21^st Century Transportation: Expanding Mobility through Technology

Presentation to the Transportation Issue Seminar Multi-State Highway Transportation Agreement Sun Valley, Idaho July 24, 1997
By: Wendell Cox

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INTRODUCTION

It is appropriate to consider the future of transportation as we stand at the threshold of a new millennium. During the last quarter century, information technology has revolutionized how we live and work. Little of that change, however, has impacted transportation. Indeed, many of our transportation policies appear to have the intention of restoring 19^th century technologies and mobility patterns. But that is soon to change.

THE SITUATION

As we survey the late 20^th century, the following is evident:

The street and highway system continues to carry the overwhelming majority of passenger trips and passenger miles --- more than 95 percent of surface passenger miles.

It is also evident that the least expensive forms of transportation are private modes --- automobiles, intercity buses and airlines. The most expensive modes of passenger transport are also the most highly subsidized. School buses are an exception to this rule, being 100 percent subsidized, but being very cost effective.

The street and highway system carries virtually all freight, some over the entire journey and the balance in supplementing air, rail and water transport.

At the same time there is considerable concern about highway impacts, especially air pollution, traffic congestion and the fear of future petroleum supply shortages. In response many analysts suggest that there is too much personal mobility, and that we should return to the transportation strategies of the 19^th century, such as urban rail and intercity rail. These systems served the community well, especially when urban densities were 15,000 per square mile or more. Today's urban area, with 3,000 per square mile, falls far short of the critical mass necessary to justify a return to the past. Even Portland, with its aggressive densification policies will fall short of achieving Los Angeles densities if its 50 year plan is successful (itself an optimistic assumption). The reality, however, is not as stark as has been claimed.

Considerable progress has been made in reducing air pollution. Even in Los Angeles the number of poor air quality days has been radically reduced. It is no overstatement to note that the air in our cities is cleaner than it was before the automobile.

Traffic congestion ---"gridlock" --- is costly, but compared to what? Average commuting time on transit is double that of automobiles. Without understating the costs of congestion, it is well to note that the market responds. Businesses locate to less congested areas, and people seek to reduce work trip travel times by changing jobs or residences. The resiliency of the US highway system is indicated by the fact that little urban freeway construction took place in the 1980s, single occupant automobile commuting rose one-third (22 million trips daily in two directions), yet average work trip travel time increased an imperceivable 45 seconds. Moreover, "gridlock" of the type reported by the media, located in New York, Washington and Los Angeles is foreign to all but a few other metropolitan areas.

The world is in no danger of running out of petroleum. Reserves continue to be discovered at a rate that increases the identified stock of petroleum. It should be remembered that the "gas shortages" of the 1970s had more to do with the failure of government allocation systems than the market. Since market mechanisms have been allowed to operate there has been no shortage of petroleum. When supplies truly begin to "run out" we will all be aware of it, as market prices skyrocket by two or three times.

Airlines: Virtually the same concerns exist in the airline industry. We are warned that "winglock" is around the corner, and that we cannot create more airspace. But technology is doing just that. The nation's air traffic control system is being upgraded from 1960s technology to 21^st century technology, while strategies such as "free flight" will further expand the nation's airline capacity. Airline usage continues to grow, as the skies are "democratized" (according to Southwest Airlines television commercials) by deregulation and competition. Airline travel is increasing so rapidly that it is slightly eroding the percentage of travel by automobile. Despite the claims of the critics, the "sky is not falling," and virtually every crowded airport in the nation is underway with the planning or construction necessary to meet continually increasing demand.

PUBLIC TRANSIT

For more than a quarter century, federal, state and local policies have sought to entice people away from automobiles and into public transit. More than $300 billion in public subsidies have been expended to support transit --- this amount rivals what was spent to build the entire interstate highway. The overall failure of these policies rivals that of the "war on poverty."

Since 1970, automobile and light truck use has increased 85 percent, while transit use has declined by three percent. Most of transit's decline has occurred since 1983, the last year before transit receive a dedication of funding from federal highway user fees.

Today transit represents barely one percent of the nation's surface passenger travel. Transit's share of travel has declined so much that doubling or tripling ridership would have an imperceivable impact except in a very few of the nation's largest central cities. School buses account for more than twice as many passenger miles as transit.

