areas or roads, but most are likely to prefer

voluntary programs. Mandatory programs are

likely to encounter more political resistance than

voluntary ones and may not address the significant incentives (e.g., free parking) that currently

encourage solo driving. In addition, mandatory
238 I Saving Energy in U.S. Transportation

programs introduce enforcement costs without

raising revenues (unless monetary penalties are

imposed).

In Los Angeles, an area considered to have the

worst urban traffic congestion and air pollution

problem in the United States, the major regulatory

TDM program (Regulation XV) is substantially a

voluntary incentive program. Hybrid programs

such as Regulation XV may represent a more balanced mix of mandatory and voluntary elements

by requiring the development and implementation

of plans, while allowing employers to determine

the best package of incentives for their commuting workers.

Incorporation of Parking Requirements in

Zoning Ordinances

Off-street parking requirements have been a common element of zoning ordinances for new buildings since the 1920s. These requirements have

several purposes, such as preventing drivers from

searching surrounding areas for available parking

spots and limiting parking spillover from commercial to residential areas. Nonetheless, zoning

requirements that maintain a large supply of parking spaces lower parking costs and thus encourage

auto travel.263 By eliminating or modifying these

mandatory requirements, the amount and cost of

local parking may better match market demand

and thereby reduce travel and gasoline consumption.

Efforts to limit urban parking spaces appear

rare. In Munich, Germany, a gradual but aggressive effort to eliminate more than 70 percent of inner-city parking spaces was initiated in 1965. A

1988 Organization for Economic Cooperation and

Development (OECD) study described this program as effective in reducing travel to the inner

city.264 To help local markets better determine the

optimal allocation of parking spaces and their

costs, based on market supply and demand, zoning ordinances could be written without establishing minimum parking quotas, except perhaps for

handicapped spaces.

Alteration of Work Schedules

To reduce the volume of peak-hour trips for work

commuters, many or most of whom have a typical

business day of roughly 9 a.m. to 5 p.m., several

alternative work schemes may distribute work

travel more evenly across more hours: flextime,

compressed work weeks, and staggered work

hours. In 1988, a staggered work hour demonstration project was implemented for one month in

Honolulu. 265 The goal of the program was to alter

government employee work schedules to distribute peak travel over more hours in the mornings

and afternoons. State, local, and county employees were required to participate in the program, which postponed the start and end of the official workday by 45 minutes each, from 7:45

a.m.-4:3O p.m. to 8:30 a.m.-5: 15 p.m. Although

many exemptions were granted, about half of all

government employees participated in the program, as well as about 8 percent of private employees, for a total of roughly 4,000 workers.

There appear to be no estimates of gasoline savings from the Honolulu demonstration project,

but average commute times were reduced about 7

to 9 percent. Savings varied by route and time of

day. Those commuting from the most distant suburbs reduced their average commute times by 15

to 25 percent, while those who started work at

7:30 or earlier actually experienced a 30-percent

increase in their average commute time (this increase was not explained). In addition, nonpartici -

‘63D.C. Shtmp and D.H. Pickrell, ‘“ prthlcn~s wl[h Parking Requirements in Ztming ordinances, ” Tr@~ Quarter/], vol. 32, October 1978,

pp. 545-561.

264T(J offset the I(MS t)f inner-clt) parhing spaces, an extensive s~stun {)f park-and-ride facilities was ctmstructed outside the center of the

city. or.ganlfatitm for Ec(m(mlic C()-iyxrali(m and Development, Clfres and Transport (Paris, France: 1988), pp. 1 I 9-123.

‘d<lnfomm[ i(m ab.)u[ [he Hfmolulu prf~granl IS from G. G iul iano, “Transp(wtatl(m Demand Management: Pr(mlise (m Panacea’)” ./o~/rna/oj

Ihe An~erl~an P/finnln(? Assotl~~tlon, vol. 58, N(J, 3, summer 1992, pp. 33 I -332.
———

Chapter 5 Policy Options for Transportation Energy Conservation 1239

pants enjoyed slightly greater reductions in commute times (up to 3 minutes more) than program

participants. As the average indicates, however,

most commuters experienced small and perhaps

unnoticeable reductions in their commute times.

Gasoline savings from alternative work schedules are likely to be small. Savings from efficiency

gains associated with decreased congestion may

be offset somewhat by potential growth of demand. Schedules that allow workers to reduce

their workweeks by a day, or by one day every two

weeks, will save on the energy used for commuting, but this may be counterbalanced somewhat

by non work travel during the extra day off, or even

an increase in long-distance driving associated

with more three-day weekends.

1 Telecommuting

Telecommuting is the practice of allowing people

to work either at home or in nearby centers located

closer to home during their normal working hours.

The relative ease of administration and costs of

implementation make telecommuting an attractive option in managing travel demand. An annual

random survey estimated that 6.6 million people

telecommuted266 at least part time in 1992. or

slightly more than 5 percent of the total adult

workforce in the United States. 267 The 1993 survey estimates that about 7.9 million adult workers

are telecommuting--a 20-percent increase over

1992.268 If these estimates are correct. about as

many workers telecommute, at least part time, as

commute by mass transit.269 However, the range

of estimates of different studies differs by a factor

of 3, with the lowest estimate for 1992 at 2.0 million.

Several businesses have found that along with

anticipated overhead cost reductions (number of

occupied offices and parking spaces), there have

been increases in employee productivity and management skills. In a telecommuting project by

AT&T and the State of Arizona, 80 percent of the

participating supervisors reported increased employee productivity, and 67 percent indicated an

increase in the overall efficiency of their departments.270 Employee morale and productivity both

improved, and telecommuting forced managers to

improve their managerial skills by setting clearer

objectives and managing by results rather than by

overseeing. A recent survey of 100 “Fortune

1,000” companies and government organizations

found that 30 percent have full-time employees

who work from home part time and that 8 percent

of the companies are about to begin such programs.

271

Public policy has already played a direct role in

the growth of telecommuting. Regulation XV,

adopted in 1987 by the Southern California Air

Quality Management District, requires the more

than 4,000 district employers with 100 employees

or more to develop and promote commuting options such as flexible work schedules, ridesharing,

and telecommuting.

272 Several businesses have

turned to telecommuting in an attempt to comply
240 I Saving Energy in U.S. Transportation

with the regulation’s average vehicle occupancy

(AVO) requirements. Regulation XV is being studied by several other areas of the United States

that are out of compliance with the Federal Clean

Air Act Amendments of 1990 (CAAA) standards.

Telecommuting is eligible for travel demand

management funding provided by ISTEA. States

and municipal planning organizations may use

funds from several programs for eligible telecommuting activities. Eligible activities include the

planning, development, and marketing of an areawide telecommuting strategy designed to improve

air quality and reduce congestion.273

The most significant barriers to telecommuting

will probably be largely nontechnical factors such

as lack of business and worker acceptance. Employers and workers must become familiar and

comfortable with this new way of working. Employers are concerned with the cost-benefit implications. Other concerns center around remote] y

supervised employees and potential problems of

lack of communication, extended breaks, and

drug abuse. Workers are concerned with the potential lack of communication. social isolation,

loss of benefits, lack of career advancement, and

stress from mixing work and home life.274 Other

potential barriers to telecommuting including local zoning codes restricting home-based work and

union opposition (especially the issue of employers identifying workers as independent contractors rather than employees).

Impact on Travel Behavior

Although telecommuting eliminates many commuting trips, theoretically these could be replaced

by other trips or longer, unlinked trips. Some examples of new or longer trips include: shopping

and/or child care trips normally made en route to

work; trips by other household members due to

the availability of the vehicle; 275 trips made possible due to increased flexibility of the work

schedule; trips necessitated by working at home,

for example, to the post office or the supply store;

and relocation of residence, yielding longer commutes on office work days.

The results of some recently completed and ongoing studies suggest that many of these new trips

are not occurring, and reductions in commute trips

have not been offset noticeably by the generation

of new trips.276For example, on telecommuting

days, participants in the State of California Telecommunications Pilot Project made virtually no

commute trips, reduced peak-period trips by 60

percent, reduced total distance traveled by 75 percent, and reduced freeway miles by 90 percent.277

Impacts on Energy Use

The U.S. Department of Transportation (DOT)

has made tentative estimates of the future impacts

on travel and energy use of a large increase in telecommuting.278

1. Potential telecommuters. To estimate the number of potential telecommuters, DOT focuses

273U.S. Department t~t’Trans~mtatl(m, Ft!dcral H]ghuay Adnlinlslratl{m, 7}c/tI.\I)(Jrr(~IJ~~)~ Inydlca(lon.s o/ ‘li/econvm/tlng (Washington, IX:

U.S. G(wemnlcnt Printing Ofiice, April 1993), p. 6.

274Thcsc c(mcems ha~e been disputed h) the results of~~l~riildemtmstrati(m prx~jec[s iid an e~tensi~e survey by the Small Business Admmlstrati(m.

2750ver the hmg [em], presumably n)itn) of [he ncw 1) available \chiclcs W(NM n{) hmger be a~ailab]e.

“~esc studies include the S(wthcrn Callf(mia Associatl(m IJf Goicrnnwnts, the Stiw {)1- California, the Hii~iiil Tdwwk Center, the

Netherlands MinlstD (lfTransp(m, Puget Sound nlultienlplt)ym pr(~granl, Los Angeles Ccwnt>, the Tratclcrs Insurance C(). in Hartf{mi, C(m -

necticut, AT&T in N’ew Y~wk (’lt~, and smreral empltyrs In .Nmthem Cal ifomia.

277 Fecleral High~ ay Adnllnistriition, op. CII., f(xm)te 273, pp. 64-65. There is little imalysis of the effects of [elec(mmmting (m rw)de

choice. Small-sample findings imhuatc that mass tr:insit id\ an and carp)tll ridcrship will go d(nvn slight] y. However, the built-in flexibility of

paratranslt scn ice v ill alh)wf most van and carp~N)ls to c(mtlnue to functi(m and thus not affect their share of vmt. See P. Mokhtarian, “Teleconlmuting and Travel: State of the Practice. State {~f the Art. “ 7k[~~~\/~t~r{cf/it~r~, vol. 18, Ni). 4, 1991, pp. 319-342.

~7xFederal Highway Administrati(m, op. cit., footnote 273, pp. 53-87.
Chapter 5 Policy Options for Transportation Energy Conservation 1241

on white collar workers with a managerial and

professional specialty, or workers in sales and

clerical jobs.279 These information workers,

those who deal primarily with creating, distributing, or using information. are the most likely

to be telecommuters in the next several years.

Approximately 50 to 60 percent of contemporary U.S. civilian jobs, or 73.3 million of the

129 million workforce, are information

jobs.280By 2002, this number is expected to increase to 85.5 million, or 59 percent of the

workforce. DOT’s projected upper bound of

telecommuters in 2002 is 15 million, about

10.5 percent of the workforce or 17.5 percent of

information workers. This is a gain of 650 percent over the next 10 years, with half of the

growth occurring in the last 3 years. The lower

projection is half of the upper bound and assumes a gain of 250 percent over the same perio d .

