How Much Do We Pay for Roads and Other Utilities?

Robert Poole of the Reason Foundation presented a comparison below in which I added my data from Honolulu, Hawaii. Thanks to the 12 solar panels on the roof of my house, and my moderate annual mileage (about 11,000 miles at 20 mpg), my costs are similar or better than average US costs.

However, the data below do not include vehicle registration fees which are part of the road charges we pay. My vehicle's registration is just under $30 per month but most light duty trucks pay about $500 for registration on Oahu, which is over $40 per month. Even with registration included, the conclusion is the same. Roads are a vital infrastructure utility and we pay less for them than we pay for other infrastructure utilities.

=========== Poole's article:What Americans Pay in Highway User Taxes  ===========

HNTB Corporation last month put out a useful analysis that compares what Americans pay for roads and highways (via gasoline taxes) with what they pay for other basic infrastructure, such as electricity, water, cell phones, broadband, etc. I was not surprised to see that their results showed a far lower annual cost to use roadways (excluding tolled facilities) than for other user-charge-funded infrastructure. But I was surprised by how low the reported gas tax charge was.

In my book, Rethinking America’s Highways (University of Chicago Press, 2018), I presented a similar comparison, using data mostly from 2012-2013. My results were very similar to HNTB’s, except for the highway number. The comparative monthly figures are shown above.

My numbers make the same basic point—that people don’t realize how little they pay for roads compared with other basic infrastructure. But my fuel tax figure is about double that of HNTB. The answer appears to be that all HNTB’s figures are per household, except for fuel tax, which is per driver. By contrast, all of mine, including fuel tax, are calculated on a per-household basis.

I’m grateful to HNTB for making this kind of comparison, but we should not be presenting an unfairly low figure for what households pay for roads. The main point is to get people to understand that even $46 per household per month is far below what they pay for other basic infrastructure and is not sufficient to cover the capital and operating costs of our extensive roadway network.

Gas or Electric Car? Website Estimates Fuel Costs

The Institute for Transportation Studies at the University of California-Davis has a tradition in researching alternative propulsion systems for light duty vehicles such as cars, vans and pickup trucks.  They recently unveiled an interesting website called EV Explorer.

People can input various types of cars and their point to point trips such as their daily commute. The EV Explorer uses Google maps to find the best route and then calculates the annual cost of round-trips depending on how many times a week a person makes this trip.

The website also allows for comparisons that take account of the local cost of living. In fact the user should include his/her local cost of gas and electricity instead of using the default national averages.

Not surprisingly, the results are startling for Honolulu compared to the average U.S. city. Not because Honolulu has expensive gasoline (it does) but because it has outrageously expensive electricity (almost three times the national average!)

I used a popular family car, the 2014 Toyota Camry in two versions, one with the standard 4-cylinder engine and one with the hybrid powerplant.  I left unchanged their two electric vehicles, the Chevy Volt and the Nissan Leaf. The trip I used was from the UH-Manoa where I work to Kailua where I used to reside. An even 30 mile round trip.

Using average U.S. prices with regular gas at $3.8 per gallon and electricity at 14 cents per KW-hour, the electric vehicles have a clear advantage in terms of money spent on fuel. Just for this trip over a year a Nissan Leaf could save be $500 over the regular Camry.  But wait!


I need to adjust the prices for Honolulu where the price of regular gas is $4.1 per gallon and the price per KWh is 40 cents (including the fixed charges added by the utility.).

The picture changes dramatically.  The EVs cost almost as much to make these trips as the regular Camry! For Honolulu, the Camry Hybrid is the right choice.  I run similar numbers about 15 months ago and indeed I got a hybrid version of a sedan that offers a 30% better city mpg compared to the version with the same gas engine alone.

If you are in Hawaii, drive an EV and brag about fuel cost savings, I am sorry to say, but your savings is a figment of your imagination.

Highway Funding: Do Roads Pay for Themselves? No Because of "Theft"

Here is a brief analysis by Jack Mallinckrodt,  PhD in Electrical Engineering, Stanford University who made U.S. transportation planning his retirement hobby and has developed a series of well thought out articles at his website www.urbantransport.org:

"
The current intense search for additional sources of highway user revenue is grossly misdirected.

Based on FHWA “Highway Statistics” data for 2004 (typical), “highway user fees”, defined as all tax payments by highway users paid as a “necessary condition of their use of the highway system”, are already yielding revenues of $245 billion/yr (2004).  That’s enough to easily pay the full current annual costs of right-of-way, planning, building, maintaining,  and operating, and financing  the entire U.S. highway system, with a surplus (in business called  a “profit”) of $98 billion/yr.

 The fact that they don’t do so is due entirely to:

1. An arbitrary (not rational) redefinition of “Highway User Fees” hs that counts only about half of the ACTUAL highway user fees paid, and
2. State and federal politicized congressional misappropriation of those  surplus revenues, (“Diversions) to earmarked political favorites (street cars, bullet trains etc.) that provide little or no congestion reduction capacity at 90 or more times the net the cost per passenger-mile.

