Surface Transportation News: Priced managed lanes, a way to ruin a railroad, and more
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Surface Transportation Innovations Newsletter

Surface Transportation News: Priced managed lanes, a way to ruin a railroad, and more

Plus: Electric grid inadequacy for EVs, gas tax needs replacing, Tesla Semi's 500-mile trip, and more.

In this issue:

Should Priced Managed Lanes Maximize Revenue or Throughput?  

Several years ago, I read a critique of priced managed lanes, also known as express toll lanes, developed and operated under long-term public-private partnership (P3) agreements. The commentary accused the P3 companies of using a technique to maximize revenue it called “jam-and-harvest.” This refers to an alleged policy of deliberately increasing the variable toll rate above the amount needed to ensure free flow in the express toll lanes (ETLs) prior to the peak, so as to deter marginal customers from entering the express toll lanes and thereby increasing congestion in the non-tolled lanes. That’s the “jam” part. The “harvest” part is to then continue these higher tolls for those willing to pay them to avoid the super-congested regular lanes.

Just a week ago, a transportation friend sent me the paper that may have originated this concept. It’s a 2015 working paper from the Columbia University Center for Pricing and Revenue Management titled “Revenue Maximizing Dynamic Tolls for Managed Lanes” by Caner Gocmen, Robert Phillips, and Garrett van Ryan. The authors built a simulation model to study various approaches to tolling, using data from the first such express toll lane on State Route 91 in Orange County, California. While some useful early data are available for this facility, as the authors note, it uses a pre-set toll schedule (different toll rates for different times of day) but not actual dynamic tolls, which are adjusted in real-time every few minutes based on actual traffic flow. The report refers to “jam and harvest” but did not identify or obtain data from any operational ETL that actually uses dynamic tolling to see if it adjusts its rates to do something like “jam and harvest” to maximize toll revenue.

As a matter of fact, the report from Fitch Ratings that I wrote about in this newsletter’s Oct. 2022 issue, includes a table (Appendix D) listing specifics for all 14 ETLs that it currently rates. All nine of those that were developed and operated as revenue-financed P3s set toll rates based on revenue maximization. Of the five managed by state agencies, one uses revenue maximization, one uses throughput maximization, and the other three use a blend of revenue maximization and throughput maximization. But we have no idea if any of the revenue maximizers employ something like “jam and harvest.”

So I was disturbed to read a Sept. 2022 report from the Center for Advanced Transportation Mobility of North Carolina State Agricultural & Technical University titled “Equitable Dynamic Pricing of Express Lanes.” This paper cites a 2018 paper and simply asserts that it has been shown that “policies that optimize for revenue create more jam on the regular lanes in earlier time periods to harvest more revenue for the latter part, a phenomenon termed jam-and-harvest.” This still appears to be an assertion, rather than a statement based on empirical data.

A 2019 paper offers another perspective on the ongoing trade-off between throughput maximization and revenue maximization in dynamically tolled lanes: “Tolling Roads to Improve Reliability,” by Jonathan D. Hall and Ian Savage, was published in the Journal of Urban Economics. Unlike many managed lanes researchers, Hall and Savage take into account not only time savings but the reliability of trip times, which were first studied in detail by Kenneth Small and several colleagues, using data from the original SR 91 express lanes. In those studies, trip-time reliability was equally important as actual time savings. Hall and Savage focus attention on traffic volumes that make flow breakdowns likely on limited-access highways, leading to large decreases in throughput. They also build and exercise models, aiming to find a variable tolling policy that takes into account both time savings and the reliability of trip times. Their overall conclusion is that tolls should be high enough to restrict flow into the priced lanes below flow rates that would maximize throughput. In other words, revenue maximization is better for express lanes customers than throughput maximization.

Whether this paper legitimizes what is being called “jam and harvest,” I’m unable to say. Being educated as an engineer, rather than an economist, I cannot advise you on the caliber of the modeling in any of these three papers. But at least state transportation departments that are overseeing revenue maximization policies on P3 managed lanes may not feel they have to apologize for them, if Hall and Savage are correct. Besides revenue maximizing being good for bondholders and ratings, it also appears to be better for managed lane customers.