During the 1980s, transit's work trip market share declined in all but two of the 39 largest metropolitan areas, and in all of the metropolitan areas that built or expanded urban rail systems.

The 1990s are proving to be even worse than the 1980s with respect to transit ridership. From 1990 to 1995, the ridership loss exceeded the entire loss between 1980 and 1990. Worse still, the largest losses have been in the metropolitan areas most dependent upon transit. Gains have been registered only in metropolitan areas where transit's market share is, at most, of very limited significance (Table in Appendix).

The allure of urban rail is proving to be no more than an allure. In Los Angeles, where I served on the transit & highway policy board (the Los Angeles County Transportation Commission) transit ridership has dropped more than 25 percent since 1985 --- despite opening three new rail lines. Moreover, the new rail systems are having little or no impact on highways. From St. Louis to Portland, highway traffic volumes have continued to increase despite the addition of urban rail. Washington, DC's $12 billion metrorail system has attracted so few automobile commuters that the overall share of work trips is lower today in that metropolitan area than before the system was built.

Transit productivity continues to decline. Passengers per $1,000 in operating expenditure has dropped by more than half since 1970. During the same period, virtually every other mode of transport has maintained or improved its productivity (even Amtrak). Transit costs per passenger have escalated nearly 50 percent relative to inflation since 1983, which translates to $7.1 billion in annual spending above inflation in 1995 --- more than the state of California spent on highways. Cost increases exceeded 25 percent in the two largest western states, California (25.4%) and Washington (49.5%. Annual operating costs increased by $430 million in California and $120 million in Washington. However four western states reduced their costs per passenger --- Arizona (-11.0%), Colorado (-10.6%), Nevada (-5.4%) and Oregon (-3.8%). In Colorado and Nevada the driving force was a major expansion of competitive contracting, while Arizona has a history of substantial private sector involvement in transit (Appendices B and C).

In what is perhaps the most stunning development, automobile fuel efficiency has improved so much that public transit bus energy consumption is 30 percent higher per passenger mile. Overall auto and transit energy consumption per passenger mile, including urban rail, is approximately the same as that of the automobile. Transit energy consumption is trending upward, while auto energy consumption is dropping.

Why has transit policy failed? There are two fundamental causes --- transit policies that are anti-transit, and demographic trends.

Anti-transit policies: Federal transit policy discourages efficiency, both in operations and capital projects, and as a result discourages transit use itself.

Operations: Federal policies force the cost of transit operations up artificially, especially through labor protection provisions that require up to six years severance for laid off employees. At the local level these policies create a situation in which transit agencies are unable or unwilling to employ cost effective service provision alternatives, such as competitive contracting, with the effect that transit costs per mile are often double what is necessary. As a result, less transit service is provided, and there is lower ridership. Where competitive contracting has been implemented, the results have been very positive. Denver has been able to use the savings to expand service and increase ridership by 25 percent. San Diego has increased service levels by half while operating costs have increased only three percent. And, transit systems are being converted to competitive contracting around the world --- London, Stockholm, Copenhagen, Perth, Melbourne, Adelaide, and soon the entire nation of South Africa.⁽¹⁾

Capital projects: Experience has demonstrated that there is no more expensive way to improve transit than urban rail. Virtually all new rail systems have attracted so few drivers from automobiles that it would have been less expensive to lease each a new automobile every two years. In spending more than necessary to implement urban rail, opportunities for more effective improvement are forgone, to the detriment of the greater number of new riders who would be served. Too often urban rail is driven by a desire to become a "world class city," a civic pride that manifests itself in construction of publicly financed convention centers, domed stadia and urban rail. To put it in Freudian terms, urban rail in America has more to do with "infrastructure envy" than transportation.

Demographics: The most important reason, however, that transit policy has failed is that transit systems are designed to serve areas of high density and concentration of destinations. In most American urban areas, the only destination that can be effectively served by transit is downtown. Transit is simply incapable of providing a reasonable level of mobility for the suburb to suburb trips that predominate. To what degree transit's inefficiency has contributed to these trends is unclear.