2 8 1

2. Reductions in trips and vehicle-miles traveled.

According to National Personal Transportation

Survey statistics for vmt, 3.7 billion vmt (or 0.7

percent of the total passenger car commuting

vmt) were avoided in 1992 by the 1.6 percent of

the work force that telecommuted. DOT’s upper

forecasts of the annual commuter passenger car

vmt avoided in 1997 and 2002 are, respectively, 12.9 billion and 35.1 billion, or 0.63 and 1.4

percent of the total passenger car vmt (2.0 and

4.5 percent of total passenger car commuting

vmt).282 The lower bound of vmt avoided is 10

billion in 1997 and 17.6 billion in 2002, or 0.49

—

and 0.70 percent of total passenger car vmt ( 1.6

and 2.3 percent of total passenger car commuting vmt), respectively.

3. Reductions in energy use. According to the upper bound of vmt reductions presented above,

telecommuting will save619 million gallons of

gasoline in 1997 (14.7 million barrels), or 0.8

percent of the total used by passenger cars, and

1,679 million gallons in 2002 (40 million barrels), or 2.1 percent of the total.283 These savings will reduce Federal and State fuel tax revenues by $57.5 million in 1992 and $540.8

million in 2002 as an upper bound ($270.3 million as a lower bound).

Policies To Stimulate Telecommuting

Although there can be substantial marketplace incentives for companies to initiate telecommuting,

including enhanced access to skilled workers, increased worker satisfaction and productivity, and

savings in office space, the substantial public

benefits in reduced congestion, oil use, and air

pollution may justify government promotional incentives. These may include changes in tax policy

to allow companies to deduct some of the direct

costs of the initial startup of telecommuting programs, such as worker training and telecommunication equipment costs, and to allow teleworkers to deduct computer and telecommunications

equipment as a business expense on personal income taxes. Local governments can amend zoning

requirements to allow a reduction in the minimum

number of parking places in office buildings to

270J. H. Pratt, vl>th$ and Rca//tic\ (!I \4’orklng at tlotnc: (’l~oro~lcrlsti~s o~ Homcbased Buslrress Lhtners and Tclecommuters,

SBA-6647-OA-9 I (W’iishlng(t)n, DC Sn]all Bus]ncss Adn~inlsiratltm, March 1993), p. 26.

~ROAshtA B, Boghani et al., “(’an “relcc~)nlrllt]n]catlt)ns Help St~lve America’s Transportation Problems?” (Cambridge, MA: Arthur D.

Little, Inc.. 1991 ), Rcfcrcnce 6S740, p. 25, See als{~ J. NIlles, “Traffic Reductkm by Telecommuting: A Status Review and Selected Bibli(Jgraphy, ’” 7}an$p{n-faflon Rcic~~r~/~, Part A, kfd. 22A. N(J. -1, July 1988, and Federal Highway Adminis[rati(m, op. cit., footnote 273, pp. 53-55.

~* ‘The higher figures arc dcrl~ cd frt~n~ a ft~recasling m{xfel dmeh)ped b) Jack Nines, by using his “business as usual” n(m~inal case. His

high.gr[}~th and ;~cccp[ance sccn:irl(~ S[arts w l[h 4,4 million [elec(~nlnluters in 1992 and ends with 30.5 million te]ec(mlmulers In 2002, See J.

N]llcs, Tclccommu[lng Research Ins[i[ute, Inc., “Telectmmlutmg Forecasts,”’ infomlational document, 1991, table 1, pp. 1, 3.

282 Assun~ing an annual inlt grf~w [h ra[c of 3.7 ptm!nt.

2

*

1 Assumpti(~ns fuel cfficlenc) ]i held \[cady [it 20,92 mpg, a~cragc rtmnd-trip distance a~oided is also held c(mstant at 21 .4miles and the

ai eragc di~tancc [t) rcgl(mal ICICC( )mn~utlng ccn[crs is 9 mllcs, a~ erage price per gallon is held ct)nstant at $1.14. These are the direct savings

only and d(l n~~l include sa~ lngs tronl c{mgest]on rcl wf,
242 I Saving Energy in U.S. Transportation

give incentives to new businesses locating in an

area to implement a telecommuting program.

One of the biggest impediments to telecommuting is the lack of information on successful

projects. California has a Telecommuting Advisory Council with more than 300 members, which

acts as a clearing house for information and advice

on telecommuting.

284 Several cities and Federal

agencies have taken part in Federal- and Statesponsored telecommuting demonstration projects. An increase in the number of projects combined with a careful documentation of the

economic and environmental effects of these projects could decrease employer resistance to telecommuting.

9 Public Investments, Information,

and Other Efforts To Manage

Transportation Demand

High-Occupancy Vehicle Lanes

HOV lanes are freeway, highway, or city arterial

lanes restricted to vehicles containing two or more

passengers. By providing a congestion-free alternative to normally congested traffic lanes, HOV

lanes encourage ridesharing by reducing or reversing the time penalty generally incurred in

picking up passengers (which often requires adding to trip length). And by encouraging ridesharing, HOV lanes may reduce the number of vehicles in use at any one time and thereby reduce

gasoline consumption. This is especially important during rush hours, when congestion is at a

maximum.

HOV lanes may be converted from existing

highway lanes or newly constructed. All HOV

lanes are likely to face enforcement problems

from encroachment of nonqualifying vehicles.

The benefits of newly built HOV lanes tend to be

‘84BtJghani ct al., t)p. cit., footnote” 280, p. 8.

uncertain because to the extent that they relieve

congestion in parallel lanes, they may encourage

additional traffic. The likely magnitude of this

“latent demand” for additional travel remains a

source of controversy in the planning community,

although experience with opening new highway

lanes shows it clearly exists. Also, newly built

HOV lanes introduce substantial costs for

construction and maintenance. Where HOVs are

developed from existing lanes, on the other hand,

congestion may increase in the remaining lanes,

thereby increasing fuel use (and emissions) in

nonparticipating automobiles but providing a

more certain incentive for carpooling and a more

certain net fuel savings.

Both CAAA and ISTEA encourage construction or conversion of HOV lanes. CAAA lists

HOV lanes as an allowed transportation control

measure for air quality implementation plans and

exempts HOV construction funds from any sanctions induced by failure to comply with the Act’s

requirements. ISTEA makes HOV lanes in air

quality nonattainment areas eligible for Congestion Mitigation and Air Quality funding.285 ISTEA also permits State authorities to designate a

two-passenger vehicle as a high-occupancy vehicle, a shift from previous FHWA policy limiting

HOV designations to vehicles with three or more

passengers.

286

In North America, there are 40 HOV projects

on freeways and other separate rights of way.

These projects are dispersed among 20 metropolitan areas and cover roughly 340 miles. These projects vary by hours of operation (from 2 to 24 hours

per day) and occupancy requirements (two to

three or more passengers, and bus-only lanes).

Under current plans, this capacity will more than

double in the next decade, increasing to 880 miles

by the year 2000. In addition, there are many more

285C.K. Leman et al., Institute for Transp~rtati(m and the Environment, “Rethinking H, O. V.: High Occupancy Vehicle Lanes and the Publlc

lntercst, ” discussl(m draft, Ma> 1993.
Chapter 5 Policy Options for Transportation Energy Conservation [ 243

projects in off-freeway settings, such as urban arterial streets and bus-only lanes, ranging in length

from several city blocks to as many as 10 miles.287

Two recent studies suggest both the potential of

HOV lanes to reduce the growth of vehicle travel

and the difficult y of accurately measuring their effectiveness. The first study examined the effectiveness of HOV lanes on Interstate 5, linking

downtown Seattle with its northern suburbs.

based on vehicle counts before and after HOV

construction. 288 The HOV lane was available in

late 1983, and vehicle counts were taken from

1978 to 1989. Adjusting for the growth in the

number of households and their income, the study

determined that the increase in vehicles was less

than had originally been projected (with no HOV

lane) for every year after the HOV became available. (As the authors stressed, HOV lanes are

judged effective if vehicle counts for the corridor

increase more slowly than projected. As population and auto ownership rates increase, travel vol -

ume is projected to increase even with effective

HOV projects.)

In fact, the study determined that the reduction

from expected demand levels increased over time,

with a 6 percent reduction from projected levels in

1984 and a 35-percent reduction in 1989. The

study concluded that based on this reduction of

projected travel demand, HOV lane effectiveness

in Seattle was comparable to the 10- to 25-percent

reduction in congestion thought possible by using

road pricing along congested routes.

Despite these encouraging results, the basic assumption of the study—that the HOV lanes were

the reason for the decrease—is speculative. In particular, the study did not evaluate or consider other

potential factors that may have slowed actual

growth in travel demand, such as the availability

and use of alternative routes, possible changes in

mass transit capacity and use. and especially.

shifts in the geographic distribution of employment and residential settlement over the 12-year

period. Although the HOV lanes may have had a

significant (if not the major) impact in reducing

travel demand on Interstate 5, this example illustrates the complex challenge in evaluating precisely the impacts of TDM measures such as HOV

lanes, because other factors may increase ridesharing or reduce travel demand.

Using a different measure of effectiveness,

another study examined changes in carpooling

rates after the construction of a 13-mile HOV lane

on Route 55 in Orange County, California.289 The

HOV lane opened in 1987, and within a few years,

vehicle occupancy increased between 7 and 9.5

percent. The increased occupancy was significant

and greatest for workers using more than half of

the 13-mile HOV lane (a 12.3-percent increase in

carpooling). Other statisticall y significant

changes in carpooling applied to workers retaining the same jobs and residences for at least two

years (6.7-percent carpooling increase) and workers traveling between 6 and 9 a.m. (3.5-percent increase). Unfortunate] y. although the increase in ri -

desharing is clear in this case. the net impact on

total transportation demand requires separate

measurement because of the potential for increased travel demand caused by reductions in

congestion and increased total road capacity.

Another source of potential error in HOV lane effectiveness calculations is the potential for such

lanes to pull passengers from transit: according to
244 I Saving Energy in U.S. Transportation

Pisarski, the socioeconomic characteristics of carpool riders and transit riders are very similar.290

When carpools pull passengers from transit, measured increases in vehicle occupancy overstate actual declines in vehicle travel.

In conclusion, HOV lanes’ effectiveness in reducing vehicle travel is difficult to measure, and

the value of HOV lanes, relative to other investments, as a strategy to improve air quality, reduce

congestion, and reduce energy use is being increasingly questioned by transportation planners.

At the very least, each proposed use of HOV lanes

should be carefully evaluated, with the potential

for conflicts with transit systems and stimulation

of travel fully accounted for in the analysis.

Intelligent Vehicle-Highway System

IVHS encompasses a range of technologies, many

still under development, that provide one or both

of two basic tools for drivers: so-called smart cars

(intelligent vehicles) and smart highways (intelligent highways). These technologies taken together are designed to provide drivers with an array of

real-time information, including road and traffic

conditions, directions to unfamiliar or distant

sites, identification of alternative routes, and determinations of optimal and safe driving speeds

and automobile spacing on roads. A 1989 OTA

staff paper concluded that existing IVHS technologies could increase road capacity by 10 to 20 percent but that this group of technologies alone is

not sufficient to eliminate urban traffic congestion. 291

IVHS has been presented as a means to reduce

gasoline use based on the improved technical effi29~isarski, op. cit., footnote 128.

ciency of vehicles in free-flowing traffic. However, IVHS may lead to increased travel and gasoline use by reducing congestion and travel times,

so energy savings from improvements in operating conditions must be balanced by this potential

travel take back. There is nothing about IVHS, per

se, that would encourage ridesharing.