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This Is One Way to Ruin a Railroad
By Marc Scribner

The supply and demand shocks that resulted from the COVID-19 pandemic continue to be felt nearly three years after much of the world abruptly shut down. Freight railroads, like most of the businesses that make up supply chains, continue to struggle with workforce challenges, equipment shortages, and shifting customer expectations. While the situation has improved, the pandemic’s fallout is likely to linger through at least this year. This environment has spurred market innovation and this sometimes-painful evolution requires patience from policymakers. Unfortunately, it has also generated misguided and counterproductive proposals from unusual sources.

One example of this latter trend is Bobby Miller writing last month in conservative magazine National Review in favor of nationalizing the infrastructure of America’s private freight railroads (“This Is No Way to Run a Railroad,” Dec. 20). The article gets much wrong about the history, economics, and regulation of railroading while charting a future for America’s railroads that is neither realistic nor desirable. To be sure, the U.S. freight rail industry must adapt to new market conditions emerging in the 21st century, as I detail in a December report published by Reason Foundation (“Freight Rail Deregulation: Past Experience and Future Reforms,” Dec. 13, 2022). But this requires careful consideration of the economic and policy facts of American rail and freight transportation.

Miller’s central argument is that the U.S. rail network would be improved if the government “adopt[ed] a franchise model for freight and passenger rail.” This is a type of vertical separation, whereby rail infrastructure would be held by a government monopolist and train-operating companies would bid to access the government monopolist’s common network. Vertical separation was explicitly encouraged in 1991 by the European Union’s Directive 1991/440.

In the Americas, railroads have generally remained vertically integrated and horizontally separated, with product and geographic competition occurring between vertically integrated railroads rather than exclusively “above the rail” between train-operating companies over a single infrastructure monopoly. The Achilles’ heel of European-style vertically separated railroads has proven to be unreliable funding and mismanagement of the government infrastructure monopolies, which has resulted in bottlenecks and poor service, particularly in freight, where Europe lags far behind North America. In contrast, horizontally separated railroads generally have no difficulty in attracting private investment because network performance incentives are clearly aligned within vertically integrated railroads.

More recent theoretical work has challenged the assumptions underlying the European Union’s longstanding vertical separation favoritism, with economists David Besanko and Shana Cui demonstrating in a 2016 paper published in the Journal of Regulatory Economics that horizontally separated railroads will tend to outperform vertically separated railroads on network quality, consumer welfare, and social welfare metrics. As an aside, during a session at the 2022 Transportation Research Board Annual Meeting, a European rail official said that he believed that the European Union’s past support for vertical separation had less to do with economics and more to do with the political difficulties of constructing a viable multinational, vertically integrated rail network model from European Union member states’ legacy of balkanized, state-owned rail monopolies.

To his credit, Miller does appear to recognize the potential problems with vertical separation by cautioning against the model adopted by the United Kingdom’s privatization of British Rail in 1994, where the U.K. spun off franchised train-operating companies and pooled infrastructure assets into a nominally private monopoly called Railtrack, which was re-nationalized eight years later after serious shortcomings became evident. The pandemic’s fallout more recently led to the collapse of Britain’s train-operating companies, with the rail franchising model anticipated to be replaced in 2024 by a nationalized monopoly called Great British Railways that would set prices and schedules and then contract out operations to private firms. However, Miller then cites Japan’s privatization of Japanese National Railways (JNR) in 1987 as something closer to his ideal.

Unlike western Europe, Japan did not adopt the vertical separation model. Instead, it broke up divisions of the JNR government monopoly into six independent, vertically integrated companies that now make up the Japan Railways (JR) Group. JR Group passenger railroads own the infrastructure in their respective geographic service regions. JR Freight operates nationally over the JR network, securing what are known in the U.S. as trackage rights to operate over the infrastructure owned by JR Group’s passenger railroads. Rather than rail franchising (i.e., vertical separation), JR Group is essentially the inversion of the U.S. system, in which government-owned passenger carrier Amtrak secures trackage rights to operate intercity service on lines owned by vertically integrated private freight railroads.

