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Reason Foundation

Surface Transportation Innovations # 86

HOT lanes proliferating nationwide, electric vehicles, transit and greenhouse gas reduction

Robert Poole
December 15, 2010

In this issue:

Electric Vehicles: the New Industrial Policy

Several years ago, when the pre-bankruptcy General Motors announced the Volt, its forthcoming electric car, I was enthusiastic. I’d read several technical articles about the big advantages of lithium-ion batteries, compared with the clunky lead-acid batteries that powered GM’s ill-fated EV-1. And compared with the huge challenges of making hydrogen fuel cells cost-effective for automobiles (especially the immensely costly nationwide infrastructure to supply the “hydrogen highway”), I reasoned that most people could simply recharge overnight, in their own garages: no new infrastructure needed.

That was then. I’ve learned a lot more since then, and despite the selection of the Volt as Motor Trend’s car of the year, I’m increasingly skeptical that lithium-battery electric vehicles will prove viable. About the same time as the Volt’s initial debut as a production vehicle, in October, J.D. Power & Associates released a 72-page report on electric cars. It makes sobering reading. Since the lithium-ion battery packs account for nearly half the cost of an EV, the Volt and others like Nissan’s Leaf cost about double what a comparable gasoline-fueled vehicle costs. For many drivers, the fuel savings will not be that great, since they drive more each day than the batteries can handle, meaning the Volt’s gasoline engine will do part of the job. And despite hopes that EVs will play a meaningful role in CO2 reduction, most of them will be recharged with electricity from coal-fired power plants, for at least the next several decades.

Charles Lane of the Washington Post has pointed to other critical reports from such firms as Deloitte, Boston Consulting Group, and Roland Berger Strategy Consultants, along with a number of engineering professors from places like MIT and Berkeley. And the National Research Council last year concluded that, “Subsidies in the tens to hundreds of billions of dollars...will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030.”

Unfortunately, tens to hundreds of billions of dollars in subsidies is what the current Administration, so far with the support of Congress, has in store. The federal government has provided subsidies to at least nine battery companies and subsidized loans to Tesla and Fisker for EV assembly plants, is contemplating subsidies to state and local governments for charging stations, and offers apparently unlimited numbers of $7,500 rebates to EV purchasers (and California adds its own $5K rebate). Menaham Anderman, CEO of Total Battery Consulting in California, told the Wall Street Journal several months ago that by 2014 the battery capacity of just the plants that have received federal stimulus funds will be three times the level of global demand.

There’s a name for this kind of government attempt to promote a chosen industry: industrial policy. It’s far more commonly done by central-planning-oriented governments than by our own government: think France under any of its governments, or Japan in the days when its Ministry of International Trade & Industry (MITI) was calling the shots about which companies and industries should do what. And we had an episode of it during the Carter administration, when the government attempted to pick winners in response to the energy crisis and created basket cases like the Synthetic Fuels Corporation.

The Economist published a briefing on the global revival of industrial policy in its Aug. 7, 2010 issue, titled “Picking Winners, Saving Losers.” Its review noted the occasional winner (e.g., the Internet resulting from DARPA research) but the far more extensive string of failures (e.g., France’s Minitel and Carter’s Synfuels Corp.). And it noted that “Some green industrial policies have backfired already,” citing in particular Spain’s open-ended subsidies for wind and solar energy, and noting that “Despite promises that they are not out to pick winners this time around, in green technology governments are doing exactly that.”

Instead of subsidizing battery makers, car companies, and car buyers, a more neutral and less harmful role for government would be two-fold. First, support research and development of improved energy and propulsion technology, leaving it to unsubsidized companies to use the best of the new technology in products they hope to sell. Second, put a price on carbon emissions across the economy. Those two measures would create a level playing field upon which energy and vehicle producers could risk their own funds seeking commercially viable products.

A Proliferation of HOT Lane Projects

More and more high-occupancy vehicle (HOV) lanes are being converted to high-occupancy/toll lanes around the country. In response to my article on the trend toward networks of HOT lanes (last month), several readers wrote in to be sure I was aware of recent and planned HOV-to-HOT conversions in their areas.