IVHS technologies include advanced traffic

sensing and signal control technologies to improve traffic flow, as well as advanced on-board

systems to help drivers interpret highway system

data to reduce travel time, improve safety, or both.

Although at least 60 IVHS-related technologies

exist, 292 their broad functions are far less numerous, consisting of three major groups of systems:

advanced traffic management (ATMS), advanced

traveler information (ATIS), and automated vehicle control (AVCS). Each of these categories

possesses technologies with unique roles and differing merits.

Many observers regard the ATMS as the most

promising group of IVHS technologies,293 but

that perception is arguably related more to the

unique nature of this technological approach than

anything else about these technologies. In short,

ATMS technologies are designed to monitor traffic via radar and other remote tracking systems, to

analyze these data, and to alter traffic flow electronically and automatically by adjusting signal

timing and freeway ramp controls, and by providing information on roadside bulletin boards. Unlike the other two major groups of IVHS technologies, therefore, ATMS bypasses direct participation and interaction with the driver and reduces the

chance that drivers may not possess, understand,

29 I U.S. Congress, Office Of Technology Assessment, Science, Education, and Transportati(m Program. “Advanced Vehicle/Highway S)stems and Urban Trat%c problems,’” staff paper, September 1989, p. i.

292PF

. .

R()~h&rg, congressional” Research servi% ‘“ln[elligent Vehicle Highway Systems: Challenges, Constraints, and Federal Prt~-

grams,” 92-189 SPR, Feb. 18, 1992, p. 1.

zg3see, e.g., D.K. will is> “IVHS Technologies:” Pr(mlising Palliative or Popular Poppycock’?”” 7ran~por;aiion Qmrlcr/~, vol. 44, N(). 1,

January 1990, pp. 73-84.
Chapter 5 Policy Options for Transportation Energy Conservation 1245

or act on other on-board IVHS technologies. By

acting outside the vehicle on the larger transportation system, ATMS technologies may also reduce

the potential safety hazards that a complicated or

distracting on-board technology could introduce

by drawing the driver’s attention away from the

road, even if only briefly.

ATIS technologies may be used to enhance

ATMS tools. ATIS technologies are on-board systems that impart information about traffic conditions and alternative routes and may include electronic maps and navigational tools. Unlike major

ATMS technologies, ATIS information may be

tailored to an individual driver travel plans and

thus, in principle. provide complete information

that assists a driver for the entire trip, from departure to final destination. These technologies,

therefore, may be especially useful for drivers

with multiple route options, assisting both local

residents and visiting travelers seeking the best

routes during a given day or time.

The third major IVHS category, AVCS technologies. is geared toward traffic safety. These onboard technologies may assist or, in the most extreme cases, replace or override drivers. Assistive

AVCS technologies include adaptive cruise control, obstacle detection, and infrared sensing to

improve safety for night driving. Other AVCS

technologies are designed to intervene directly in

driving, including automatic braking, cruise control, and maneuvering: the rationale behind these

technologies is to maintain optimal but safe distances between vehicles to improve driving and

traffic flow. The most ambitious AVCS technologies under development involve automated driving, where human drivers essentially become passengers until reaching their destinations.

In principle, IVHS technologies aim to make

optimal use of road space, while maintaining safe

distances from other vehicles and objects. By im-

—.

proving the efficiency of road and lane use, IVHS

technologies promise to reduce traffic congestion

and driving times, which could reduce vehicle

emissions and fuel use per vehicle-mile of travel.

but such road improvements could lead to more

vehicle-miles traveled.

There are other potential drawbacks to IVHS

technologies. First. absent changes in production

and implementation costs, their expected expense

is substantial]. According to the Federal Highway

Administration, installing ATMS technologies on

the more than 15.()()0 miles of U.S. urban highways will cost $30 billion to $35 billion,294 and

the costs for on-board technologies will increase

this amount further, adding an estimated $1 ,500(0

$2,000 per vehicle, although these costs are expected to decline as production volumes increase.

295

However, if reported estimates of annual congestion costs ($30 billion to $100 billion,

current dollars) and traffic accident costs ($75 billion to $100 billion, current dollars) are reasonably accurate, then a $30-billion investment in

ATMS would be fairly cost-effective If congestion

and accident costs were reduced as little as 5 per296 cent per year.

Second, many IVHS technologies may not

work well (or at all) incrementally; that is, they require broad applications of road system and vehicular technologies. As a result, incremental investments may not be fruitful, thus limiting the

chances of gradual implementation. Third, many

on-board ( “smart car”) technologies require driver interaction and attention, which may reduce

safety by distracting drivers, particularly in challenging congestion and weather conditions when

they are most likely to use the technologies. Finally. concerns about legal liability in cases when

AVCS technologies fail and cause accidents may

limit industry interest in these tools.
246 I Saving Energy in U.S. Transportation

Despite these potential drawbacks, congressional interest in IVHS technologies has increased

markedly in the last several years. The Intermodal

Surface Transportation Efficiency Act of 1991

(Public Law 102-240) authorizes a total $659 million for IVHS research and development for fiscal

years 1992 through 1997.297 Also, at least $150

million in additional IVHS funds are authorized

by 1992 Department of Transportation funding.

This amount represents a major increase from earlier IVHS authorizations, which totaled about $4

million in 1990 and $24 million in 1991.298 These

projects will help determine IVHS impacts on

traffic flow, congestion, and road safety, but the

impacts on total vehicle travel and energy consumption (the focus of this report) are worth examining as well.

Improved traffic signaling

Although this is often discussed in the context of

broader IVHS applications, changes in traffic

signaling have already demonstrated their potential to reduce traffic congestion without major investments in IVHS projects. For example, urban

travel times have been reduced as much as 25 percent by improved timing of traffic lights. In Los

Angeles, the Smart Street project around the University of Southern California has reportedly reduced both travel time and fuel use about 13 percent.

299

9 Conclusions

Some of the more optimistic evaluations of transportation demand management strategies suggest

that they may reduce peak hour travel volumes by

10 to 25 percent, depending on the strategy chosen

and how aggressively it is applied, and they conclude that in some cases, travel volume and congestion may be reduced even further, although the

political and economic costs would likely prevent

implementation.

OTA believes that estimates such as these

should be treated as highly uncertain, and policymakers should recognize the large variability of

TDM effectiveness, depending on location and

circumstance, as well as the experimental nature

of many TDM initiatives. Nevertheless, there is

enough positive experience with certain types of

TDM measures—moving to paid parking is an obvious example—that policy makers can expect

strong] y positive results with well-designed TDM

programs.

Current information suggests, however, that no

TDM measure by itself will eliminate traffic congestion, and no TDM measure will significantly

reduce congestion in all circumstances. Moreover, some TDM strategies may increase transport

energy use by improving traffic flow, thereby encouraging more and perhaps longer trips. Identifying the best TDM strategies for a city or region

will depend on the nature of the major problem

(congestion, air emissions, energy use) and the

particular conditions of the corridor under consideration, whether city, county, or region.

Finally, transportation policy planners should

appreciate several other points about current TDM

strategies:

= State and local authorities generally do not pursue TDM to conserve energy.

■ Most TDM strategies have not been implemented on a large scale, and most have not yet been

adequately evaluated, particularly from the

perspective of energy consumption.

~ Most TDM strategies implemented thus far

have focused on worktrips, although these represent only about one-quarter of all trips.

m Any reduction in existing transportation demand has the potential to spur latent demand.

Consequent] y, promising results from employer-based or metropolitan-based programs should

be considered tentative until the effect on total

regional travel (and energy use) is understood.

~97Publlc Law 102-240, 105 Stat. 2194, sec. 6058(a)-(b),

298 RtJthberg, op. cit., ftx)tnote 292, summary page, p. 1.

29(} Willis, op. cit., f(x~tm)te 293, p. 77.
Chapter 5 Policy Options for Transportation Energy Conservation J 247

■ Given the variety of TDM options and the

conditions that determine which will be optimal in addressing travel demand, selecting or

implementing specific programs is necessarily

a local exercise. Thus, Federal transportation

policy planners would do well to support and

encourage (rather than direct) local choices in

the selection of optimal TDM strategies.

1 Policy Context

This section offers policy options to increase the

energy efficiency of the freight transport system.

Several points, which are common to all policy

options, provide the setting within which to consider them.

1.

2.

Freight transport plays a key role in the

economy, and national goals for the freight

transport system may not always be consistent

with energy efficiency. Desirable attributes of a

freight transport system include low cost, high

reliability, high speed, high flexibility, minimal losses and theft, and high availability. In

many cases, increased energy efficiency can reduce costs and thereby improve the freight system overall;300 however some policy options to

increase energy efficiency-such as reducing

speed limits—may adversely affect other goals

(in this case, speed of goods delivery). These

tradeoffs must be recognized when making

policy decisions.

The freight transport industry itself is a significant part of the economy—for example,

3.

4.

about 2.1 million people are directly employed

301 Policies affecting the energy in the industry.

efficiency of the industry could significantly

affect the industry in other ways as well—for

example, shifting freight from trucks to trains

would certainly shift employment as well—

and these effects must be recognized.

The Federal Government has long played a

role in the freight industry: 1 ) The national

highway system was initially rationalized in

part for national defense and is now used by

trucks, which are responsible for a significant

fraction of the maintenance requirements of

302 2)Navigable Waterways these highways.

used by freight barges are often dredged and

maintained by the Army Corps of Engineers.

(3) Railroads, which operate on privately

owned rail networks, were originally regulated

as a response to monopoly pricing practices and

an attempt to ensure appropriate pricing. At

present, many freight modes are regulated and

subsidized in different ways, and policy

changes affecting the industry should recognize the history of regulation and the current

pattern of subsidies in the industry.

Evidence from past successes and failures in

policies to influence automobile energy efficiency should be used to craft successful policies for truck energy efficiency. In the last 20

years the Federal Government has tried a variety of approaches to increase the energy efficiency of the private automobile fleet, including requiring energy consumption labels, fuel

economy standards, and financial incentives

(e.g., the gas guzzler tax). Many of these ap-

~~1 Bureau of (he Census, op. cit., footnote 259. p. ~7.

~t)~whethcr or not trucks pa) thctr ‘“ fair share” t~f Ihese costs is a contcnti(~us issue: htlwc~ m, a C{)ngrmsl(mal Research Scn ice anal) sis ~~f

Department of Transpwtatltm research states, “M[)st heai y trucks do not pa} thclr fait share ftlr Liw of Federal-ai(i highways, ii~~tlrdlng ti~ the

U.S. DOT.’” C(mgres\ltmal Research Service, “Truchs and Puhlic Pt)lIcy.” 9 I - 15E, p. 5.
248 I Saving Energy in U.S. Transportation

preaches could be used with freight trucks as

well.