The network designs of Japanese and U.S. rail systems also serve fundamentally different purposes. The distinct operating characteristics of freight and passenger trains (e.g., speed, length) generally call for prioritizing one type of rail service at the expense of the other. Japan, like Western Europe, has chosen to optimize its railroads to serve passengers over freight. Being a small island country also means Japan can move much more domestic freight efficiently along its coasts by ship (more than 40%), although Japan also moves a greater share of freight by truck than the U.S. does.

In 2018, the last year wholly unaffected by the COVID-19 pandemic, just 8.4% of inland freight ton-miles were moved by rail in Japan, similar to a number of Western European countries. In contrast, rail’s 2018 freight modal share in the U.S. stood at 31.4%—nearly four times Japan’s rail freight mode share. While Japan enjoys a 32.6% rail mode share of combined rail and road passenger miles of travel, rail’s passenger mode share in the U.S. is just 0.5% of surface transportation passenger miles—less than 1/60th of Japan’s.

As with his international rail misunderstandings, Miller gets basic facts wrong about the U.S. rail network. He accuses U.S. freight railroads of “charg[ing] prices well above the rate of inflation” even though inflation-adjusted freight rates are down by more than 40% since the partial deregulation of the industry in 1980. He claims “[t]he one Amtrak route that the government makes a profit on” is with its Northeast Corridor operations between Boston and Washington, the only territory where Amtrak operates as a vertically integrated carrier, even though Amtrak has never turned a profit on any corridor when depreciation is properly accounted for. Amtrak’s failure to adopt generally accepted accounting principles not only tricks people like Miller into accepting Amtrak’s “operating profits” without proper context, but it also diverts attention from the state of good repair backlog in the Northeast Corridor that Amtrak currently estimates to be $43.7 billion and growing.

The inconvenient truth facing passenger rail aficionados like Miller is that passenger rail is usually an unprofitable endeavor. Before Amtrak relieved U.S. private railroads of their passenger service mandates enforced by the Interstate Commerce Commission, railroads had been cross-subsidizing passenger service with freight revenue for generations. Amtrak was only created because freight revenue had evaporated by 1970 under heavy regulation and new trucking competition following World War II. Regulators had refused to grant requested “train off” passenger service discontinuances even after those railroads had gone bankrupt.

While passenger rail hobbyists were enthusiastic about the prospect of Amtrak, the rail industry was simply happy to be free of costly passenger service obligations it could no longer afford. Summarizing the railroads’ perception of Amtrak, one railroad executive remarked at the time that Amtrak primarily served as “a sentimental excursion into the past for legislators over 50.”

Adopting vertical separation in the U.S. would almost certainly cause rail infrastructure investment to crater and networks to deteriorate, with the only beneficiaries being rail’s truck competitors who could capture some of the highest-value traffic from shippers fleeing foundering rail carriers just like they did in the 1960s and ‘70s. History might not exactly repeat itself under Miller’s misguided agenda, but it would likely rhyme, and no one in the U.S. rail industry wants to relive the era of standing derailments with a slightly different soundtrack.

Rather than Miller’s confused rail-franchising proposal, policymakers should instead recognize that the future of rail in America is in freight and look to build on the unambiguous success of partial deregulation carried out under the Staggers Rail Act of 1980. Since then, inflation-adjusted average rail freight rates have declined by 44% while freight volume grew by 57%. Even though the law only concerned economic deregulation, the Staggers Act enabled large safety gains, with a 76% decline in train accident rates and an 85% decline in employee injuries and occupational illnesses.

Despite the clear success of partial rail deregulation, some politicians and special interests seek to reverse these reforms and prevent freight railroads from adapting to new competitive market pressures. A coalition of large industrial shippers is seeking new regulations that would limit railroads’ return on investment and, thus, capacity to invest in system improvements. Tellingly, these shippers have opposed the Interstate Commerce Commission’s successor agency, the Surface Transportation Board, adopting robust benefit/cost analysis for major new regulations similar to what has been required of all federal departmental agencies since the Clinton administration.