Minneapolis last month saw the completion of its second such conversion, which now extends along 16 miles of I-35W. I knew about that one, but until recently was unaware of MnDOT’s plans for more such projects. A recent article in the Minneapolis Star-Tribune identified I-35E between St. Paul and Little Canada as one likely possibility. Other near-term prospects are I-94 between Minneapolis and St. Paul, further stretches of I-35E and W, and Highway 36 between I-35W and I-35E. Longer-term, HOT lanes could be implemented on Highway 169, north Highway 77, and a long section of I-494 between Bloomington and Maple Grove. And yes, MnDOT is now thinking about a whole network of such lanes.

Los Angeles, the nation’s most congested metro area, has a number of such projects in the planning stages, for possible implementation after the pilot projects now being implemented on the El Monte Freeway (I-10) and Harbor Freeway (I-110). In Los Angeles County, the LA Metropolitan Transportation Authority has recommended five candidates: I-105 between I-405 and I-605, I-405 from I-105 through the west side and across the San Fernando Valley to I-5, SR 91 from I-110 to the Orange County line, SR 57 from SR 60 to the Orange County line, and I-10 from I-605 to the San Bernardino County line. The Orange County Transportation Authority is studying HOT lanes for I-405 from SR 55 to I-605. And the Riverside County Transportation Authority is implementing an extension of the existing 91 Express Lanes from the Orange County line eastward to I-15. This is starting to look like the beginnings of a network.

And the Georgia DOT is moving forward with plans to add HOT lanes to I-75 and I-575 outside the I-285 Perimeter freeway in Atlanta. Called North by Northwest, this megaproject is intended to be the Atlanta area’s first phase of a large HOT lanes network, whose second phase will be on the western portion of I-285 and a portion of I-20 west. GDOT also intends North by Northwest to be the first project implemented under its 2009 public-private partnership enabling legislation. That measure replaced a previous law under which only unsolicited proposals were allowed, which left GDOT in the secondary role of having to respond to projects not necessarily in its long-range plans. In addition, changes in leadership at GDOT created uncertainty within the private sector. The new law puts GDOT in the driver’s seat, and the agency prequalified three teams for North by Northwest in June. But the project still faces hurdles, among them the shift to a new governor, possible new faces on GDOT’s State Transportation Board, and a hole in the project’s financing plan, when an expected TIFIA loan did not come through last month.

As I’ve written previously, HOV to HOT conversions are under way on all five of Houston’s existing HOV lanes. And the Washington State DOT is planning a 40-mile Eastside Corridor that would convert existing HOV lanes and add new HOT lanes on I-405 and SR 167, as part of a nearly $2 billion upgrade of that corridor.

How High Are the Toll Rates on SR 91?

It seems nearly everyone in transportation has heard about the successful 91 Express Lanes on California’s SR 91 freeway linking the bedroom communities of inland Riverside County with the employment centers in coastal Orange Counties. This pioneering project is 15 years old this month. Its variable pricing has kept traffic on the express lanes flowing smoothly at 65 mph or above during rush hours for all 15 years, thanks to an algorithm that is adjusted every 12 weeks based on traffic counts for every hour of every day. And most people have heard about the Express Lanes’ peak-period tolls of $10 to go the 10 miles (one way)—an amazing $1 per mile.

But that widely cited number is far from typical. In fact, due to the Southern California real estate bubble bursting, the last several years have seen a number of decreases in toll rates for individual hour-long time blocks on the Express Lanes. If you go to www.91expresslanes.com and look for the current toll rate schedule, you have to search pretty carefully to find any time blocks with $9 or $10 tolls. The most recent revision (in October) lowered the rates in three time blocks in the afternoon eastbound (peak) direction. In the entire eastbound toll schedule, there are only three time blocks with really high tolls: Thursday afternoon 4 to 5 PM ($9.95) and 5 to 6 PM ($9.80) and Friday from 3 to 4 PM ($10.25) and 4 to 5 PM ($9.35). But on other weekdays, the 5 to 6 PM eastbound tolls are $5.35 on Monday, $7.25 on Tuesday, and $8.50 on Wednesday. Wait till 6 PM and the tolls for that hour range from a low of $3.60 on Tuesday and Wednesday to a high of $5.30 on Friday. Westbound morning peak tolls are much lower. The highest ones are in the 7 AM hour, between $4.40 and $4.55, depending on the day of the week.