I What Is the Potential?

The future potential for energy conservation in the

freight sector lies largely with reducing truck energy use, because trucks consume the major part

of U.S. freight energy—more than 80 percent. The

technical and operational potentials for reducing

truck energy use were discussed in chapter 2. As

noted there, demonstration runs combining commercially available technology, highly trained

drivers, and ideal operating conditions yield

impressive efficiencies--50 to 70 percent greater

than the existing fleet. These results may not be

achievable in day-to-day operation, but they do

provide an upper bound on what could be

achieved with today’s technologies. If all heavy

trucks achieved this level of energy efficiency, energy use would drop by about 0.9 quads, or 15 percent of total freight transport energy use.303

Aside from these technical improvements,

truck energy use can be reduced by shifting to alternative freight modes. Each freight mode has

characteristics (see table 5-12) that are best suited

for certain cargo. For example, trains and barges

can move high volumes of goods at low cost, yet

tend to be slower than trucks and are restricted to

Rail Truck Barge Air ——— —

Geographic coverage M H L H

Speed M H L H

Energy efficiency H M H L

cost I#M M/H L H

KEY H = high M = medium L = low

SOURCE Off Ice of Technology Assessment 1994

existing tracks and waterways; they are therefore

best suited for long-distance transport of highdensity basic commodities such as coal and grain.

Trucks and air can respond quickly to new demands, can go almost anywhere, and are generally

fast and reliable, but cost more as well; they are

therefore best suited for distribution of higher-value-added intermediate and consumer goods.

In recognition of these varied attributes, intermodal transport (use of multiple modes) has been

growing rapidly. This typically involves using

trucks for local pickup and delivery, and trains for

long-distance hauling. The same container or

trailer is used by both trucks and trains to reduce

transfer delays and minimize losses and theft.

Some transportation companies are investing in

multiple modes: one large trucking firm, for example, recently made agreements with several

railroad companies, and is investing in containers

that can be carried by both trucks and trains.304

The growth of intermodal movements--especially double-stack containers on flatcars--has led to

trains taking an increasing share of these long-distance movements in corridors where train service

is available.

Although each mode has markets that are best

suited for it (e.g., commodities by train and barge,

shorter-haul time-valued goods by truck), trains

and trucks do compete in some markets. One analysis identified commodities-including motor

vehicles, paper, and chemicals—that collectively

account for more than one-third of both truck and

305 Although data on just where train ton-miles.

trucks and trains carry these products are not

available, there is general agreement that trucks

and trains do sometimes compete for the same

movements.

These competitive markets are not well defined, but in general, for long-distance move-

.W3~e ~~[ ~onlrllerclal It al ~lIabIe tn]chs arc 62 PCrccn( more efficient [han the cx is[ing Ileet (set chapter 2, [able 2-6, average of 72 and f I

.

percent. respectively ), [hcrcf(m replacing the tlcet will reduccenergyf usc ( 1-1 I .62) t~r 38 pcrct.m[. Heat y trucks ucc(mnt for ab{wt 5 I percent of

truck energy usc (chapter 2, table 2-3). trucks use 4.9 quads per yctir (table 2-2): thercf(m savings -4.9 x 0.38 x 0.51 = 0.9 quads.

~()~.-EYerY pr{)b]elll is ;in opp~~uni[y (J. B. Hunt Transp(wt Scrviccs). ” I“orrune, NOV. ] 6, 1992.

.

3051n ] 987 .S KC) ~onlrllo~l(l~s” in Ral I Truck Ct~lll~’tl[i~~n,” Inft rmod~// Trends, publtshed by the Amcrlcan Ass(~latlt)n of Rai lrx)ads, Mar.

3. I 989.
Chapter 5 Policy Options for Transportation Energy Conservation 1249

ments of basic commodities, trains (and barges, if

waterways are available) are the dominant mode.

For long-distance movement of intermediate and

manufactured goods, trains and trucks often compete; however the trend in recent years is toward

greater use of intermodal transport (containers or

trailers on trains). For intermediate movements—600 to 1,600 miles—the two modes often

compete, and neither mode dominates.306 For

short-distance movements—less than about 600

miles—trucks are used almost exclusively because the y offer door-to-door service and minimal

loading time.

The energy savings of shifting freight from

truck to rail is made uncertain by the nature of

most freight energy data; they measure total energy use by mode, but the mix of products carried by

different modes is quite different. For example, in

1990, the average energy intensity for intercity

freight movement by truck was 3,357 Btu per tonmile, whereas the average intensity for intercity

freight movement by train was 411 Btu per tonmile, 307 or a ratio of 8: 1. However, an examination of the energy consumption by both trucks and

trains for moving identical cargo over the same

route, for a few specific cargoes and routes, suggests that trucks use 1.3 to 5.1 times as much energy as do trains to move the same cargo over the

same route.308 This study found that trains generally use 150 to 310 Btu per ton-mile to move

mixed freight over long distances, whereas trucks

use about 770 to 980 Btu per ton-mile for the same

309 Many other estimates have been made service .

of modal energy efficiency-including some that

try to include not only the propulsion energy (i.e.,

energy required to move freight from one point to

another), but also the energy associated with vehicle manufacturing, road and rail construction,

maintenance, and access (getting freight to and

from the terminal). A comprehensive but dated review of these estimates found that they vary widely (suggesting that such numbers be used carefully); and estimated that including all of these

factors would yield about a 1.7:1 truck-to-train en-

 These estimates suggest that for ergy use ratio.310

long-distance movement of some commodities,

the energy savings from shifting freight from

trucks to trains could be significant, but much less

than would seem to be the case from a simple examination of average energy intensities.

A second key unknown in estimating the energy savings potential of mode shifts is the amount

of freight that could be shifted. One study estimated that trucks move 54 percent. and trains 46

percent, of the nonbulk, long-haul (more than 500

miles) freight traffic.311 For an extreme case in

which all 308-billion ton-miles of this long-distance truck traffic shifted to trains, net savings

would be about 0.2 quad if only propulsion energy

is considered,312 and about 0.4 quad with propulsion, vehicle and infrastructure construction,

maintenance, and access energy.313

Shifting all the competitive freight would represent a doubling of present-day king-haul nonbulk train movements, and therefore would re306.. Trend~ In Truc~’Raii Market share, “ /nternIodal Trends, published by [he American AsstJcia(i(~n of Railroads, Apr. 17, 1992.

~~TDaYis and S[rang, op. ci[, footnote I 34, p. 2-25.

N)tl Abacus Tcchno]ogy” cow, Rfli/ ,.~, Trllck Energy Efi;~/enfY, contractor” re~~fl ft)r [hc Federal Railroad Administration, April ]991, p.