As someone might have said: “We don’t have a revenue problem, we have a revenue distribution problem.”. The revenue distribution process is a leaky sieve. The revered “Highway Trust Fund” initiated long ago as a solution to highway funding, with its latter day revisions has become instead, part of the problem.

No conceivable additional revenue collection mechanism, not increased fuel taxes, not tolling, nor mileage charge system, will resolve this funding gap until we fix the real highway fund leakage problem.  Our first priority must be to fix the highway user fee receipt distribution process. Otherwise we will simply be spinning our wheels faster. There is much more to this story, derived and explained in “Highway User Fee Surplus.”
"

Have We "Solved" the US Energy Crisis? Update: No!

In the last couple of weeks I stumbled through some blog articles (e.g., These Charts Better Not Reflect The True State Of The US Economy) that describe an astonishing development: Gasoline consumption has collapsed! (... Not really: See update at the bottom.)

• Feb. 1993: 57 million gallons per day
• Feb. 2003: 61 million gallons per day (+7%)
• Feb. 2013: 28 million gallons per day (-54%)

See the data for yourself at the U.S. Energy Information Administration. I captured the graph below.

If this is not a hacker's job, we are witnessing momentous changes in the energy field. No wonder that Tesoro-Hawaii cannot find a buyer for its refinery at Campbell Industrial Park for over a year.

Also, the implications for the Highway Trust Fund and State DOTs are enormous. Their funding has been cut in half.

If this pattern is sustained, then all climate initiatives need to be shelved... "2040 targets" are already met!

The following reasons may explain this trend in part. I guestimate that the factors I list below can cause an one third reduction but I am not convinced that they can cause a staggering 54% reduction:

• Gas price: A 10% increase in fuel price may cause a 2% to 5% reduction in trips and/or trip length. High gas prices reduce discretionary trips but do not reduce trips with an important purpose such as work, school, trips to doctor and grocery store, etc.
• Persistently high gas price may lead people to change location; they move closer to work or school and they may replace a low efficiency car with a high efficiency car.
• Unemployment in the US is much higher than officially reported since people who have given up looking for work are no longer counted as unemployed.
• There is some evidence that ties with unemployment that younger Americans drive less.
• Hybrid cars, electric cars and cash-for-clankers cars replaced thousands of low MPG cars so roughly speaking the same thousands of vehicles now consume less than half that their predecessors did.
• HOT lanes (that promote carpooling and provide uncongested travel) and transit may have caused a marginal reduction. 

==============================================

UPDATE: Colleagues on the mainland and I are still investigating this because the data shown above are suspect. This EIA dataset of gas consumption is much flatter. Using these data, the annual consumption differences are as follows:

• 2002 to 2012 = -1.6%
• 2005 to 2012 = -8.2%

2005 was the year with the highest consumption, according to this set.

Better MPG across most light duty vehicles classes, Hybrids, EVs, Cash-for-clankers and a little less driving did cause a drop. An 8% drop is much more believable than a 54% drop. We still do not know if these are "data we can believe in."  

Why Aren’t Younger Americans Driving Anymore?

The nation's congestion problem has lessened largely due to youth unemployment and high fuel prices. Read this interesting Washington Post blog for more details.

One has to be careful to not overreact to the sharp change in the trend of miles driven because the graph is population adjusted. It shows the rate of driving per person. The rate is dropping but population is growing, so the next effect is likely a 1% to 5% reduction in traffic, depending on the area.

Want a Fine Electric Car? Not in Hawaii.

The Tesla S is a fine EV, comparable to a BMW 5 series or a Mercedes S class.  Tesla argues that their model S can also be cheaper than its competitors. It has developed a calculator to prove it, based on location, incentives, fuel and electricity prices, and owner annual mileage.

I looked into the Tesla S and made some calculations. A couple of months ago I mentioned on the Rick Hamada Program on KHVH that my estimates indicated that in Hawaii if I was choosing between a $50,000 Tesla S and a $50,000 BMW 528i,  I should buy the BMW. (Cars were optioned so that with EV incentives they came with approximately the same "out the door" cost.)

This is the outcome of outrageous electricity prices which, thanks to renewable energy mandates and meddling politicians who pick winners (for their own self-interests,) are continuously escalating,

As you can see below, the true cost to own a base Tesla S in Hawaii is 17% more than California and 34% more than Colorado (excluding applicable taxes, insurance and registration differences, etc.)

Keep a 9 y.o. Car or Replace it with a Hybrid?

I own a sporty 4 door sedan with almost 70,000 miles on it. It's a good car that will likely serve me well for another 6 to 10 years with proper maintenance. It does require premium gas and its average real world 20 miles-per-gallon (mpg) is decent. Could a high efficiency hybrid car be a less expensive choice in the long term?

The general question is: What is the total cost of a new and a used car and how can one estimate it? Each person's choice will vary so I use my case to illustrate the approach.