Despite all of this, there are substantial efforts to increase transit funding. Publicity surrounding one recent report suggested that transit takes so many cars off the road that the I-495 Capital Beltway around Washington, DC would need to be expanded by 29 needs.⁽²⁾ That virtually no transit operates on this roadway seems not to have been a concern. In most cities, the estimated additional miles of freeway that transit usage makes unnecessary is overstated by 30 to 60 times, even if it is assumed that all freeways operate at capacity.⁽³⁾

The same report noted that transit is 20 times as safe as automobiles. In fact, the reality is that travel by urban freeway is safer than transit.⁽⁴⁾ Travel by urban streets and freeways is about as safe as transit.

INTERCITY RAIL

Amtrak: National policy with respect to intercity rail has been no more successful than transit policy. Amtrak is near bankruptcy, having consumed $20 billion in federal subsidies, while carrying 0.1 percent of the nation's travel. Amtrak is now the nation's 13^th largest intercity transportation company, smaller than 11 airlines and Greyhound Lines. The largest airlines carry more than 10 times as many passenger miles as Amtrak. Amtrak's cost per passenger mile is now more than double that of automobiles, airlines and intercity buses.

Moreover, Amtrak provides scant relief to highways. Our Cato Institute Amtrak report estimates that Amtrak trains between New York and Philadelphia reduce automobile traffic by no more than two percent of highway capacity --- Amtrak figures are higher --- 3.2 percent.⁽⁵⁾ Mirroring our findings, the US Government Accounting Office estimated that, at peak travel periods, Amtrak service between Los Angeles and San Diego reduces traffic by 0.7 percent.⁽⁶⁾

A "temporary" dedication of 0.5 cent of federal highway user fees is being considered by Congress. This is surely not the answer. Amtrak's fundamental problem is that its costs are well above market. Providing additional public subsidy is likely only to encourage even greater cost growth. And anyone who believes that an Amtrak highway user fee dedication would be temporary is unfamiliar with Washington's processes.

The recent report by the Congressional commission offered fresh policy options -- the most important being a privatization of Amtrak similar to that already implemented for British Rail. Individual routes would be franchised for specific periods and operated by private companies who would bid a maximum subsidy to provide the required level of service.

Frankly, the best alternative might well be to allow Amtrak to file for bankruptcy, just as much larger transportation systems have in the past (such as Eastern Airlines, Continental Airlines, Trans World Airlines and Pan American Airways). As with the airlines, the Amtrak system would continue to operate during the bankruptcy process. There seems no doubt that Amtrak's most important service would survive --- along the Northeast corridor from Washington to Boston. Moreover, it is quite likely that other routes would survive, as a competitive cost structure would make service financially viable along corridors that produce heavy losses today.

High Speed Rail: No more promising than Amtrak is high speed rail of the variety operated in Japan, France and other nations in Europe. The proposed Florida line from Miami through Orlando to Tampa would require heavy subsidies and have virtually no impact on traffic in the state, even if the highly optimistic ridership projections of the promoters could be believed.⁽⁷⁾ The maximum reduction of vehicles from freeways due to high speed rail (HSR) in the corridor would be no more than 80 --- 1/30 of a single lane's capacity.

High speed rail would reduce traffic by so little in Florida that, even at today's high cost of highway construction, high speed rail is estimated to be 64 times more costly per passenger than highway expansion. High speed rail is estimated to be at least seven times more costly per passenger than Miami's airport expansion (which will double capacity).

Moreover, high speed rail is unable to compete with the airlines on price. Latest US Department of Transportation data indicates that the average airfare in Florida's high speed rail markets has dropped to 38.4 percent below the projected average high speed rail fare.⁽⁸⁾ Like Amtrak, high speed rail is likely to require massive subsidies. If high speed rail charged air fares competitive with airlines (which we would consider an absolute necessity), fares would be insufficient to cover capital costs and debt service. Under these circumstances, in the best case,⁽⁹⁾ the Florida project would require $10 billion in state subsidies and federal bond guarantees. Our analysis indicates that bond default is likely within five years.