7-15. For long-haul service, including effects of circuity.

~~~lbld., p. 7-4.

~ l~c{)ngres~lonal Budget ~ffice~ ““Energy Use in Freight Transportation,’” staff worlung paper, February 1982. This cstlma[c IS for a trailer

(m flatcar train and an interclty truck.

3 I I ‘. Trends in Tm~k/Rail Market Share, ” op. cit., f(xmwte 306.

3 I ~A~sunllno g75 B[u ~.r [on. nli]e for trucks and 230 Btu ~r ton-nlile for trains, D

as in Abacus Technf~l(~g> C~mp., op. cl!., f(wtm)te 308, p.

7-4.

j I ~A~sunlln C ~ 4~0 B(U ~.r [on-nll]e f,)r trucks ~d 2,040” Btu ~r tt)n-nli]~ for [rains, as ft)und by’ (’(~ngrcssi(lna] Budg~t offic~, op. cit., 0,

footnote 310, This cstlnlate is for a trailer (m a flatcar train and an intercity truch.
250 I Saving Energy in U.S. Transportation

quire expansion in the train system. Existing rail

networks are not capacity-constrained, and improved information technologies would allow

greater use of existing tracks. However, some new

tracks would have to be built in areas not presently

served, and more locomotives and freight cars

would be needed. In addition, some intermodal

transfer points are already heavily used and would

require expansion or relocation. Such a shift

would also have significant effects on the train and

truck industries themselves.

E Policy Options

Methods to increase freight transport energy efficiency include greater use of commercially available technologies (such as improved aerodynamics, tires, and engines), promotion of the

commercial availability of new and developing

technologies, operational improvements (notably

reduced speed and idling), and truck-to-train

mode shifts. Policy options include financial incentives such as taxes and subsidies; regulations

such as fuel economy standards and speed limits;

changes in Federal testing, research, and development; changes in Federal procurement; early retirement programs; and improvement of intermodal infrastructure (table 5-13).

Financial Incentives

Energy taxes

One policy option for reducing energy use is to increase the price of energy. This can be done with

an energy tax. Such a tax could take many forms,

including:

= Btu tax based on energy content,

● carbon tax based on carbon content,

■ simple percentage tax based on current price,

and

● flat tax per gallon.

Diesel fuel is already taxed by both the States

and the Federal Government. The current tax is in

the form of a flat tax per gallon.

Energy taxes are a contentious issue. Arguments in favor of using a fuel tax to promote energy efficiency include the following:

1. It is relatively easy to implement and administer. Mechanisms already exist to collect fuel

Increased

use More

of new Operational Mode

technologies technologies improvements shifts

Financial Incentives

Energy taxes

Feebates

Regulation

Fleet average requirements

Specific technology requirements

Increased truck size/weight limits

Enforce/reduce speed Iimits

Federal testing,evaluation, R&D

Federal procurement

Early retirement

P

P

P

P

—

—

P

P

P

P

P

P

—

—

—

P

P

—

P

—

P

P

P

P

—

—

—

N

—

—

—

—

KEY P = posltlve effect, — = little or no effect; N = negative effect.

SOURCE Off Ice of Technology Assessment, 1994
Chapter 5 Policy Options for Transportation Energy Conservation 1251

2.

3. .

4.

5.

taxes, and the additional administrative cost to

the government of increasing the tax would be

very low.

It can raise considerable revenue. Freight transport consumes about 27 billion gallons of die-

 therefore, a diesel tax in- sel fuel per year,314

crease of 1 cent per gallon would generate

about 269 million dollars.315 These funds

could then be used to provide incentives to

manufacturers and operators for research, development, and purchase of energy-efficient

vehicles.

From the perspective of economic theory, a tax

is preferable to regulation because it guides. but

does not constrain, consumer choice. A tax allows users to find their own methods to conserve (e.g., by investing in energy-efficient

technologies or by changing driving behavior).

It will affect both new vehicle purchase behavior and operation of existing vehicles.

U.S. diesel prices are considerably lower than

those of other industrialized countries. In Germany, for example, diesel currently costs $2.81

per gallon.316

Arguments against using a fuel tax to promote

energy efficiency include:

1.

2.

The magnitude of energy savings is uncertain.

It is generally agreed that, all else being equal, a

higher energy price will result in reduced energy use, but there is little agreement on the energy savings per unit of price increase. The savings will depend on the level of price increase,

of course. but will also be influenced by the

speed and visibility of the price increase (a sudden and widely publicized increase will result

in more behavioral change than a gradual, hidden increase).

Some users are unaware of the opportunities for

efficiency improvements. In these cases, taxes

alone without improved information will have

no effect on efficiency.

It increases the price of goods (to the extent the

tax is passed on to consumers). This could have

two important detrimental effects: Consumers

could reduce consumption, leading to reduced

economic output; and the economic competitiveness of U.S. products on world markets

could be harmed. The over-al l economic effects,

however, will depend on how the tax is structured. A revenue-neutral tax would result in

shifts, but not necessarily decreases, in economic output: and if tax revenues were used for

economically productive purposes then the net

effects on economic output are not clear.

It will affect different users different I y—for example, a manufacturer located far from its market will pay more than one nearby. This is not

necessarily a disadvantage, because the new

price may be “correct” in the economic sense.

but the differential effects may have political

implications.

Feebates

These programs are discussed earlier in more detail. Feebates, or fee-rebates, combine rebates to

purchasers of efficient vehicles with surcharges on

purchases of inefficient vehicles. Feebates can be

revenue-neutral. by having the surcharges cover

the costs of the rebates and the administrative

costs. Such a program provides a financial incentive for efficiency without requiring an increase in

government expenditures, and is more flexible

than a mandated approach such as a fuel economy

standard (discussed below). The disadvantages of

feebates include: 1 ) there is no large-scale program experience, 2) they affect only new vehicle

purchases, and 3) they provide no incentive for efficient operation of vehicles. The lack of program
252 I Saving Energy in U.S. Transportation

experience—specifically the lack of data on behavioral response to the combination of fees and

rebates—makes it difficult to estimate the energy

savings potential of such a program.

Feebate programs for trucks incur a special disadvantage because combination trucks are sold as

separate trailer and engine units, and because

trucks haul very disparate types of cargo. Consequently, feebate programs may have difficulty

properly grouping competing vehicles. Further,

defining the “average fuel economy” necessary to

compute fees and rebates presents a special problem.

Regulations and Government Programs

Performance technology mandates

In 1975 Congress passed the Energy Policy

Conservation Act (Public Law 163), which

and

sets

energy efficiency requirements for automobiles

and light trucks. These requirements were in the

form of a minimum fleet average—the salesweighted average efficiency of new vehicle sales

was required to exceed a value set in the legislation. Although the costs and benefits of this legislation are disputed, there is general (although not

unanimous) agreement that these requirements

played a large part in the doubling of the average

fuel economy of new automobiles—from 14 mpg

in 1975 to 28 mpg in 1990.317 More recently, legislation was passed that set energy efficiency requirements for electric motors, refrigerators,

lights, and other energy-using devices. For these

devices, minimum efficiency levels were set that

all units must meet. An evaluation of these standards found that energy and net cost savings were

significant. 318

The precedent for mandated energy-efficiency

goals suggests that such an approach be considered for trucks.319 A mandated approach to increasing truck energy efficiency could take several forms. A fleet average requirement could be set,

as it is for automobiles and light trucks, and

manufacturers could determine the best mix of

technologies and price incentives to meet the requirement. Such a requirement would have to be

normalized to account for different truck sizes and

purposes, since some manufacturers produce only

full-size trucks, whereas others produce a range of

trucks. Alternatively, a minimum efficiency level

could be set for each class of truck (e.g., all trucks

designed for pulling full-size trailers must achieve

a minimum number of miles per gallon).

One complicating factor in structuring such a

requirement is the interactive effects of trucks and

trailers. Most heavy trucks are designed to attach

to trailers, and the fuel economy of the combined

truck-trailer depends in part on the aerodynamics

of the trailer. There is a large existing fleet of trailers that turn over relatively slowly; therefore it

would be inappropriate to require truck manufacturers to meet efficiency levels that require the use

of new, aerodynamically integrated trailers.

A milder regulatory approach might involve

the requirement of excess idle and/or speed warning lights, speed governors (already in use by

some truck fleets), and automatic shutdown to

eliminate excess idle.

1.

2.

3.

Advantages of a regulatory approach include:

It can result in large energy savings. As noted

above, regulations setting energy use for electric motors, heating and cooling equipment,

lights, automobiles, and light trucks are already

in place, and by most accounts have (or are expected to) resulted in large energy savings.

It is relatively inexpensive for the government

to implement and enforce.

It would speed implementation of existing or

near-market technologies. As discussed above,

317See ofilce of Technology” Assessment, op. cit., footnote 7, p. 20-22, and the discussi(m earlier in this chapter.

318 See discussion in U.S. congress, Office ~~f Technolt)gy Assessment, Bui/ding Ener~v l;~~icienc), OTA-E-5 I ~ (Washingwn, DC: U.S.

Government Printing Office, May 1992), p. I I 1.

. .

J lg~e setting of appropriate regulati(>ns would require much better data (m truck size, use, energy ctmsumpti(m, age. and s() forth than

currently exist.
Chapter 5 Policy Options for Transportation Energy Conservation \ 253

technologies are available that significantly

improve efficiency.

Disadvantages include:

1. It is difficult to determine the optimal level at

which to set the requirement. The cost-effective

level of efficiency will depend in part on fuel

costs, which can fluctuate.

2. It may raise the cost of new trucks, thereby

slowing fleet turnover (and reducing energy

savings).

3. Regulations limit consumer choice. Some argue that consumers, not the government, are

best qualified to choose their preferred efficiency level.

4. It can increase the costs of vehicle production

significantly if manufacturers are forced to retool production lines.

5. It affects only new vehicles and provides no incentive for efficient operation of trucks. The

very high efficiencies achieved in some trucks

(see, for example, table 2-6) resulted from both

efficient technologies and careful driving; it

would be inappropriate to expect such results

from all drivers.

Increasing allowable truck weight and size

All else being equal, larger trucks are more efficient in terms of Btu per ton-mile. However, increasing allowable truck size may encourage

mode shifts from trains to trucks, reducing the net

energy efficiency gains. In add it ion, there are safety concerns with larger trucks that are as yet unresolved. 320 These issues suggest that further study

is needed before increasing size or weight limits.

Improved enforcement or reduction

of speed limits

There is a considerable energy efficiency penalty

from higher speeds. One generally accepted rule

of thumb is a 2.2-percent mileage penalty for each

mile per hour above 55.s21 Despite the energy

penalty, however, highway speeds have been increasing since 1974. Improving enforcement of