With rail’s truck competition anticipated to increasingly automate in the coming decades and with labor accounting for nearly half of truck operating costs, rail must also adopt new productivity-enhancing automation technologies to remain viable through the 21st century. Unfortunately, even small movements in this direction—such as by harnessing existing mandated automation and communications technologies to enable single-person crews on some trains, long the default in Western Europe—have been strongly resisted by rail unions. The unions currently have the support of the Federal Railroad Administration (FRA), the rail industry’s safety regulator, which has proposed a rigid crew-size regulation despite conceding it does not possess “any meaningful data” to support the conclusion that two-person train crews are safer than one-person crews.

Organized labor has also opposed automated track inspection that FRA’s own data finds is more accurate than traditional visual inspections. Automated track inspection would not only improve safety for the trains operating over the rails, it would also keep track inspectors out of harm’s way and reduce rail equipment accidents in the field. While FRA was an early supporter of these improved track inspection technologies, it has recently reversed course at the request of rail unions.

The good news is Congress can protect the gains realized from the Staggers Act and help usher in 21st-century freight rail. It should require that new major rules from the Surface Transportation Board be supported by robust benefit/cost analysis and limit the agency’s discretionary powers. Congress should also explicitly prohibit FRA from regulating train crew size and establish a permanent automated track inspection program not subject to the whims of political appointees.

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More Evidence of Electric Grid Inadequacy for EVs

The Dec. 2022 issue of this newsletter included an article on the much-cited National Grid study that highlighted major challenges involved in building enough charging stations for a complete transition to electric propulsion, for both personal and commercial vehicles. In December, the trucking industry think tank American Transportation Research Institute (ATRI) addressed this issue, with a focus, of course, on how this would affect the trucking industry. The study’s three main findings are:

  1. An all-electric vehicle fleet would require more than 40% of all electricity currently generated in this country, with an especially large fraction of that being needed for heavy long-distance combination trucks.
  2. There would be major problems obtaining enough rare earth materials for the amount of battery capacity needed for an all-electric vehicle fleet.
  3. For long-haul trucking, a major challenge will be finding enough locations for heavy-truck chargers since there are so few existing places where those trucks can park.

Those are all valid points, but some are more problematic than others. The study estimates that personal vehicles would require 1,040 billion kilowatt-hours (kWh) per year, while trucks of all sizes would require 553.5 billion kWh per year. But that’s a bit misleading because the lion’s share, 75%, of truck electricity demand is from long-distance heavy-duty combination trucks (Classes 7 and 8). If those trucks were excluded, the electric vehicle (EV) demand would be 1,176 kWh/year—35% less. I mention this because a May 2022 ATRI study, “Understanding the CO2 Emissions of Zero-Emission Trucks” did a detailed comparison of the carbon footprint and other aspects of Class 8 diesel, battery-electric, and hydrogen fuel cell trucks. It found that fuel-cell electric was far superior to battery-electric for this category of truck—lower lifetime CO2 emissions and significantly higher payload capacity by avoiding the very heavy battery pack needed for battery electric vehicles, or BEVs.

The current ATRI study covers a lot of the same ground about the costly and scarce minerals needed for BEV combination trucks as the May 2022 study, so I won’t go through that again. Instead, let’s go to the third topic of the new report: the shortfall of truck parking spaces. It cites a 2019 FHWA inventory of such spaces, including 273,000 spaces at private truck stops and 40,000 at highway rest areas. As a barrier to expansion, let me quote a short paragraph on page 43 of the new report:

“At the nation’s approximately 40,000 public rest stop truck parking spaces, commercial charging is not allowable under federal law. This limitation stems from a 1956 regulation that restricts any commercial activity at public rest areas, including fueling or restaurants (though some grandfather clauses exist). This regulation presents myriad challenges to public rest area charging. The likely consequences and implications are that truck charging fees either could not be assessed at public rest areas, could not exceed direct electricity costs, and/or that private sector entities could not provide the charging services.”

The text goes on to cite 2021 lobbying by trucking ally National Association of Truck Stop Operators and others to maintain the ban. And it notes unresolved problems in getting electric vehicle charging installed at private truck stop parking spaces. And in the recap of findings at the end of the report, under the heading “Truck Charging Availability Will Be the Truck Parking Crisis 2.0,” the fourth of six bullet points is the following:

“Other barriers include laws preventing commercial charging at public rest areas and the remoteness of many truck parking locations.”