These tolls are not “set” by the Orange County Transportation Authority. Rather, they are the result of an algorithm developed by traffic engineers in accordance with OCTA’s traffic management and revenue goals. The algorithm is explained on the 91 Express lanes website. Putting toll-setting on automatic pilot like this is sometimes difficult for elected officials to accept. But such algorithms are now in use on HOT lanes in Miami, Minneapolis, San Diego, Seattle, and elsewhere, and they work very well. In fact, they are the key to both congestion relief and revenue generation from HOT lanes.

How to Get Broken Sidewalks Fixed

UCLA parking guru Donald Shoup has come up with another good idea: a clever way to get city sidewalks repaired faster. And no, it does not involve any role for the federal government (such as the proposed “Complete Streets” mandate being promoted by groups that want even larger diversions of federal highway user-tax money).

Keeping sidewalks in good repair is not only nice for pedestrians. It’s also a way to protect cities and their taxpayers from liability suits. The Ninth Circuit Court of Appeals ruled in 2002 that the Americans with Disabilities Act applies to sidewalks, since broken sidewalks can be a barrier to those in wheelchairs, the blind, and others walking with a cane. Shoup cites data from the City of Los Angeles indicating that 4,600 of the city’s 10,750 miles of sidewalks need repair, at an estimated cost of $1.2 billion. But due to other budget pressures, the city only fixed an average of 67 miles per year between 2000 and 2008, a rate that would take 69 years to work off the backlog even if no other sidewalks deteriorated in all that time.

Shoup’s clever idea is to require property owners to fix their sidewalks at the time of the sale of the property. In researching the issue, Shoup found a survey of 82 cities in which 40% already make sidewalk repair the responsibility of the owner, with 46% splitting the cost with the owner, while only 13% of cities paid for sidewalk repairs out of their own budgets. California’s Streets & Highways Code makes property owners responsible, but the city stopped enforcing it when federal funds for sidewalk repair became available in 1973. But the federal program ran out, and when Proposition 13 slashed property taxes, the city implemented the current poorly funded sidewalk repair program.

Shoup’s idea would require a property seller to include a certificate of compliance with the sidewalk code as part of the escrow documents for the sale of the property. The cost of the repairs can come out of the escrow proceedings, thereby relieving the owner of shelling out cash in advance. Pasadena and Piedmont, California already have such “point of sale” repair programs in place, and Shoup cites them as models.

How effective would this be for Los Angeles? Shoup obtained data from the Assessor’s office on all property sales for a recent 12-year period. Half of all parcels in the city changed hands during that time. Thus, had a point-of-sale sidewalk repair program been in place during that time, half the broken sidewalks in the city would likely have been repaired—a far faster pace than the city’s current repair program maintains.

Shoup’s article, “Fixing Broken Sidewalks,” appeared in the Spring 2010 issue of Access, published by the University of California Transportation Center. (www.uctc.net/access/36/access-36brokenwindows.pdf)

Transit and Greenhouse Gas Reduction

An analysis of the November congressional election results and their impact on federal transit funding appeared in the Nov. 18 issue of Transportation Weekly. It concludes that the results “bode poorly for advocates of increasing mass transit’s share of spending from the Highway Trust Fund,” and has “other implications for the Administration’s ‘livability and sustainability’ agenda.” The assessment rests on analyzing the changed demographics of congressional representation. “The median Democratic district next year will have a population density eleven times larger than the median Republican district”—compared with only four times larger in the outgoing Congress. On average, that means “House Republicans will have far fewer districts with transportation needs that can be easily addressed by mass transit.”

I suspect this means that advocates of increased federal transit spending will rely more on environmental arguments to make their case—such as the claim that transit gets more people out of their cars and is therefore a useful means of greenhouse gas (GHG) reduction. Let’s take a closer look at that contention.