Two recent national reports have concluded that high speed rail is not commercially viable in the United States. A 1991 National Research Council report reviewed 33 potential high speed rail markets and found:

In nearly all these markets, break even operation would require not only low costs but also the ability to charge premium fares well above airline levels. The combined occurrence of both these conditions in any one market would be extremely unlikely.⁽¹⁰⁾

A study by the Federal Railroad Administration (FRA) similarly found that commercial revenues would fall far short of costs in all studied corridors over the period from 2020 to 2040.⁽¹¹⁾ The most favorable performance was projected in the Washington-New York-Boston corridor, at 55.3 percent, which would require a public subsidy of 44.7 percent. FRA projected that commercial revenues in the Miami-Orlando-Tampa corridor would cover 37.7 percent of costs, requiring a public subsidy of 62.3 percent.⁽¹²⁾

FRA found ridership would be even lower where discount airlines operated, noting that an air fare reduction of 30 percent would reduce high speed rail ridership by 30 percent.

HIGHWAYS

Highways predominate in American transportation, and that is not going to change. But this is more than an American phenomenon. Around the world, highways become more important as nations become more affluent. Since the fall of communism, public transit's market share has dropped in half in former east Germany, as the percentage of trips taken by auto now equal that in former west Germany. As for America's "love affair with the automobile," consider the fact that Europe is nearly as dependent upon autos as we are. This is despite more compact and centralized cities, lower crime rates, better transit systems, and taxes that raise the price of gasoline to $4.00 and more per gallon. For most trips, Americans cannot even use transit. Use of automobiles does not reflect a love affair, it rather reflects reality. On the other hand, Europeans can use transit for a large percentage of their trips, but do not. If there is a love affair with the automobile, it is in Europe, not America.

America's interstate highway system has produced considerable benefits for the nation.

The nation has been well served by the interstate highway system. Travel times have been reduced. A highly competitive trucking industry has emerged, reducing the transportation component of product prices. The improved safety of interstates have provided great benefits. At least 187,000 lives have been saved --- more than the population of Salt Lake City. Further, nearly 12 million injuries have been avoided --- approximately equal to the population of Washington, Oregon and Colorado combined --- or all of metropolitan San Francisco-Oakland-San Jose, Seattle and Portland combined. Accident related economic gains alone have exceeded the cost of building the interstate system. Economic benefits are estimated to be at least $6.00 for each $1.00 in construction cost.⁽¹³⁾

And despite the critics, highway user fees continue to be greater than highway expenditures.

But our transportation system --- the highway system --- must be improved to accommodate growth. The interstate highway system is a case in point. It was designed at a time that Las Vegas was smaller than Yakima, Phoenix was considerably smaller than Youngstown, and the Salt Lake Valley was home to only a fraction of its current population. Millions of people have moved west and south. Yet the interstate highway system is little changed from its original design. I believe that it is time to bring it up to date. An "Interstate 2000" system⁽¹⁴⁾ expansion of less than 4,000 miles could be built for $15 billion --- within the constraints of presently available federal highway funding.

THE ROAD TO THE FUTURE

Twenty five years of policy failure has demonstrated that people will not be enticed out of their automobiles. Nor will people be forced out of their automobiles by any legislature composed of members interested in re-election.

All of this is not to suggest that change is not in the offing. On the contrary, transportation in the 21^st century could be as unlike that of the 20^th century as that 20^th century has been from the 19^th century.

But the changes in the 21^st century will not be the result of government policy --- they will --- as in the past -- be the result of innovation and the market. The automobile will remain, but it will operate in a much different environment.

21ST CENTURY TRANSPORTATION

Indeed, we stand on the threshold of a synthesis of personal mobility and mass transit --- a world in which automobiles are used far more efficiently and safely through technological advances.

Automated Highway Systems (AHS) will increase the capacity of current freeways by 100 to 200 percent, with greatly improved safety. Automobiles will be operated automatically in "platoons" as the highway controls steering, braking and collision avoidance. An early test will be conducted in San Diego starting in August. Japan expects to have a fully functional roadway in day to day operation by 2005.

Navigation systems relying on satellites and other technology will provide drivers with improved information on routing, improving the efficiency of the entire roadway system, not just freeways.

In the more distant future "autonomous automobiles" would combine the features of both the automated highway and navigation systems. Autonomous automobiles would rely on geo-positioning systems capable of guiding automobiles within tolerances measured in inches. The autonomous automobile will be capable of quickly transporting its passengers to virtually any destination on the road network, improving roadway capacity, average speeds and safety.