Kudos to ATRI for identifying this as a significant barrier to truck electrification. My only disappointment is that this report does not cite the Reason Foundation March 2021 study, “Rethinking Interstate Rest Areas,” which makes the same point, and discusses the successful use of private capital to develop/redevelop service plazas on tolled Interstates which are exempt from the federal commercial-services ban. These service plazas are adding EV charging.

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Louisiana Gas Tax Needs Replacing, Says Local Think Tank

Researchers and transportation analysts in Louisiana are increasingly aware that per-gallon fuel taxes are a problematic long-term revenue source for the state’s highway system. In a Dec. 28 commentary, Jamie Tairov of the free-market-oriented Pelican Institute reviews this problem and suggests possible solutions.

Historically, the state’s gas tax was a pure user tax, with the proceeds dedicated to building, maintaining, and modernizing the state highway and bridge system. Over the past 50 years, most states converted their highway departments to departments of transportation. Louisiana’s became the Department of Transportation & Development (DOTD), and the highway fund became the Transportation Trust Fund, which is responsible for highways, bridges, ports, flood control, etc. And funds going into the Trust Fund include not only state and federal fuel tax proceeds but also auto registration fees, airport fuel taxes, and, beginning this year, a $100 annual tax for electric vehicles (EVs). Needless to say, who pays for what has become somewhat blurred.

Louisiana’s fuel tax revenue is barely increasing and is likely to start declining as new cars must go farther and farther per gallon of gas (thanks to tougher federal fuel-economy mandates), more people replace conventional cars with hybrids that use less gas, and as electric vehicles become a larger and larger part of the vehicle population. Complicating the highway construction and maintenance problem is a huge recent increase in Louisiana construction costs, which Ms. Tairov’s piece puts at 88% over the past two years.

Her commentary also suggests that some of the roads and highways that are part of the state highway system could be devolved to local governments, which may well make sense but would likely not be easy, politically. She also suggests possibly deferring new construction projects for several years in case costs “come back down,” but that risks not paying for projects now only to face paying even higher costs three years from now. (Note, the long-term trend in highway construction costs as tracked by the Federal Highway Administration is annual increases averaging 5.72% per year from 2002 to 2019, with very few annual decreases.)

The most troubling suggestion in the piece is “un-dedicating the gas tax, placing those funds in the state’s general fund, and then funding DOTD like any other state priority.” In my 2018 book, Rethinking America’s Highways, I make the case for restoring the users-pay/users-benefit principle—i.e., strengthening the link between paying for and using roads and highways. The gas tax, of course, needs to be replaced with a user fee that applies to all vehicles regardless of how they are propelled. A congressionally-appointed national commission in 2009 studied an array of possible user fee mechanisms and concluded that by far the best way was to charge per mile driven.

When my Reason colleague Marc Scribner read the Pelican piece, he pointed out that, “Eliminating the users-pay principle and funding roads like any other general government obligation out of general appropriations has long been a goal of progressive smart-growth groups who believe they can more easily get their pet projects funded when road-user revenues aren’t dedicated to roads.”

I agree, and in my book I discussed a longer-term goal of making highways function more like other infrastructure such as water supply and electricity. Customers get a monthly bill showing how much they used, the rate per unit of use, and the amount due. The revenues go exclusively to the capital and operating costs of the utility in question.

A growing number of state DOTs have been carrying out pilot projects to simulate, with volunteer drivers and trucking companies, how a per-mile user fee system might work. There is no consensus yet on the best model, but Louisiana policymakers should be thinking about carrying out a similar pilot project.

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Questions About Tesla Semi’s 500-Mile Trip

The highly touted 500-mile run of a fully loaded Tesla Semi from Fremont to San Diego has raised a number of questions. As far as I can tell, only two minutes of a claimed eight-hour trip video have been posted on YouTube. The video shows only one pause for a bathroom break during that time period, which is suspicious, and not counting that break, if it really went 500 miles in eight hours, that’s an average speed of 62.5 miles per hour. Could there be zero congestion on I-5 (or any other freeways) for any eight-hour period in California?