The American Public Transportation Association (APTA) has two studies on this, done by outside parties, on their website (www.apta.com). The first, done by SAIC under the Transit Cooperative Research Program, is “Public Transportation’s Contribution to U.S. Greenhouse Gas Reduction,” September 2007. Using data from 2005, it estimates that the net CO2 savings from transit are 6.9 million metric tons per year. That’s about 0.3% of U.S. transportation GHGs. There is also a follow-on study, by ICF International, called “The Broader Connection between Public Transportation, Energy Conservation, and Greenhouse Gas Reduction,” dated February 2008. This study makes a number of assumptions about land-use impacts due to the existence of a transit system, and concludes that in addition to the 6.9 million tons of direct impacts, the land-use impacts add another 30.1 million tons of GHG reduction—for a total of about 1.6% of transportation GHGs. But that result seems very high to me, since it (like the TCRP study) ignores the very large GHG impact of building rail transit lines. A more realistic overall number might be under 1% of transportation GHGs. Consequently, if by a major and very costly effort, transit’s mode share were to be doubled over the next 20 years, it would reduce transportation GHGs by another 1%. Computing the cost per ton of GHGs reduced is left as an exercise for the reader.

I also came across an economist’s assessment of Quebec’s Action Plan on Climate Change, published Feb. 20, 2010 in the Montreal Gazette. Ian Irvine of Concordia University and the Montreal Economic Institute reviewed the 26 measures in the plan, the cost of each, and the projected impact of each on CO2 reduction. Of the $1.2 billion to be spent over 5 years, fully 60% ($720 million) would go for expanding transit. But that spending would contribute only 100 kilotons out of the projected 13,380 kilotons of CO2 reduction from implementing the plan. “In other words,” concludes Irvine, “if we exclude public transit, more than 99 percent of the CO2 reduction goal can still be met, but with less than half the budget.”

Irvine hastens to add, and I agree, that “This is not to argue that we should not invest in public transit, but our tendency to consider such investment as an ultimate savior against climate change is most certainly misguided.” By all means let’s debate the role of transit in our urban areas. But let’s not do so on dubious grounds.

Inter-City Luxury Bus Keeps Expanding


In the September issue, I wrote about the under-appreciated inter-city bus market, which serves six times as many cities as Amtrak, but without the latter’s huge taxpayer subsidies. Thanks in part to the continued growth of luxury bus service, intercity bus passenger volume increased by 5.1% last year, according to the Chaddick Institute at DePaul University.

Two of the luxury bus companies I wrote about in September have announced expansions. RedCoach, which began service this year in Florida and Atlanta, has announced two more cities as of the first of the year: Jacksonville and Daytona Beach. RedCoach, owned by Grupo Plaza, one of South America’s largest transportation firms, equips full-size buses with just 27 leather seats (vs. 55 on a Greyhound), arranged in two and one configuration. Besides greater leg room and foot rests, it offers free WiFi, electric outlets for laptops and cell phones, and movies.

And Megabus last month announced that it is making Washington, DC its fifth travel hub. That will mean adding 32 buses and offering service to a number of new cities, including Richmond, Knoxville, and Raleigh. The expansion is expected to increase Megabus’s business by 40%.

Speaking of Megabus, a reader sent me a blog post from Iowa, reporting on the request by the DOTs of Iowa and Illinois for $248 million in federal funds to establish daily passenger rail service between Chicago and Iowa City. Including state tax money, the total start-up cost would be $310 million. The blogger pointed out that Megabus already serves the Iowa City to Chicago route, and does it one hour faster than the proposed train service. And at zero taxpayer cost.

For the record, I need to acknowledge that there is apparently a small subsidy program to restore (via subsidy) bus service between smaller cities that have lost Greyhound or other scheduled bus service. It’s part of the Federal Transit Administration’s Rural Transit Assistance Program under Section 5311. I hasten to add that Megabus and the other new-generation luxury bus operators are not receiving any subsidy under this program.

Upcoming Conferences


Note: I don’t have space to list all the transportation conferences going on; below are those that I or a Reason colleague am participating in.