The only high-mpg alternatives to my car are the 2012 Toyota Camry LE Hybrid and the 2012 Hyundai Sonata Hybrid. The remainder of the hybrids are too "sleepy", too large or too expensive for me.

I chose to make comparisons with the Camry. It is less sporty that my current car but various magazine tests praise it for its good acceleration and good fuel efficiency. It is rated at 43 mpg city so I assumed a 40 mpg for my estimations. Having used a rented Prius for a few days I confirmed that its city mpg is as good as advertised at 51 mpg. I excluded the Sonata despite the fact that it is $4,000 less expensive than the Camry because tests have shown that its real world mpg is worse than its EPA rating of 35 mpg city. [1] According to Edmunds.com both have a similar 5 year total cost to own. [2]

Real world mpg is important and EPA has revised the rules because of large deviations. For example, I did complain to Honda in 2000 because my 1999 Accord LX rated at 24 mpg city never did any better than 20 mpg even with a bit of freeway use thrown in the mix. In 2011 Honda had bigger problems with its Civic Hybrid (lawsuits about the claimed mpg) which stresses the importance of the real world mpg rating in different areas by different users.

There are many variables in this long term calculation, some more important than others:

• Length of analysis: 6 years and 10 years.
• Out the door cost of the new car: $29,160.
• Current value of the 9 y.o. car: $9,500.
• Insurance and registration: I called my insurer to find out today's premium for the 2012 Camry Hybrid: 5% higher than my current car. Registration is the same at $300 per year.
• Usage: this is hugely important in comparing a high mpg to a low mpg car because high use makes the high mpg car cheaper in the long term. My scenario was for 6,000 miles per year which is what I averaged in the past three years. I also run the numbers for 10,000 miles per year.
• Tires: New set of tires costing $800 every 30,000 miles.
• Maintenance: annual average cost of $900 for the 9 y.o. car and $300 for the new car based on past experience. In other words, in the next 10 years it’ll take $9,000 to keep the 9 y.o. car in very good shape and $3,000 to do the same with the new car.
• Cost of fuel: this is another critical variable because fossil fuel pricing will be quite uncertain in the future. There is no doubt that the price of fuel will fluctuate a lot between 2012 and 2022. Some argue that new large deposits will be found, Libya’s production will come up to normal soon and China’s thirst for oil will be leveling off. Others point to the diminishing reserves (they are good for up to 100 years more) and the large unrest likely in the Arab peninsula, like Syria or worse. So I run three scenarios of average annual price change of -4%, +2%, and +5%. I explain each scenario below.
  

Today's oil price is about $105 per barrel. When President Obama took office the price was $35 per barrel. Many analysts expect that in the next decade the price of oil will average $50 to $80 per barrel, so gas may be cheaper than it is today. This is represented by the -4% scenario. In this scenario, today’s unleaded gas is $4.35 per gallon and the average price in the next 10 years will be $3.65/gln. (All prices mentioned are in today’s dollars.)

The 2% scenario assumes that the current level of oil price per barrel is high, that it will drop some time after the 2012 elections and then begin to grow again resulting in a mild average increase. In this scenario, today’s unleaded gas is $4.35 per gallon and the average price in the next 10 years will be $4.76/gln.

The 5% scenario assumes major unrest in Saudi Arabia or another calamitous event that affects oil prices. In this scenario, today’s unleaded gas is $4.35 per gallon and the average price in the next 10 years will be $5.47/gln.

The estimation of total costs takes quite a bit of analysis. The figure below shows the calculation for one car, one mileage scenario and one gas price scenario. The final results require 12 estimations like this.


The results are summarized in the table below. The obvious result is that regardless of gasoline pricing scenario, the car with 40 mpg city is a good choice for high annual mileage users. In my case, staying with what I've got is the smart choice.



[1] http://www.edmunds.com/hyundai/sonata-hybrid/2012/

[2] Hyundai: True Cost to Own®: $42,406 -- Toyota: True Cost to Own®: $42,915 (both are 5 year estimates) from [1]

$10 Gas? Not Really!

Gas at $10 is a myth. China's big boom is over. Their cities are so congested and polluted that they can't absorb more cars so their demand for gasoline should level off.

Similar story for Brazil where Sao Paolo just exceeded 19 million people. In such vast and growing cities rail systems are an obvious need. The explosive growth in demand for oil distillates from the BRICs (Brazil, Russia, India and China) will subside significantly soon. Most of the problem in gas prices is actually created by the restrictions of the EPA and the President.

$10 per gallon of gas is called ... Greece, Italy and several other countries where most people drive 40+ mpg cars instead of 20 mpg cars. In this way, their relative cost for fuel is roughly the same as ours. People find a way to assure themselves independent, flexible transportation. See more in this post: Gasoline Price Comparisons: Taxes not Octanes Matter

People in Hawaii can adjust should gas prices "explode." I am still amazed at the $30K to $50K trucks people buy when a hybrid family sedan is much safer and less than $30K to buy -- let alone the sub-$20K and over 35 mpg compact cars available in the market. There is a lot of room for downsizing in Hawaii.