Other questions include whether the Semi had a full load, weighed the claimed 81,000 pounds, and actually operated on a single battery charge for the whole trip. Autoevolution last month offered a critical assessment. There was no weighing of the truck, and the pallets carried in the trailer to simulate commercial freight loads were estimated at 34, each weighing 600 kilograms (or 1,323 pounds). Yet the video shows only a brief glimpse inside what appears to be a partially loaded trailer. Autoevolution’s estimate of the total gross weight is well below the claimed 81,000 pounds.

The May 2022 ATRI study “Understanding the CO2 Impacts of Zero-Emission Trucks” estimated that the total empty weight of a Class 8 Semi powered by batteries would be 32,016 lbs. Of that, the battery pack alone accounted for a bit over 17,000 pounds. The empty weight of a comparable diesel Class 8 was put at 18,216 pounds. Subtracting the empty weight from the targeted 81,000 gross weight yields a payload capacity of 62,784 pounds for the diesel but only 48,984 pounds for the battery-electric. Tesla has released no figures on either the Semi’s empty weight or the weight of its battery pack. Of course, it may be lighter than ATRI’s estimates, but it would be nice of Tesla to disclose such figures.

Further questions were raised in an article on Electrek on Dec. 16. Reporter Fred Lambert cited a Reuters interview with Pepsico VP Mike O’Connell about the company’s initial 36 Semis for its Frito-Lay division, 15 of them in Modesto and 21 in Sacramento. The Frito-Lay trips will average 425 miles, while trips hauling Pepsi soft drinks will average 100 miles. This suggests that potato chip loads will “cube out” (fill the cubic feet) long before they “gross out” (using all the available payload weight). So at best, it seems likely that the 500-mile run was simulating potato chip loads, not soft-drink loads.

Trucking companies will not make many serious fleet commitments without verifiable performance data. Flashy videos will not be enough.

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News Notes

PennDOT Finances Major Bridges P3 Project
Just before Christmas, the Pennsylvania Department of Transportation and a Macquarie-led consortium reached financial close on the $2.3 billion Major Bridges Program’s first phase. It will replace six major bridges: one on I-78, four on I-80, and one on I-81. Three other aging Interstate bridges will be addressed in a subsequent project. Because the state legislature last year changed the public-private partnership law to prohibit putting tolls on “existing” Interstate lanes (even though these projects will replace all those lanes), PennDOT is financing the project based on availability payments. The consortium put in $202 million in equity, and the financing includes $1.8 billion in tax-exempt private activity bonds (PABs), the demand for which was six times the amount sought.

Brent Spence Bridge Project Finally Moves Ahead
After more than a decade of local opposition to toll financing to replace the aging Brent Spence Bridge between Kentucky and Ohio, a plan to refurbish the existing bridge for local traffic and build a new (non-tolled) bridge for long-distance (through) traffic reached an agreement—thanks to in large part “free” money from taxpayers via Congress: $1.6 billion in grants from two new federal programs. The new 10-lane bridge will carry I-71 and I-75 across the Ohio River.

Louisiana Moving Forward on Major Bridge P3
After securing modest pledges of state and federal grant support, the Louisiana Department of Transportation & Development is expected to issue its long-awaited request for proposals for a long-term design/build/finance/operate/maintain P3 project this spring. The project will replace the aging I-10 bridge across the Calcasieu River. The estimated cost is $1.5 billion, with the feds committing $150 million and a state grant of $100 million. Tolls are expected to be a significant portion of the financing package, and the concession term is expected to be 40 to 50 years.

Gordie Howe Bridge Delayed Eight Months
The $5.7 billion Gordie Howe Bridge between Detroit and Windsor, Ontario, will not likely open to traffic until Aug. 2025, an eight-month delay. The main factor is delays on the Detroit side of the river, where a new interchange with I-75 is a significant part of the project, along with the bridge and ports of entry on both sides. The 1.5-mile, six-lane bridge will provide much-needed additional capacity for America’s single busiest commercial border crossing. The P3 consortium consists of ACS Infrastructure Canada, Fluor Canada, and Aecon Concessions. The public-sector partner is the Windsor-Detroit Bridge Authority.