TEAMFL and Florida Transportation Commission, Jan. 20-21, Orlando, FL, Hyatt Regency Orlando International Airport. Details at: www.teamfl.org. (Robert Poole taking part)

Transportation Research Board 90th Annual Meeting, Jan. 23-26, Washington, DC, multiple hotels. Details at: www.trb.org/AnnualMeeting2011/Public/AnnualMeeting2011.aspx. (Robert Poole and Adrian Moore speaking)

News Notes

Auto Club Unit Backs Highway Fund for Highways
AAA Mid-Atlantic president Don Gagnon, citing the large and growing annual highway funding shortfall and the political impossibility of a federal gas-tax increase, has called for Congress to refocus the Highway Trust Fund on highways only. (AAA World, July/August 2010) That has led to recent protests outside national AAA headquarters in Heathrow, FL by bicycle and pedestrian advocates, as reported this month by DC Streetsblog.

Telecommuting Beats Transit in Most Metro Areas

Data from the 2009 American Community Survey reveal a 31% increase in telecommuting nationwide since 2000, to a national average mode-share of 4.3%. That compares with 5.0% for transit (a slight increase since 2000), a small increase in driving alone (to 76.1%), and a decline in carpooling from 12.1% in 2000 to 10.0% in 2009. For the largest 50 metro areas, in only 14 did transit capture a larger commuting share than telcommuting: New York, Los Angeles, Chicago, Philadelphia, and other large cities with significant traditional central business districts. Transit and telecommuting were equal in Portland (at 6.1% each). And in all 35 others, telecommuting had a higher mode share than transit (including Atlanta, Dallas, Houston, Miami, Phoenix, etc.).
(“Decade of the Telecommute,” Wendell Cox, www.newgeography.com/content/001798-decade-telecommute)

Adapting to Climate Change

In a thoughtful and well-researched four-page briefing, The Economist makes the case that “Global action is not going to stop climate change. The world needs to look harder at how to live with it.” (Nov. 27, 2010). This is a useful follow-up to the magazine’s three-page article on geoengineering’s pros and cons, “Lift-Off.” (Nov. 6, 2010). Both are highly recommended.

Mineta Institute on Bus Rapid Transit
A very useful compendium of case studies on BRT was released in June by the Mineta Transportation Institute at San Jose State University. In “From Buses to BRT: Case Studies of Incremental BRT Projects in North America” John Niles and colleagues offer five detailed case studies, along with thoughtful findings and recommendations on how BRT can be “a path to better transit.” (www.transweb.sjsu.edu/project/2704.html)

Toolkit for Legislators on PPPs in Transportation
After about a year and a half of work, the National Conference of State Legislatures has released “Public-Private Partnerships for Transportation: a Toolkit for Legislators.” The 120-page report focuses on what legislators need to know in order to craft workable PPP enabling legislation. My Reason colleague Len Gilroy served as an advisor to the NCSL task force that developed the document and tells me he’s pleased with the result. Go to: www.ncsl.org/default.aspx?TabId=20321.

Study Finds Low Support for Transportation Spending
The Pew Center on the States and the Public Policy Institute of California (PPIC) collaborated on a survey of public attitudes toward government spending in five fiscally stressed states: Arizona, California, Florida, Illinois, and New York. The report, “Facing Facts: Public Attitudes and Fiscal Realities in Five Stressed States,” finds scant support for increased investment in transportation infrastructure. Of the major state budget categories, voters were most concerned about education and health & human services. But they were skeptical about paying more for transportation and are widely distrustful of state government; about 75% in all five states reject paying additional taxes for transportation. These findings suggest that the transportation community still has a big educational job ahead of it—and in the meantime, should focus on getting the most bang for the buck from existing funding.(www.ppic.org/main/publications.asp?i=951)

Active Traffic Management Overview
A useful synthesis report from FHWA crossed my desk recently, though it has a March 2010 cover date. “Synthesis of Active Traffic Management Experiences in Europe and the United States” reports on a 2006 scan tour by U.S. transportation professionals to observe active traffic management (such as variable speed management) projects in five European countries. It’s a good introduction to this emerging field, in which European countries have led the way. (www.ops.fhwa.dot.gov/publications/fhwahop10031/index.htm)
 
