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Energy Price and Travel Behavior

Energy Price and Travel Behavior. Topics. Historical energy price and travel behavior Why can’t we see an elasticity on travel demand related to gasoline price? Are we stuck in an environment of our own creation?

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Energy Price and Travel Behavior

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  1. Energy Price and Travel Behavior Erlbaum - TRB Session 681

  2. Topics • Historical energy price and travel behavior • Why can’t we see an elasticity on travel demand related to gasoline price? • Are we stuck in an environment of our own creation? • Is there some other effect that is not being measured? Or is it the way we measure things? • Unintended consequences in the planning process Erlbaum - TRB Session 681

  3. 1973-74 Energy Crisis – Impact on Travel NYSDOT PRR 131, December 1977A review of a number of studies at that time • Travel demand • Gas availability more important than price • Who is affected by increasing gas price? • Not affected: HHs in mid – upper income • Severe impact: lower income HHs • Who Conserves? • HH with travel flexibility • High Auto Ownership + Income • High level discretionary travel Erlbaum - TRB Session 681

  4. Individual Travel Behavior Under Energy ConstraintsNYSDOT PRR 86, July 1975 • NYS 3 surveys in ‘73-’74 period • 80% at least 1 action • Work Related • Drive slower • Carpool • Walk • Shop chain • Recreation - less or closer Erlbaum - TRB Session 681

  5. Individual Travel Behavior Under Energy Constraints (cont’d) • Observations • Transit increases - not sustained • Work trips remain unchanged • Non - work trips decline • Elasticity • Estimates vary widely • Sensitive to study, source and control of other effects • At best guesses Erlbaum - TRB Session 681

  6. Individual Travel Behavior Under Energy Constraints (cont’d) • Government Response ’73-74 • Odd/Even • 5% Monthly Set aside • CAFE  27.5 by 1985 • Nothing until 2007 • Increase CAFE  35 by 2020 Erlbaum - TRB Session 681

  7. Is History Repeating Itself? 1973/’79 v. 2007 • Are travel options physically limited? • Settlement patterns • Infrastructure • Historical modal investment • Is travel behavior/activity changing? • Is it the economy (pending recession)? Erlbaum - TRB Session 681

  8. Erlbaum - TRB Session 681

  9. 2001 NHTS – Trips v. Activity Erlbaum - TRB Session 681

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  11. Can we actually show the elasticity of travel demand related to gasoline price?What are basic travel relationships we should understand? Erlbaum - TRB Session 681

  12. 1995, 2001 NHTS NYS Add-on ResultsResidential Household Travel 95.6 95.2 Erlbaum - TRB Session 681

  13. Travel & The Economy • Assessing Trends • Economy • Price or 2nd, 3rd order cascading economic effects? • Pending recession? • Is behavior influencing economic activity or economic activity influencing behavior? Erlbaum - TRB Session 681

  14. Source: VMT – USDOT, FHWA – Highway Statistics GDP – USDOC, BEA Erlbaum - TRB Session 681

  15. 1966-2006 Source: GW Volumes - Port Authority of NY & NJ GDP – USDOC, BEA Erlbaum - TRB Session 681

  16. Statewide View of Travel • Assessing Trends • Monthly data • Linear trend line • 12 month moving average • Polynomial • Peak v. valley growth Erlbaum - TRB Session 681

  17. Source: Monthly VMT – USDOT, FHWA Traffic Volume Trends Erlbaum - TRB Session 681

  18. Source: Monthly VMT – USDOT, FHWA Traffic Volume Trends Erlbaum - TRB Session 681

  19. Elasticity? • Trend is Asymptotic after 2004 • Synthesize historical MVMT trend for 2004-date • Derive elasticity from change in real and synthetic MVMT and actual price • Is there a relationship between price change and elasticity? Erlbaum - TRB Session 681

  20. Derived Actual Actual A function of historical % chg in MVMT- forecasts future MVMT (January 2004-date) Source: Monthly VMT – USDOT, FHWA Traffic Volume Trends Erlbaum - TRB Session 681

  21. To derive monthly elasticity from previous graphic, use the change in the forecast MVMT and actual MVMT and solve the following equation for the elasticity (E) : [(1+ chg gspr * -E) * (1+ chg MVMT) * MVMT)] Elasticity? R^2~=0.05 Erlbaum - TRB Session 681

  22. Elasticity • Not evident • Highly volatile • Increase and then decline • Inadequate periods of significant and sustained price increase • Not a player yet • Similar observations to 1973/’79 Erlbaum - TRB Session 681

  23. Why is elasticity not evident? • Economic Rule of Thumb • People react to price increases only when they can turn to substitutes • Even price doesn’t do a really good job • Price Increases • Alternatives? • Can’t change the type of fuel you use • Can’t stop going to work • Gasoline purchases are closely tied to things we own • Home – location choices • Car – mobility choices Erlbaum - TRB Session 681

  24. Why? • Since the 1980s • Gasoline has been cheap • Cars  minivans  SUVs • More fuel efficient Less fuel efficient • Increasing Property Values • Move further from place of work • Suburbs • Ex-urbs • 1990 average commute time rose 15% • 3 in 4 Americans commute • Jobs move out of central cities into suburbs • Difficult to carpool • Public transit unavailable • < 5% of American Public uses Transit Erlbaum - TRB Session 681

  25. Why? • Hefty Price Increase >> 30% for 5+ years • Time to come up with substitutes • Higher Commuting Costs  • Smaller car • Move closer to work • Find a Carpool for the kids • Take transit? • Consumers don’t change behavior for blips Erlbaum - TRB Session 681

  26. Unintended Consequences Erlbaum - TRB Session 681

  27. Cascading Impact of Changes in Travel Law of unintended consequences • Changes in behavior • Less travel • Less fuel tax/toll revenue • Less infrastructure investment • Increasing energy and material prices • Projects become more costly • Projects delayed or re-scoped • Less alternatives due to cost • Need for new revenue sources • Congestion/time of day pricing Erlbaum - TRB Session 681

  28. To Give Me More Gas Tax Money I Want You Erlbaum - TRB Session 681

  29. Energy Impacts on Capital Program • Time line Issues • Projects: bid in advance • Start ~ 3- 6 months later • Energy price/material adjustments over project life • Preparation of site (Fuel) • Material (Asphalt) • Delivery (Fuel) • Placement (Fuel) • Net Result – Project cost escalation • Drag on funding Erlbaum - TRB Session 681

  30. Source: NYSDOT, Construction Division Erlbaum - TRB Session 681

  31. Source: NYSDOT, Construction Division Erlbaum - TRB Session 681

  32. Recap • History: • Changes come out of discretionary travel • NHTS 2001 • Discretionary and maintenance activities are 60+% of the pie • Travel demand 2004 – date • Apparent dampening trend • Underlying economic uncertainty? Erlbaum - TRB Session 681

  33. Recap • Its not gasoline price • No elastic effects identifiable • Revenue forecasts • Over estimate, if based on simple trends • Capital program expenditures • Subject to fuel price escalation and volatility • Difficult to forecast • Hard to budget for • Increasing at a rapid rate Erlbaum - TRB Session 681

  34. The End Nathan Erlbaum NYS Department of Transportation nerlbaum@dot.state.ny.us 518-457-2967 Erlbaum - TRB Session 681

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