Arizona Planning EV Charging “Along” Its Interstates
Arizona DOT plans to use $76.5 million in Infrastructure Investment and Jobs Act funding to add electric vehicle charging facilities along I-8, I-10, I-17, I-19, and I-40. The plan will upgrade eight existing charging stations and add 13 more, according to ADOT. They will be located at 50-mile intervals and no more than one mile from an Interstate offramp. It would have been more convenient for EV operators if the charging stations were located right on the Interstates, but federal law still prohibits any commercial services at Interstate highway rest areas.

Connecticut Truck Mileage Fee Began on Jan. 1
In addition to its diesel tax, commercial truckers using Connecticut’s highways as of Jan. 1 are being charged a per-mile fee, based on vehicle weight. The rates go from 2.5 cents/mile for trucks between 26,000 and 28,000 lbs. to 17.5 cents/mi. for trucks of 80,000 lbs. or more. While it is called a fee, because the proceeds are supposed to support the state’s Special Transportation Fund (to improve roads and bridges), it’s more accurately a user tax, analogous to the original state fuel taxes that were dedicated to highway purposes. And truck weight does correlate with the extent of pavement wear and tear.

Reports Question U.S. Electricity Net Zero by 2050
The Electric Power Research Institute released a report in September titled “Net-Zero 2050: U.S. Economy-Wide Decarbonization Scenario Analysis.” As summarized by Steve Milloy of the Energy & Environment Legal Institute, the report found that conversion to clean electricity plus direct electrification (of uses such as electric vehicles) is incapable of leading to U.S. net zero by 2050. Supporting this finding is a report from the North American Electric Reliability Corp. (NERC), “2022 Long-Term Reliability Assessment,” which found that fossil fuel plants are being removed from the grid too quickly to meet ongoing demand.

Jones Act Repeal Suggested by JEC’s GOP Members
In a 29-page report called “Policy Solutions to Reduce Inflation,” the nine Republican members of Congress’s Joint Economic Committee singled out both the Jones Act, which prohibits foreign-owned ships from transporting cargo between two U.S. ports, and the Foreign Dredge Act, which prohibits foreign dredge operators in U.S. harbors and waterways. Both serve to protect high-cost U.S. companies and prevent efficient delivery of shipping and dredging in this country. These were among a number of sensible suggestions for reducing inflation that should elicit bipartisan support.

Barone Spotlights State Population Winners and Losers
In a Dec. 28 column, the Washington Examiner’s Michael Barone drew on 2022 Census domestic migration data to identify the states gaining and losing the most population due to domestic migration. The three biggest population losers, according to Barone, were New York (3.3% out-migration), Illinois (2.2%), and California (2.2%) plus Washington, DC (down 3.8%). By contrast, the biggest population gainers were Florida (3.3%), South Carolina (3.2%), Texas (3.05%), and North Carolina (2.5%). Obviously, the pandemic and economy significantly impacted the trends, and it is too early to know if they are permanent, but policy analysis and media coverage of migration, housing, and infrastructure in these areas will be vital in the coming years.

EVs and Winter Weather
“Cold weather is zapping electric pickup truck range.” That headline appeared in Equipment World on Dec. 21. It added that range loss in cold weather is stirring up serious concerns among some electric vehicle users. Just sitting out in the cold overnight can deplete range by 20%. The North American Council for Freight Efficiency has found in cold-weather testing that “you lose 10% of range for every 10 degrees under 30 degrees Fahrenheit.” Even worse, the AAA Automotive Research Center in Southern California reports that electric vehicle range “dropped 57 percent…when the temperature was held steady at 20 degrees.” Both Ford and Rivian have advised users of their EVs to park them overnight in a garage, plugged in, out of freezing weather. I have seen no comparable data on hydrogen fuel cells in cold weather, probably because there are so few such vehicles in production or operation.