existing speed limits, and reducing speed limits

from 65 to 55 mph, are policy options to consider.

Reduced speed limits will also enhance safety

and, unlike many other options, affect the entire

fleet and not just new vehicles. The chief disadvantage is the increased time requirement, with its

attendant cost penalty.

Recent data indicate that the average speed for

all traffic on rural interstate highways with a

55-mph speed limit is 60 mph. If this average applies to trucks as well, reducing average speeds

from 60 to 55 mph would reduce energy use by 2.2

percent/mph x 5 mph, or 11 percent. Trucks currently consume about 5 quads of energy (table

2-2), and about two-thirds of truck miles are for

nonlocal service.322 If three-fourths of nonlocal

truck-miles occur on highways, and highway

truck-miles are twice as efficient as nonhighway

truck-miles, reducing average truck speeds from

60 to 55 mph should save about 0.2 quad per year

of freight energy.323

32 I see L JohnSon” et ~], 4. EnCrgy Contingency planning for Frei ght Transp)rtatitm, ’” ANL CNS\r-34 (Argt)nnc. 11. Argf)nnc Nallt)nal Laboratory, August 1982 ), also American Trucking Asst)ciati(ms. The Maln[cnance Council, 55 ir. 65: An Equipmcnf opcrar(n~ ( ‘~~ if! ( “{wtp~~r-1

son (Alexandria, VA: 1987), p. 7.

322u . .s Depaflnlen[ ~) fconlnlcrce, Bureau {)f the Census, ~}f~t k /r]~ et?/or) (Jnd Lr\c Sir) c}, TC87-T-52 ( Wishlngt{m. DC: ALl~Llst 1 ~~()). P

US-6.

3~3HlghwaY tmck-nll]e~ are two.thlr~s IIr]le~ thr~~.quafl~rs, or t~nc-half of tt~[al truch-mi!cs, Assum}ng th~} t~rc Iv 1~~ ~ls effi~l~nt s~lgg~sts

that they consume 4.9 times (me-third. or 1.63 quads, 1 I percent of [his IS about 0.2 quad.
254 I Saving Energy in U.S. Transportation

Federal procurement

The Federal Government currently has about

380,000 trucks.324 Changes in Federal procurement to encourage or require greater energy efficiency in new trucks would save energy by itself,

would demonstrate that energy-efficient technologies are available and effective, and would support markets for such products. 325 Although mos t

of the Federal truck fleet consists of light-duty vehicles, the Federal government does purchase a

significant number of medium- and heavy-duty

trucks. The General Services Administration, the

major purchaser of vehicles for the U.S. government, does not have energy efficiency requirements in its specifications for medium and heavy

trucks. These specifications could be modified to

include minimum mile-per-gallon requirements.

Federal R&D and information programs

At present, the Federal Government supports little

truck energy-related R&D. Although manufacturers do considerable R&D, much of this is targeted

at safety, performance, and emissions goals. In an

era of flat energy prices, manufacturers see limited

market demand for energy efficiency. This suggests that expanded Federal R&D support for energy efficiency may be appropriate.

Investments in energy efficiency require credible and complete information on the costs and

savings of such investments. Unfortunately, data

on fuel efficiency of trucks are often difficult to

find and, where available, difficult to compare

across models because there is no standardized

testing method. Extending the existing testing and

labeling program for light-duty vehicles to freight

trucks would provide consumers with the information needed to make optimal energy efficiency choices. There is also a need for testing and

certification of energy efficiency retrofit devices,

notably aerodynamic add-ens. The effects of labeling programs are difficult to measure,326 but

there are several reasons for the government to implement them: they improve consumer information, they provide manufacturers with a marketing

tool to promote highly efficient models, and a

government program will probably be seen as

more credible than a program run by an entity with

a direct economic incentive in the outcome.

Early retirement

One barrier to rapid market penetration of energyefficient truck technologies is the existence of a

large fleet of relatively inefficient (as compared to

new units) trucks. Early retirement of old trucks

would improve the energy efficiency of the fleet,

and offer considerable emissions and safety benefits as well. The disadvantages of such a program

include possible adverse equity effects and ques327 tions about its cost-effectiveness. There is insufficient experience with such programs to

mount a large-scale early retirement effort; however, it may be appropriate to investigate smaller,

experimental programs to see how well they work.

Promotion of intermodal freight movement

Intermodal movements have been growing rapidly, but there is room for this growth (o be accelerated. A recent survey of shippers found that the

3z6E~aluati(m t)f appliance labels is discussed in Office of Techn{)l(~gy Assessment, op. cit., footnote 318, pp. 1 I 3-116.

327 Earj V retlrerllent ~) fears ,s dlscus~cd in (-1. S. conor~~s offic~ (JfTcchno]ogy” Assessment, Rellrln,q ~~/d ~’~ir.$.’ ~)rf~,~r~inj.j ~~~ ,$~1~’f’ f;~J~(~/lne

e,

f~nd ReAtwc EmI~ $tons, OTA-E-536 (W’ashlngt{m, DC U.S. G(wemnwnt Printing Office, Jul} 1992).
Chapter 5 Policy Options for Transportation Energy Conservation 1255

major barrier to greater use of intermodal movements is the belief that intermodal transport is too

slow or unreliable.328 The causes of delay in intermodal service include excess circuity (i.e., unavailability of direct-route tracks) and, perhaps

most important, excessive delays at terminals.

Many terminals are located in urban areas, are too

small for their volume of traffic, and are difficult

for trucks to access. Infrastructure changes, such

as truck-only access roads from highways to intermodal terminals, or relocating terminals outside

of urban areas, could be considered. The Intermodal Surface Transportation Efficiency Act of 1991

(Public Law 102-240) established a National

Commission on Intermodal Transportation (section 5005), and requires the Commission to report

to Congress on barriers to greater use of intermodal service. Congress could consider the recommendations of the Commission carefully, with the

recognition that improved intermodal service

could have significant energy efficiency benefits.

~~xlntcrn~tdal Ai~~~clatit~n t~f North Armmca and the Nati{mal Industrial Transprtatitm League, /992 /n~ermoda/ lnde.r (Rivcrdale. MD

Dcccmber 1992), p. 14. Rallr{mls In general suffer fr(m~ a reputatitm f[~r unrel iability and px)r service; however, this is starting to change—see

“’Big R:lI] I( Flnal]~ R(~undlng the Bend. ” B1/\lnC\.$ tt’eeh’, N(~v. I ] , t 991, pp. ] 28-] 29.
I ndex

A

AAMA. See American Automobile Manufacturers

Association

Accidents, 133-134,222,229

ACEEE. See American Council for an Energy-Efficient Economy

Adults of driving age, 55, 83

Advanced automobiles. See Superefficient automobiles

Advanced traffic management systems, 244-245

Advanced traveler information systems, 244,245

AE093. See Annual Energy Outlook 1993

Agricultural impacts of air pollution, 129, 131-132

Air freight, 46,53,73-74

Air passenger travel

congestion problems, 24, 212-213

energy consumption overview, 6-7, 42-43

European and U.S. transportation systems comparison, 84,86

forecasting transportation energy consumption,

61-63,73-74

transportation trends, 48-49

Air pollution, 4, 27, 128-133, 228. See also Greenhouse effect

Air quality standards, 128-130, 173-175

Alternative fuel imports. See Energy security

Alternative fuel vehicles, 24-26, 162-169,229-230

Alternative fuels

background, 26-28, 169-173

description, 172

effect on greenhouse emissions, 169, 170-171

emissions and air quality impacts of, 173-175

energy security impacts of, 125-126, 175-176

gasoline taxes to address technology problems,

229-230

policy issues, 178

recent estimates of greenhouse impacts of,

177-178, 179

sources of uncertainty about the greenhouse and

energy use impact of, 176-177

American Automobile Manufacturers Association,

153-155

American Council for an Energy-Efficient Economy, 19, 154-155, 156-157, 160-161

American Housing Survey, 116

American Public Transit Association, 49

Annual Energy Outlook 1993,2,8-10,65-76,

139-140

Argonne National Laboratory Transportation Energy

and Emissions Modeling System, 69, 71,73,

74-76

Arizona

telecommuting project, 239

Asian and U.S. transportation systems comparison,

200-205. See also Japan

ATIS. See Advanced traveler information systems

ATMS. See Advanced traffic management systems

AT&T, 239

Automated vehicle control systems, 244,245

Automobiles. See also Corporate average fuel economy standards; Fuel economy; Light trucks; Motor vehicle infrastructure and services

attitudes toward, 95-96

classification of costs of motor vehicle use,

100-103

dominance in U.S. transportation system, 32,

94-95, 182

inefficiently priced costs, 12-13, 32-33, 98-111,

189-190,216-223

“internal” or private benefits, 96

ownership and use restrictions, 237

smart cars and highway systems, 244-246

societal benefits, 96-98,217-218

superefficient automobiles, 24-26, 162-169,

229-230

travel demand, 53-57

AVCS. See Automated vehicle control systems

B

Baseline Projection 1993,69,70,73

Battery electric vehicles and electric hybrids, 24-26,

167-168

BMW, 149

Bryan bill. See S. 279

1257
258 I Saving Energy in U.S. Transportation

c

CAAA. See Clean Air Act Amendments of 1990

CAFE credits. See Corporate average fuel economy

credits

CAFE standards. See Corporate average fuel economy standards

Cal ifornia

alternative fuel use promotion, 173

California Air Resources Board, 60-61, 171-173

congestion studies, 114

emission requirements and standards, 25, 60-61,

174, 175

Los Angeles commuting times, 116

Los Angeles ridesharing program, 236, 238,

239-240

Los Angeles Smart Street project, 246

Low Emission Vehicle Program, 26-27, 172-173

NRDC-Sierra Club analysis, 190-192

Orange County HOV lane study. 243

ozone effects, 129

Southern California congestion pricing estimate,

234

State of California Telecommunications Pilot

Project, 240

Telecommuting Advisory Council, 242

Canada

modal share of passenger transportation, 80

natural gas reserves, 125, 176

Carbon dioxide, 179,228. See also Greenhouse effect

Carbon monoxide, 132

Carpooling incentives, 236,242-244

CBO. See Congressional Budget Office

Census Bureau, 55

Chrysler Corp., 142, 150

Clean Air Act, 9,29,32, 128, 140

Clean Air Act Amendments of 1977, 130

Clean Air Act Amendments of 1990

clean fuels requirements, 26, 171

emissions requirements waiver limits, 194

TDM measures and, 3,20,230-231,240,242

Clean Car Initiative, 25-26, 163, 164

Clinton Administration’s Clean Car Initiative,

25-26, 163, 164

Commercial trucking. See Truck freight

Commodities, projected growth in, 64

Community development patterns, See Development patterns

Cornrnuiing patterns. See also Ridership of public

transport; Travel demand

congestion problem evaluation, 115-116, 120

snapshot of the U.S. transportation system, 6, 40,

48

TDM and, 238-239

Commuting times, 114-119, 121-122, 238-239

Congestion, See also Transportation demand management

counterarguments to congestion as major national

problem, 114-115

evaluation of data on, 115-122

as external cost of transportation, 93

gasoline taxes to address costs, 228

intercity travel and, 23-24, 212-213

land use change incentives, 210

light-duty vehicle travel and, 56-57

perception as major national problem, 13-14,33,

111-114

public transport costs and benefits, 188-189

Congestion pricing, 20,233-235

Congressional Budget Office, 156-157

Congressional Research Service, 127, 132

Corporate average fuel economy credits, 27, 169,

171, 175

Corporate average fuel economy standards

background, 4, 140-141

best schedule for new standards, 149-150

best standard types, 148-149

conclusions, 159

efficient and effective approaches to fuel conservation, I 41-143

employment impacts of, 18, 153-155, 154

energy security considerations, 126

feebates as alternative or complement to, 19-20,

159-162

freight transport and, 252

fuel savings from S. 279, 18-19, 156-157

gasoline t~xes’ impact on, 14-15

light-truck fuel economy regulation, 17-18,

157-159

safety and new fuel economy standards, 18,

150-153

U.S. new car fleet fuel economy potential, 16-17,

143-148

Costs of transportation. See also specific el-ternalities, i.e., Congestion: specific u-nprjced inpuls,

i.e., Parking

efficiently versus inefficiently priced costs, 12-13,