Quotable Quotes

“The first lesson [from Cancun] is that countries should re-center their efforts on carbon reduction policies that have value for society beyond CO2 mitigation alone. This means focusing on policies that deliver strong co-benefits such as congestion reduction, enhanced energy security, pollutant reduction, and fuel cost savings. The second lesson is that prospects for significantly reducing emissions and avoiding disruptive climate change have not improved; transport must now ready itself to adapt itself to a changing climate.—Jack Short, Secretary General, International Transport Forum, press release Dec. 14, 2010.

“To one degree or another, all three [incoming Republican governors] worried that their states would be left with unsustainable operating costs once the initial [HSR] stimulus money disappeared. They have a point. Passenger rail’s competitiveness with air and automobile traffic is far from established—as Amtrak’s perennial federal operating subsidies show. Even high-speed bullet trains don’t offset enough plane or car traffic to reduce America’s carbon footprint by much. The president may admire China’s burgeoning high-speed system, but that system is deeply in the red. On major routes, the trains often whiz along half-empty, since the tickets are far too expensive for ordinary Chinese. China recently announced a review of its program in light of a Chinese Academy of Sciences study warning that its debts may be unsustainable.”
--Editorial, The Washington Post, Nov. 16, 2010

“In an unkind moment, a reporter asked the present DOT Secretary Ray LaHood what he meant by livable, given that the department had just added it to its criteria for giving away money. He replied vaguely that it was something about being able to walk to work and the park and a restaurant, to a doctor, and a few more things. Well, it turns out I was living the livable lifestyle when I was growing up in Queens, New York in the ‘50s and didn’t know it. Here all along, I just thought we were poor. We were three generations of the family in the same household, and we all had the same doctor who lived two blocks away. Today I don’t have a doctor—I have half a dozen, none of them selected on the basis of distance. When one selects doctors, best—not closest—matters. Hospitals are growing in size but declining in number of facilities per thousand population. All of this is simply representative of the immense trend toward specialization in our society—an increasing division of labor in all activities and an accompanying division of tastes and preferences in an increasingly affluent society. If you want a loaf of Wonder Bread, there’s a 7-11 down the street. If it’s ciabatta with sun-dried tomatoes, there’s this really great place I know a few miles off exit 29 on the freeway.”
--Alan Pisarski, “Livability and All That,” The New Geography, November 2010 (www.newgeography.com/content/001865-livability-and-all-that)

“In terms of economic efficiency, whether the federal government or state and local government should fund certain infrastructure projects depends upon whether the funding benefits the nation as a whole or particular states and localities. If those who benefit from a project do not bear its costs, too large a project (or too many projects) might be undertaken or too many infrastructure services consumed relative to the resources used to provide the project or services. To avoid that problem, the federal government could choose to fund a project undertaken by a particular state or locality only if that funding was expected to benefit taxpayers nationwide. Under that scenario, projects that produced benefits only for the citizens of a given state or locality would be funded at those levels of government.”
--Congressional Budget Office, “Public Spending on Transportation and Water Infrastructure,” November 2010 (www.cbo.gov/ftpdocs/119xx/doc11940/11-17-infrastructure.pdf)

“[M]uch available evidence points to the fact that while investment in transit systems may well support, and even strengthen, pre-existing trends toward urban growth and CBD consolidation, it never creates such trends where they do not already exist, and certainly cannot reverse trends toward spatial dispersion. The difference between the two views may appear at first to be merely a matter of emphasis. But on more careful observation, it can be seen that the implications for public transport decisions are very dissimilar. The first position leads to investment motivated by the desire to arrest unwanted trends toward lower-density urban forms, or actively create denser forms of development. The latter view notes that the right time, and perhaps the only time, to invest heavily in urban public transit systems is when underlying trends show that the urban form is already consolidating for reasons unrelated to transport.”
--Andrew Marsay, “Capturing Growth Trends Through Investment in Public Transport Interchanges,” paper for University of Johannesburg’s annual “Discourse” series.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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