Miami-Dade County Scraps Monorail in Favor of People Mover
For a long-planned transit connection between Miami and Miami Beach, Miami-Dade County, which previously rejected the idea of extending its heavy-rail transit system across Biscayne Bay in November, also rejected the previously favored idea of a monorail to be developed under some kind of P3 agreement. Instead, the county is sticking with something they know: the slow-moving Metromover—a 1970s-era elevated people mover that circulates in downtown Miami. That will likely cost a lot less and will be compatible in operations and maintenance with the existing Metromover.

Hawaii DOT Favors Road Usage Charge for EVs
After having conducted a pilot project to test aspects of a per-mile charge for all vehicles, the Hawaii DOT now favors beginning the transition from per-gallon taxes to per-mile charges with a per-mile charge for electric vehicles (as is already the initial approach in Utah DOT’s ongoing program). Electric vehicles would pay 0.8 cents per mile initially, based on miles driven read from their odometers at annual vehicle inspections. The pilot project involved 2,000 volunteers, funded largely by a federal grant in 2018.

New Jersey Motorists Will Be Taxed for Amtrak’s Gateway Tunnel
Directors of the New Jersey Turnpike Authority approved the diversion of enough toll revenue to pay for the state’s 25% share of the cost of the $16 billion Gateway Tunnel project. New Jersey officials plan to apply for a federal railroad loan to cover the state’s cost, and diverted turnpike funds will be used to make monthly payments on the loan. This amounts to a $4 billion tax on Turnpike customers, not including interest costs. Where are the trucking associations and AAA on this?

Tesla Puts Video Game in Front of Drivers
Kelly Blue Book reported, without comment, the news that Steam Gaming will be added to Tesla’s Model S sedans and Model X SUVs from model years 2022 and 2023. The illustration shows “Cyberpunk 2077” on a huge Tesla screen, just to the right of the steering wheel. One hopes there is some kind of lockout to prevent a driver from playing such games while driving in “self-driving” modes that require hands on the wheel and eyes on the road. But even if there is, hackers will likely find ways to bypass the lockout.

Recommended Reading

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Quotable Quotes

“Eliminating fares without otherwise improving service is unlikely to push very many drivers to take more trips via bus. Instead, evidence suggests that increased ridership will mostly come from people who already take the bus choosing to do so over biking or walking. That’s fine, but it doesn’t do anything to reduce congestion or emissions. In Talinn, the capital of Estonia, fare-free buses led to a 40 percent reduction in trips made on foot and reduced the number of car trips by just 5 percent. In Trenton, NJ and Denver, CO experiments with free fares likewise showed no change in car traffic, despite significant increases in ridership.”
—Jerusalem Demsas, “Buses Shouldn’t Be Free,” The Atlantic, Dec. 9, 2022
“The fact that Cruise’s test cars get stuck or Tesla cars crash when their Full Self-Driving systems are engaged indicates that we are still in the pre-commercial phase of automotive AI. But technical issues are only one, albeit important, part of the entire transformation of the automotive driving experience, especially when moving to automotive AI-based systems that have no interaction with humans for the driving task. Like a present which has many layers of wrapping, from the tissue paper around the present to the ribbon and bow on the box, automotive AI requires various layers to complete the basic technology.”
—Michael L. Sena, “Automotive AI Is Making Both Cars and Drivers Better,” The Dispatcher, Jan. 2023

“Do policymakers today have the stomach for the fight? Coming so soon after the fiscally austere 2010s, many are reluctant to tighten the tax-and-spending screws once again. Indeed, many politicians have gone the other way, and now seem uncomfortable with the notion that anyone should lose out from anything, ever. They are offering hundreds of billions’ dollars-worth of deficit-financed fiscal support that will fuel inflation, whether by subsidizing energy bills (in Europe), offering ‘cost-of-living payments’ (in Australia and New Zealand), or forgiving student debt (in America). Policymakers are thus ignoring the fundamental lesson of the 1980s. Fighting inflation is hard. It requires all hands on deck and immense courage over a long period of time. It is also, unfortunately, almost inevitable that some groups lose out, if only in the short term. As politicians run scared, the 2020s risk earning a special place in the history books, too—for failing to tame inflation.”
—Free Exchange columnist, “I’ll Do Things for You,” The Economist, Dec. 3, 2022

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