15, 99-1 (M, 103, 109-111,218,220

externalities as grounds for government intervention, 12, 92-94

inefficiently priced costs, 12-13, 32-33, 98-111,

189-190

public transport costs, benefits, and performance,

187-188, 188-190

CRS, See Congressional Research Service

Current status ~f the U.S. transportation system. See

also European and U.S. tran~portation ;ystems

comparison

fact(;rs that will affect transportation energy consumption, 8-10, 53-65
Index ] 259

perspectives on the nature of the problem and

solutions, 3-5, 33

snapshot of the transportation system, 5-7, 31-33,

35-46

transportation data and precision, 36

transportation energy use and potential for conservation, 7-8

trends in transportation, 46-53

D

DeLuchi study

conclusions, 12-13, 109-111

detailed results, 103-109

summary of key results, 99-103. I 78, 179

Department of Energy, 19, 156-157

Department of Transportation, 20, 188, 240-241,

246

Desert Storm campaign expenditures, 122, 127

Development p~tterns. 40-41, 57.96. See also Land

use; Urban fornl

Diesel fuel taxes, 250-251, 252

DOE. See Department of Energy

DOT. See Department of Transportation

Downsizing of the U.S. car fleet, 150- ]53

DRI/McGraw Hill Spring/Summer Energy Forecast,

69, 70, 72, 74

Driving-age adults, 55, 83

Driving time saturation among high-mileage drivers,

56

E

Early retirement of trucks, 254

Eastern Bloc

natural gas reserves, 126, 176

Economic effects of gasoline taxes, 14-15, 224-230

Economic efficiency of motor vehicle travel. See

Efficiently versus inefficiently priced costs of

transportation

Economic security, 93, 228-229. See also Energy

security

Economic structure, light-duty vehicle travel and.

56

Ecosystem losses, 134

Efficiently versus inefficiently priced costs of transportation. See also Inefficiently priced costs of

transportation

conclusions, 109-111

economic efficiency concept. 15

summary. 12-13, 99-1 ()(), 103, 218, 220

EIA. ScJe Energy Infomlation Administration

Electric vehicles, 24-26, 165-168

Emissions controls, 130-131, 173-175

Employment issues, 18, 98, 121, 153-155. See also

Women in the workforce

Energy efficiency, 247-255, 2S2-253. See also Fuel

economy

Energy Information Administration

aging of the population projections, 55

alternative fuel use, I 73

Annual liner-g> Outlook 199.7, 2, 8-10, 65-76,

139-140

Energy Modeling Forum, 15

Energy Policy Act of 1992, 3, 9, 27, 28, ] 73

Energy Policy and Conservation Act, 252

Energy security

alternative fuel impacts on, 27, 175-176

background, 4, 122-123

conservation impact on, 125-126

costs of, 126-128

costs of public expenditures for motor vet] icle

infrastructure and services, 106, 107

extent of the security threat, 123-125

as external cost of transporttition, 93

gasol inc taxes to address costs, 228-229

Energy Security Act, 178

Energy taxes. ScC~ Diesel fuel taxes; Gasoline taxes

Environmental costs of transportation, 32,93, 134,

228. See also Air pollution

Environmental Protection Agency. 61, 121, 128, 130

EPA. See Environmental Protection Agency

EPACT. See Energy Policy Act of 1992

European and U.S. transportation systems c(~mparison

automobile dominance, 32, 94-95, 182

conclusions, 87-89

convergence of transport patterns, 207-208, 211

freight transport energy USC, 86-87

high-speed rail systems, 214-215

introduction, 1 ()-12

modal share of passenger transportation, 80

Munich parking space elimination. 238

Newman and Kenworthy study findings, 200-205

passenger transport energy use, 78-84, 84-86

public transport use, 181

truck freight prevalence in Europe, 43, 87

urban land ownership, 211

U.S. potential to move toward European transport

energy levels, 11-12, 77-78

EVS. See Electric vehicles

External costs of motor vehicle use. See also specific

e.x-ternalties, i.e., Congestion

background, 4

estimates of nonmonetary costs, 107, 108

,gasol ine taxes to address. 227-230

as grounds for government intervention, 92-94

implementation considerations, 132-134

social cost pricing po] icy and, 222-223
260 I Saving Energy in U.S. Transportation

F

Federal Aviation Administration, 212

Federal Highway Administration

ATMS technology cost estimates, 245

congestion studies, 4, 13-14, 111, 112, 114,

117-122, 140

highway accidents study, 133

highway cost allocation study, 218

HOV designations, 242

Federal procurement of trucks, 254

Federal R&D and information programs relating to

truck energy, 254

Federal Reserve System, 15,225

Federal Transit Administration, 187

Feebate programs, 19-20, 159-162,251-252

FHWA. See Federal Highway Administration

Fleet fuel economy potential, 16-17, 143-148

Ford Motor Company, 142

Forecasting transportation energy consumption

air passenger travel, 61-63

alternative forecasts, 65-76

freight transport, 63-65

fuel economy and light-duty vehicles, 57-61

initiation of federal policy measures, 139-140

introduction, 2-3

summary, 8-10

travel demand and light-duty vehicles, 53-57

Former Soviet Union

changes in U.S. relationship, 124, 176

France

auto travel per capita, 85

high-speed rail system, 214-215

light-duty vehicle ownership per capita, 208

passenger-miles per capita, 85

passenger transport, 80

vehicle efficiency, 202

Freight transport

tittributes of freight transport modes, 248

energy conservation potential, 28-29, 248-250

~n~rgy consumption overview, 7, 43-46

cmrgy use in the U.S. and Europe, 11,86-87

t’in:muiill incentives to increase fuel efficiency,

250-252

t’orccmring transportation energy consumption,

63-65,66-70,74-76

policy context for reducing energy use, 247-248

production of materials and goods and, 50

regulations and govcmment programs to increase

fuel efficiency, 252-255

transportation trends, 50-53,73-74

truck fleet (1987), 44

U.S. freight transport system (1989), 44

Fuel-cell vehicles, 24-26, 166-167

Fuel economy. See ako Corporate average fuel

economy standards

air travel, 62-63

freight trucks, 64-65

light-duty vehicles, 57-61

scenarios of automotive fuel economy, 145-146

superefficient automobiles, 24-26, 162-169

U.S. new car fleet fuel economy potential, 16-17,

143-148

vehicle-miles traveled and, 71-73

Fuel neutrality policy, 28

Fuel taxes. See Diesel fuel taxes; Gasoline taxes

Full cost accounting system, 15-16,98-99, 110-111.

See also Social cost pricing policy

G

Gas guzzler taxes, 160

Gas Research Institute Baseline Projection 1993,69,

70,73

Gasoline prices, 81,82,91-92,209,225-227

Gasoline taxes

alternative fuel technology “chicken-and-egg”

problem, 229-230

alternative fuels taxation, 28

automobile accidents and, 229

background, 4,224

CAFE standards’ cost-effectiveness versus,

142-143

congestion and, 228

as energy conservation policy option, 14-15, 159

energy security and, 228-229

environmental harm and, 228

government intervention strategies for energy

conservation, 91-92

impacts on economic variables, 224-227

matching the instrument with the externality, 230

model-based results, 230

subsidized costs of infrastructure and services

and, 220-221

subsidized parking and, 227-228

unpriced highway services and, 227

General Motors Company, 25, 142, 151, 158, 165

General Services Administration, 254

Germany. See West Germany

Government intervention considerations. See Intervention considerations

Great Britain. See United Kingdom

Greenhouse effect

of alternative fuels, 27-28, 169, 170-171,

176-178, 179

background, 4

gasoline taxes to address costs, 228

GR193. See Gas Research Institute Baseline Projection 1993
Index 1261

H

Hawaii

Honolulu work hour demonstration project,

238-239

Health impacts of air pollution, 128-129, 131,

132-133

Heavy t~~ks, 44,51-52,70

Hidden private expenditures for motor vehicles.

105-106, 221-222. See also specific unpricecl inputs, i.e., Parking

High-mileage drivers, driving time saturation

among, 56

High-occupancy vehicle lanes, 20-21,242-244

High-speed ground transportation systems, 23-24,

212-216

High-speed rail systems, 23-24, 212-216

Highway speed limit enforcement, 253-354

Highway speed measures, use in evaluating congestion problems, 13-14, 115-120

Highway system. See a/so Congestion

gasoline taxes to address unpriced services, 227

intelligent vehicle-highway systems, 244-246

monetary payments by users for highways and

services, 104-105

public expenditures for infrastructure and services, 106, 107, 220-221

snapshot of the U.S. transportation system, 6, 34,

37-38

Highway Trust Fund, 227

HOV lanes. See High-occupancy vehicle lanes

HSGT systems. See High-speed ground transportation systems

I

ICC. See Interstate Commerce Commission

Inefficiently priced costs of transportation. See also

specific e.x-ternalities, i.e., Congestion; specific

unpriced inputs, i.e., Parking

causes and prescriptions, 218, 219

conclusions, 109-111

correction for, 92

exterrulitics. 107, 108, 222-223

hidden private expenditures for motor vehicles,

105-106,221-222

introduction and viewpoint, 4, 12-13, 15-16,

32-33,98-103

monetary payments by users for highways and

services, 104-105

monetary payments for motor vehicles, fuel, and

other items, 103, 104

nonmonctary personal costs, 107-109

public expenditures for motor vehicle infrastructure and services, 106, 107, 220-221

public transport costs and benefits evaluation,

189-190

social cost pricing policy and, 216-223

Infrastructure and services. See Motor vehicle infrastructure and services

Insurance Institute for Highway Safety, 151

Intelligent vehicle-highway systems, 21,244-246

Intcrcity travel and high-speed ground transportation

systems, 23-24, 212-216

Intermodal Surface Transportation Efficiency Act of

]991

energy conservation goals, 3

intcrmoda] freight movement promotion, 255

IVHS funding, 246

TDM measures and, 20,21,231,235,242

tclecommuting funding, 240

transit projections and, 9, 29

Intem~odal transport, 7, 29,51, 248-250, 255

Internal combustion engine vehicle designs,

163-165

Interstate Commerce Commission, 45,50

Intervention considerations

automobile benefits, 94-98

background, 9 I -92

congestion issue, 111-122

correction for an existing network of subsid ics

and inefficient pricing, 92

energy security, 122-128

externalities, 92-94, 132-134

incffic ient pricing (subsidies, extcmal i ties, hidden

costs), 12-13, 32-33, 92, 98-111

ozone pollution, 128-132

ISTEA. See Interrnodal Surface Transportation Efficiency Act of 1991

Italy

auto travel per capita, 85

light-duty vehicle ownership per capita, 208

passenger transport, 80

vehicle efficiency, 202

IVHS. See Intelligent vehicle-highway systems

J

Japan

feebatcs’ impact on U.S. car fleet cornpetiti\cncss, 19-20, 160

high-speed rail system, 214-215

light-duty vehicle ownership per capita, 32, 208

oil imports, 124-125

vehicle efficiency, 202

L

Land use. See also Development patterns; Urban

form
262 I Saving Energy in U.S. Transportation

automobile use growth and, 98

congestion problem and, 120

ecosystem losses due to transport

European and U.S. transportation

parison, 82-83,207-208,211

incentives for changes, 290-210

lack of examples of changes, 207

need for shifts in. 206-207

systems, 134

systems compolicy questions, 22-23,34,210-211

preferences of residents, 208-209

public transport relationship to, 23, 181-182

snapshot of the U.S. transportation system, 40-41

time frames of changes, 210

transportation impacts of, 133

Lawrence Berkeley Laboratory, 19-20, 161-162,202

LEVP. See Low Emission Vehicle Program

Light-duty vehicles. See Automobiles; Light trucks

Light trucks

classification of costs of motor vehicle use,

100-103

energy consumption overview, 43-44

fuel economy, 57-61

fuel economy regulation, 17-18, 157-159

travel demand, 53-57

Local road costs, 222

Low Emission Vehicle Program, 26-27, 172-173

M

Magnetically levitated (maglev) trains, 23-24,

212-216

Mandatory ridesharing, 237-238

Market power associated with oil use reduction, 127

Mass transit. See Public transport

Massachusetts

LEVP adoption, 172

Mercedes-Benz, 149

Methanol, 126

Mexico

natural gas reserves, 125, 176

Middle East-Persian Gulf region

natural gas reserves, 126, 176

U.S. national security expenditures, 127-128

U.S. oil import dependency, 122, 124

Military expenditures for energy security, 122,

127-128

Mode shifts. See Intermodal transport

Monetary payments by individuals. See also Private

costs of transportation

for highways and services, 104-105

for motor vehicles, fuel, and other items, 103, 104

Monopsony component of oil premiums, 127

Motor Carrier Act of 1980,50

