Thursday, 12 May 2016

Committee for Sydney says road pricing is the only way to address congestion

The Sydney Morning Herald reports on the Committee for Sydney's new report called A Fork in the Road (PDF), which advocates road pricing to address the city's traffic congestion problems.  The Committee for Sydney claims it is an independent think-tank that aims to champion the city.  Its executive board includes bank, law firm, consultancy and infrastructure representatives.  Although I broadly agree with the findings of the report, it isn't exactly new or ground breaking, some of the terminology used is odd (it talks about vehicle miles traveled charges charging for kilometres) and it fails to consider the wider strategic context of highway charging, funding and management.   It's a useful contribution to the debate about transport in Sydney, and its conclusions are largely sound, with its call for an inquiry into road pricing being welcome.  However, I think it could have gone much further and thought more strategically about how roads are managed, charged and funded.  It's lacking some context, which to me is the Infrastructure Australia, Australian Infrastructure Plan which called for road pricing on all roads for all vehicles within 10 years. Surely that should be relevant?

It repeats conclusions that are far from new or ground-breaking, such as how simply providing new capacity is insufficient, although it does seem to exaggerate the over generalised assertion of induced demand.   Induced demand is a valid assertion in conditions of continued growth, but is not applicable to all (or indeed much) new capacity in other situations and most importantly, when capacity is priced efficiently.  Almost all cases cited of induced demand involve the almost cost-free provision of new infrastructure.  It is also never claimed of public transport, although that do has an induced demand effect (and it too is rarely priced efficiently at peak times).  

The fundamental problem of ALL major cities is that peak travel demand is underpriced on all motorised modes.  This means that supply cannot efficiently match demand (as unless it is priced to pay for the peak supply cost, it has to be subsidised by non-users).  The answer is for peak demand to spread by time of day, route and location, and that means road and public transport use.  However, if all road users and public transport users faced those costs tomorrow, it would mean a significant economic dislocation, so transition needs to be gradual.

The report does note that simply increasing public transport supply (at someone else's cost, because urban public transport is typically not fully or even predominantly paid for by the users) is insufficient (and indeed nowhere has traffic congestion been addressed by this alone).   On page 9 it notes that TDP (Time, Distance, Place) based road pricing is the answer, curiously using a term I've only ever seen in the UK. 

It is critical of tolling in Sydney claiming such projects are promoted because they are fundable, rather than necessary or the "best way" of meeting an access need (although I'm wary of groups that claim they are best placed to know what projects are "necessary" if users are willing to pay for them).

It cites dated data about the London congestion charge (traffic congestion is now at levels before the charge was introduced), although the Stockholm, Milan and Singapore case studies are more robust (although I'm surprised there is no mention of Singapore's transition towards GNSS based charging that enables "TDP" charging).  

The big surprise to me is that not a word is uttered about the examples of distance charging extant already in Europe, the US and New Zealand, including the pilots underway in Oregon and soon California.  Nothing is said about the clear distortions and inefficiencies of vehicle registration fees and fuel taxes, and the longer term revenue and equity sustainability issues around those.   Furthermore, a shift towards road pricing raises the question as to what sort of entity should manage roads and set prices.  It is unlikely to be optimal to have an entity that requires legislative changes to alter prices and has a high degree of political direction.

It is likely that New South Wales will move in the next decade to having distance, weight and maybe even location and time of day charging for all heavy vehicles, which provides a platform that could also be used for light vehicles.    This may offer one path ahead, but meanwhile the conclusion of the report that there ought to be a public inquiry into road pricing in New South Wales is welcome.   The Committee for Sydney should be applauded for wading into an issue that could easily be unpopular and create a backlash among many, the key will be ensuring that public acceptability and perceptions of fairness are addressed.   

Wednesday, 11 May 2016

Free flow Dartford Crossing tolls still causing angst

The Observer reports numerous stories of vehicle keepers charged for use of the Dartford Crossing (Kent, UK) without actually using it because the Automatic Number Plate Recognition (ANPR) system for identifying vehicles is generating errors in number plate recognition. Stories include cases of change of ownership that get ignored, and also an account that had automatic top up but had the top up declined, without the motorist being aware of it. 

Failures in ANPR reading will, of course, happen. Classic errors include getting 0 and O mixed up along with 1 and 7, but some of the errors in enforcement appear to be strange. Any lookup of a number plate with the Driver and Vehicle Licensing Agency (DVLA) should identify the vehicle make, model and colour which ought to rule out most errors of identification.  