Other technological advances are likely to provide relief as well. Improved traffic signalization is already improving travel times in some corridors. Telecommuting is increasing, and it is likely to increase even more in the future.

Perhaps an irony is that technological advances in highways could result in less, not more urban sprawl. Critics of urban sprawl, who bring a religious fervor to their cause no less intense than Crusaders exhibited against Muslims, have embraced strategies of the "new urbanism" as an alternative. The problem with these strategies (particularly evident in the Portland Metro 2040 Plan) is that they seek to impose the preferences of planners on people. In the long run, this is not likely to be successful. On the other hand, creating new street and highway capacity through technology will make our central cities and older suburbs more accessible, which could make them more desirable places to live and locate businesses.

Finally, there will continue to be a need to expand the highway system, especially in response to growth and removal of traffic "bottlenecks."

THE COMING REVOLUTION IN TRANSPORTATION

Recent developments in highway and automobile technology promise to prove the critics wrong. It will not be necessary for people to give up their personal mobility. Indeed, technology is likely to enhance it, by speeding travel times and greatly improving traffic safety. "Bridges to the past" was a losing presidential campaign slogan, and transportation policies that are "bridges to the past" will only waste resources, without changing the way we live, work, travel or commute. The time for reminiscence has passed. It is time to look to the future.

1. Wendell Cox, Jean Love & Nick Newton, Competition in International Public Transport: State of the Art, presentation to the 5^th International Conference on Competition and Ownership (Leeds, UK), May 1997.

2. Press releases on Donald H. Camph, Dollars and Sense: The Economic Case for Public Transportation in America, (Washington, DC: Campaign for Efficient Transportation), July 1997.

3. Notes on the "Dollars and Sense" Report, The Urban Transport Fact Book, Internet publication at www.publicpurpose.com/ut-$&sns.htm.

4. Wendell Cox and Jean Love, The Best Investment a Nation Ever Made: A Tribute to the Dwight D. Eisenhower System of Interstate and Defense Highways, (Washington, DC: American Highway Users Alliance), June 1996.

5. Jean Love, Wendell Cox and Stephen Moore, Amtrak at Twenty-Five: End of the Line for Taxpayers Subsidies (Washington, DC: Cato Institute), December 1996.

6. Calculated from "Amtrak: Issues for Reauthorization," Testimony (Washington, DC: United States Government Accounting Office), March 13, 1997

7. Wendell Cox, Evaluation of the FDOT-FOX Miami-Orlando-Tampa high Speed Rail Proposal (Tallahassee, FL: The James Madison Institute), April 1997.

8. "Florida Average Air Fares Fall Below Average Fare Required to Cover High Speed Rail Fixed Costs," The Urban Transport Fact Book, Internet publication at http://www.publicpurpose.com/flhsrair.htm.

9. Assumes capital and operating costs would be no more than projected. The history of large capital projects renders this a highly optimistic assumption.

10. In Pursuit of Speed: New Options for Intercity Passenger Transport (Washington, DC: National Research Council, Transportation Research Board), 1991.

11. Overview Report: High Speed Ground Transportation for America (Washington, DC: Federal Railroad Administration, United States Department of Transportation, August 1996).

12. Section 1036 of the 1991 Intermodal Surface Transportation Act of 1991 required the US Department of Transportation to conduct a study on the commercial feasibility of high speed rail. The report appears to have violated the Congressional mandate, by evaluating high speed rail on a non-commercial basis. USDOT counted non-user benefits and consumer surplus as commercial revenues. Consumer surplus is the difference between the price paid by a purchaser and the price that the purchaser would be willing to pay for the good or service. No amount of rationalization can convert non-user benefits and consumer surplus into commercial revenues --- they are simply not real money. If they were, the rates of non-user benefit and consumer surplus used by USDOT could be used by Congress and the President to balance the federal budget this year and forever, pay off the national debt in three years and cancel state and local taxation in perpetuity.

13. Wendell Cox and Jean Love, The Best Investment a Nation Ever Made: A Tribute to the Dwight D. Eisenhower System of Interstate and Defense Highways, (Washington, DC: American Highway Users Alliance), June 1996.

14. Wendell Cox and Jean Love, "Interstate 2000: Improvement for the Next Millennium," Roads & Bridges, June 1997.