Motor fuels taxes. See Diesel fuel taxes; Gasoline

taxes

Motor vehicle costs. See External costs of motor

vehicle use

Motor vehicle infrastructure and services

gasoline taxes to address unpriced services, 227

monetary payments by users, 104-105

public expenditures for, 106, 107,220-221,

242-246

Motor vehicles. See Automobiles; Corporate average fuel economy standards; Fuel economy:

Light trucks; Truck freight

N

National Commission on Intermodal Transportation,

255

National Highway Traffic Safety Administration,

151, 152

National Research Council, 146

National security expenditures, 106, 107, 122,

127-128. See also Energy security

Nationwide Personal Transportation Survey

on commuting times, I 14-11 S

load factor statistics, 56

on parking costs, 105

person-miles of travel statistics, 212

on public transport ridership, 49, 184

vehicle-miles traveled statistics, 241

Natural gas, 125-126

Natural Resources Defense Council-Sierra Club

analysis, 190-192

New Hampshire

commuting times, 116

New York

LEVP adoption, 172

Newman and Kenworthy study findings

automobile orientation, 201

background, 200-201

energy use per capita, 201-202

reliability of the data, 205

residential density and gasoline use, 202-203

residential density and job balance, 201

role of other variables, 203-205

travel volume, 201

vehicle efficiency, 202

NHTSA. See National Highway Traffic Safety Administration

Nitrogen oxides, 129-130

Noise and vibration problems caused by transportation, 134

Nonmonetary costs of transportation. See also specific externalities, i.e., Congestion

imposed by motor vehicle users on others, 107,

108

personal costs, 107-109

Nonpeak road use pricing, 235-236
Index 1263

NPTS. Scc Nationwide Personal Transportation Survey

NRC. Sce National Resew-ch Council

NRDC. SCc Natural Resources Defense CouncilSierra Club analysis

o

OECD. Sec Organization for Economic Cooperation

and Development

Oil consumption in U.S. SW Current status of the

U.S. transportation system; European tind U.S.

transportation s~stcnls comparison

Oil imports. 5’CC Energy security

Oil supply disruption, costs of, 127

Oi] taxes, ] ~~. .$(]C ~i/.s{j Dicsc] fLlc] taxes: Gasoline

taxes

Oregon

Portland land usc programs, 22,29, 140, 193,207

Orgimizution for Econ(~mic Cooperation and Dcvcloprncnt, 9 I -92, 1 24- I 25.238

C)zonc pollution

controlling ~olatilc organic compounds. 130-132

ozone and its precursors, 1 29- I 30

ozone control, 128-129

P

Park in:

costs of, 221-222, 227-228

inuorp~rat ion of park in: rcq u iremcnts in zoning

ordinances. 238

pricing, 20, 22 I -222, 232-233

Particulate air pollution,” 132-1.33

pusscnger trak’e]. .$CC a/.$o public transport

encr.g~ consumption ()~cn icw. 5-7, 37-43

energy LISC changes in the U.S. and E~uropc, 84-86

energy usc in the U.S. and Europe todaj, 1()-1 1,

78-84

forecasting transportation encrg)f consumption,

71-76

intcrcitj tra~cl and HSCJT systems. 212-216

transport:it ion trcn~!s, 47-49

Peak pricing, 233-235

Performance tcchnolo:j” inundates, 252-253

Persian Gulf. Scc Midd]c East-Persian Gulf region

Pigou\ ian ttikci, 22.3

Pipeline\, 46

Polic~ i$suc~ and options”

altcmatit c fuels and uonwrvtition, 26-28, 169-179

background. ] ~, ] 35-] 39

uost$ and bcncfi t~ of changts, 138

criteria for transp(xt:]t ion energy cwnscnation

option icle~-t ion, I 37

fccbatcs ~~ alternatii c or complement to CAFE

stmd:irds, 19-20, 159-162

freight energy usc reduction, 28-29, 247-255

gas~]inc taxes, 14_] 5, 224_230

initiation of Federal policy measures, 29, 139-140

intercity travel and HSGT, 212-216

introduction, 1-5, 31-34

new fuel economy standards, 16-19, 140-159

ovcrv icw, 29-30

public transportation, 21-22, 180-199

social cost pricing policy, 15-16, 216-223

supercfficicnt automobiles, 24-26, 162-169

transportation demand management, 20-21,

230-247

urban fornl and transportation, 22-23, 199-212

Porsche. 149

Power and Associates research, 95-96

Pricing mechanisms. See .vpec~’c nlechanisnl.~, i.e.,

Gasoline taxes

Pricing parking, 20, 221-222, 2.32-233

Pricing travel, 20, 233-236

Private benefits of automobiles, 96, 218

Private costs of transportation, 103-106, 218, 220,

221-222

Public expenditures for motor vehicle infrastructure

and services, 106, 107, 220-221, 242-246. SC()

also Subsicl ics

Pub] ic transport. SCe also High-speed ground transportation systems

tictivc vehicle fleet and infrastructure, 39

automobile benefits comparison with, 96, 97-98

bookkeeping problems and transit patronage, 197,

198

conclusions, 197, 199

cost per passenger of recent rail transit projects.

] ~g

costs and benefits evaluation, 188-190

critics’ views on expansion. 4, 182-183

energy consumption overview. 6, 39-42

European and U.S. usage comparison, 85-86, 181,

182

land use change incentives, 209-210

magnification of transit benefits, 190-192

metropolitan areas with over 10 percent of workers using public transport, 184

performance in the U. S., 183-188

policy issues and options background, 21-22,34,

192-193

political impetus for- changes. 193-194

proponents’ views on expansion, 4, 1 80-I 82

ridcrship potential for, 194-195

transportation trends, 49

urban fornl and, 23, 195-197

R

Rail freight, 7, 45-46, 52, 248-250

Rail passenger tra}cl, 84, 86
264 I Saving Energy in U.S. Transportation

Railroad Revitalization and Regulatory Refoml Act,

50

RCI. See Roadway Congestion Index

Rebates. See Feebate programs

Regional Rail Reorganization Act, 50

Regulation XV, 236,238,239

Residential development patterns. See Development

patterns

Ridcrship of public transport, 184-187, 189,

194-195, 197, 198

Ridesharing

incentives, 236, 242-244

requirements, 237-238

Road congestion. See (congestion

Road use pricing, 20,233-236

Roadway Congestion Index, 112, 113

Rural areas, automobile benefits in, 97

s

S. 279

background, 140, 148

fuel savings from, 18-19, 156-157

light-truck fuel economy regulation, 157

safety issues, 150

Safety concerns, 18, 150-153,245

Safety costs of transportation, 93, 133-134, 222, 229

Security considerations. See Economic security; Energy security

Shoup and Wilson estimates, 233

Sierra Club, 190-192

Singapore

congestion pricing program, 235

Smart cars and highway systems, 244-246

Smart Street project, 246

Social benefits of automobiles, 33,96-98,217-218

Social cost pricing policy. See also Inefficiently

priced costs of transportation; specific e.rrernufi-

;ies, i.e., Congestion-: specific unpriced inp14ts,

i.e., Park ing

accuracy problems, 217

background, 216-217

efficiently priced but often overlooked items, 218,

220

externalities, 222-223

hidden private-sector costs, 221-222

identify-ing policy mechanisms, 218

incorporation of social benefits, 217-218

marginal versus average costs, 103, 217

policy prescriptions for social cost accounting,

218

public infrastructure and services, 220-221

S&ial costs of motor vehicle use. See Inefficiently

priced costs of transportation; Social cost pricing

policy; specific externalities, i.e., Congestion;

specific unpriced inpufs, i.e., Parking

Southern California Air Quality Management District, 239-240

Speed limit enforcement, 253-354

Speed measures, use in evaluating congestion problems, 13-14, 115-120

Staggers Act, 50

Stanford University Energy Modeling Forum, 15

State of California Telecommunications Pilot Project, 240

Strategic Petroleum Reserve, 122,229

Subsidies

automobile, 192

correction for, 92

free parking, 227-228

pricing parking and, 20,221-222,232-233

public expenditures for infrastructure and services, 106, 107, 220-221, 242-246

public transport bookkeeping problems and patronage, 21-22, 197, 198

Supereffi~ient automobiles, 24-26, 162-169,

229-230

Surface Transportation Assistance Act, 50-51

Sweden

auto travel per capita, 85

company car use, 84

passenger-miles per capita, 85

passenger transport, 80

T

Tax policy. See also specific fuxes, i.e., Gasoline

taxes alternative fuels and, 178

European and U.S. transportation systems comparison, 81, 82

monetary payments for highways and services,

104-105

price incentives tied to fuel economy, 160

pricing parking option and, 232-233

social cost pricing policy and, 222-223

TCMS. See Transportation control measures

TDM. See Transportation demand management

Technical energy-efficiency improvements, 125

TEEMS, See Transportation Energy and Emissions

Modeling System

Telecommuting

background, 20,239-240

energy use impact of, 240-241

policies to stimulate, 241-242

travel behavior impact of, 240

Texas

Houston commuting times, 116

Texas Transportation Institute, 112, 113, 117-121
Index 1265

Tolls. See Travel pricing

Traffic congestion. See Congestion

Traffic problems. See Congestion; Transportation

control measures; Transportation demand management

Traffic sign~ling improvements, 246

Train transportation. See Rail freight; Rail passenger

travel

Transportation control measures, 130-131,231,242.

Scc also Transportation demand management

Transportation costs. See Costs of transportation

Transportation demand management

automobile ownership and use restrictions, 237

background, 230-232

conclusions, 246-247

economic incentives, 232-236

HOV lanes, 20-21, 242-244

intelligent vehicle-highway systems, 21, 244-246

mandtitory ridcsharing. 237-238

m)npcak road usc pricing, 235-236

parking rcquircmcnts incorporation in zoning ordinances, 238

pricing parking, 20, 221-222, 232-233

pricing travel, 20, 233-236

regulatory mandates, 236-239

ridesharing incentives, 236, 242-244

telccommuting, 20, 239-242

traffic signaling improvements, 246

work schedule altcr~tion, 238-239

Transportation Encrgj{ and Enli\sions Modeling System, 69, 71, 73, 74-76

Transportation Research Board, 118, 153, 213

Travel demand, 53-57, 71-73, 94. See also Transportation c(mtrol measures: Transportation dcrnand n)anagcnwnt

Travel pricing, 20, 2.33-236

TRB. See Transportation Research Board

Truck freight

energy conscnation potential, 28-29, 248-250

energy wnsumpt ion overv icw, 7, 43-45

financial inccntiics to increase fuel efficiency,

250-252

forccdsting transportation energy consumption,

63-65

fuel economy tcchnologics, 66-67

high-efficiency heavy trucks, 70

opcrtitional strategies to improve fuel efficiency,

68-69

policj contest for reducing energy use, 247-248

prevalence in Europe, 43, 87

rcgu]at ions and government programs to increase

fuel efficiency. 252-255

transportation trends, 51-52

Truck weight and size limits, 253

TTI. See TcAas Transportation Institute

u

Ultralite prototype, 165

United Kingdom

auto travel per capita, 85

company car use, 84

light-duty vehicle ownership per capita, 208

passenger-miles per capita, 85

passenger transport, 80

vehicle efficiency, 202

Unpriced inputs, 12. See also Inefficiently priced

costs of transportation; specific unpriced inputs,

i.e., Parking

Urban form. See also Development patterns; Land

use

background, 22-23, 199-200

cause and effect issue, 205-206

conclusions, 211-212

European and U.S. transportation systems comparison, 82

evidence for a strong urban form-transportation

energy use relationship, 200-205

land use change, 206-211

public transport and, 195-197

reliability of the data, 205

Urban Mass Transit Administration, 195-196

U.S. new car fleet fuel economy potential, 16-17,

143-148

v

VAFE standards. See Volume average fuel economy

standards

Vehicle availability, light-duty vehicle travel and, 56

Vehicle load factor, light-duty vehicle travel and,

55-56

Vehicle-miles traveled, 53-57,71-73, 112, 113,241

VOCS. See Volatile organic compounds

Volatile organic compounds, 129-132

Volume average fuel economy standards, 148-149

w

Washington

Seattle HOV lane study, 243

Waterborne freight, 46,52-53

West Germany

auto travel per capita, 85

company car use, 84

high-speed rail system, 214-215

light-duty vehicle ownership per capita, 208

Munich parking space elimination, 238

passenger-miles per capita, 85

passenger transport, 80

Western Europe. See European and U.S. transportation systems comparison

Women in the workforce, 54-55,83, 121

ti U S GOVERtJMENT PRIPJTING OFFICE 1994– 30 1 - 8 0 4 / 1 74 1 2
266 I Saving Energy in U.S. Transportation

Work schedule alteration, 238-239. See also Tclccommuting

World oil market changes, 123-124, 229

Wyoming

commuting times, 116

Y

Younger drivers, 237

z

Zero emission vehicle requirements, 25,26-27

Zoning ordinances, incorporation of parking rcquircmcnts in, 238

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