Highways England interestingly reports 93% compliance with the toll, which is not bad, but clearly not at an optimal level (I would have thought over 95% would be the target). However, the article outlines a number of theories as to the compliance issues. One being the alleged lack of signage about the toll, including the use of the “C” congestion charge sign used there (seen below).  Dartford Crossing is, legally, a congestion charge, because the capital costs of all three stages have been recovered, so it remains as a traffic management measure (although the cost of maintaining and operating the two tunnels and bridge is around half the net revenues from the toll). Yet many people consider the “C” sign to refer to the London Congestion Charge. To almost anyone, Dartford Crossing is a toll, as it applies to a single route, it replaced a toll and there is little sign that the charge reflects demand by time of day (except that it does not apply overnight).

All of this ought to be teething problems, and it appears that some effort is being made at “soft” enforcement with initial penalties being waived within two weeks for motorists who may well have not known of the need to pay. For me, I think this demonstrates the importance of people in the toll and highway management industry thinking of road users as customers, rather than people who ought to simply do what they are told.

The Dartford Crossing is a service that is charged for, and what is needed is for those who encounter it for the first time to understand that they need to pay and to have options to pay that are easy. Imagine a motorist driving alone for the first time over the crossing, with obviously no chance to write down a phone number or website address to pay. Yet options ought to clearly exist for the few motorists without web based payment access to go to a service station or a kiosk to pay by cash or card.

Tuesday, 10 May 2016

Vehicle miles travelled grow in the US, but not fuel consumption

Arthur Berman on the site oilprice.com reports on an interesting statistic indicating two key trends that should be of interest to transport policy makers in the US.

This figure indicates that vehicle miles travelled are at a record high.  For some time, green transport advocates have claimed that what they called "peak car" had been reached, implying that there had been a generational switch away from growing car trips and mileage:

Gasoline sales and Vehicle miles travelled

The claim was generally an assertion, whereby it was thought that younger generations preferred to use public transport, were more environmentally conscious and so the age of the private car was starting to wane.  This appeared to be an overly simplistic interpretation of data which seemed to reflect that with the economic slowdown associated with the so-called "Global Financial Crisis" (GFC) and high oil prices, that this reflected a cultural trend (one which may seem apparent in some relatively affluent urbanised centres like Berkeley, but which was much more questionable outside the geographic and cultural locations of those who made the claim).   That doesn't appear to hold true.

It would be simplistic to say that the drop in oil prices has helped promote demand, but Berman says that the relationship doesn't appear to be that direct, although it undoubtedly helped.

US gasoline sales related to prices
This graph indicates that as prices declined, demand did not respond immediately, no doubt because for many the cut in that price was a saving that could be used for other expenditure, not necessarily more transport.    Further analysis in the report indicates a lack of price sensitivity around demand for gasoline, but this appears to be a bigger issue when it looks like gasoline is increasingly a less important element in road transport costs.

For those of us in the world of funding and charging roads, the most interesting statistic is how the rise in vehicle miles travelled is not matched by fuel consumption.  There was a 3% increase in total vehicle mileage over a year in 2015, but a 2% increase in gasoline sales.  Does that mean that increased VMT are resulting in only a 50% increase in fuel consumption?  It may be too soon to conclude quite that, but there is definitely a declining correlation between fuel consumption and distance travelled.

Inflation adjusting fuel tax wont be enough

What this means is clear.  Even inflation adjustment of fuel tax wont be enough to offset ever declining yields.   Higher traffic levels don't necessarily mean proportionate increases in road maintenance costs, unless the increase is from heavy vehicles.  Around 40-60% of road maintenance costs may be fixed, and unrelated to traffic volumes, but increases in traffic do tend to mean increased capital spending on improving capacity at bottlenecks.   So continuing to use fuel taxes to recover road capital and maintenance costs is not going to be sustainable (and inflation adjustment is likely to only to delay the inevitable by a few years).

Alternatives will have to be found, unless it is deemed politically and economically desirable to simply keep increasing fuel tax, with the costs of road infrastructure falling on a reducing proportion of road users.  Taxation of vehicle ownership has its own limitations, as it imposes deadweight economic costs that distort wider economic activities.   The most economically advantageous approach would be to move towards charging for road use.

Some jurisdictions are using tolls as a way of achieving this, although tolls may be viable for major highways and crossings, they will not enable efficient charging of all roads.  Only charges based on distance or time will do this.

So it will be the likes of Oregon and California, pioneering such options in the US, that will be ahead of this. Charging by distance or time (and by time I mean actual time on the network, not so much prepaying like a vignette in Europe), with factors for vehicle size and weight, will far more accurately charge for road infrastructure costs than a proxy such as fuel consumption.  There is also more potential to charge varying by location, to reflect infrastructure costs and time to reflect congestion factors, but these are neither necessary, nor always desirable.

The issue of fuel use vs. road use is one of sustainable revenues at the moment, it is increasingly going to be an issue of equity, for it is difficult to see why the motorist who buys a Tesla and pays nothing to use the roads, should be subsidised by the low income motorist with a twenty year old 6-cylinder car.