Sunday, May 4, 2008

The Market Speaks

Fans of the free market argue that the information it provides to producers and consumers--like how much it costs to fill up a tank of gas--allows for individuals to make choices about how to deal with it. Here's a story from today's Chron about bus ridership and how it is influenced by the price of gas:

Area residents, who otherwise would never part with their cars, now feel compelled by record fuel costs to look at alternatives, such as carpooling or telecommuting. Many also are turning to mass transit.

Several who were riding Metropolitan Transit Authority Park & Ride buses last week said they were saving wear and tear on their nerves at the same time. The rides are a time to escape with a book, listen to music or catch up on some Zs.

Traffic jams are other peoples' worries.

Last fall, the Chronicle examined two years' worth of monthly boarding data from Metro and monthly gasoline prices in Houston, but found no clear link between them. Both numbers went up and down, seemingly at random. That has changed.

Ridership counts for October through March are up nearly 3 percent compared to the same period 12 months earlier. Metro officials put the actual increase at more than 6 percent when adjusted to reflect more accurate counts made by sensors in the bus and train doors, starting in October.

The price of regular gasoline rose 35 percent during the same period. Boardings for the six months on Park & Ride buses, which travel the long routes that eat deep into commuters' wallets, increased 13 percent over the previous year.

Metro's April data are not out yet, but in March, when gas prices here averaged $3.15 a gallon (32 percent higher than in March 2007), Park & Ride boardings were up 16 percent compared with a year ago.

Metro attributes about 40 percent of that gain to the opening of two new Park & Ride lots in Katy and Baytown, but says the rest is because of higher gas prices.

Metro also saw its boardings shoot up after Hurricane Katrina in 2005. Much of that reflected the influx of evacuees to Houston. But there also was a nationwide increase in transit use sparked by the higher fuel prices after the storm, American Public Transportation Association spokeswoman Virginia Miller said.

Fuel prices approached $3 in 2006, then dipped during the summer. But transit use did not go down.

"People had changed their travel habits and were staying with it," Miller said.

She said there may be a "tipping point" at which large numbers of motorists will shift to mass transit, at least for their daily commutes to work, but it is not clear where that point is.

"For a lot of people across the country, $3 and just over $3 was a tipping point, since both 2006 and 2007 were record ridership years," she said.

"It may be that $3.50 is a tipping point for a whole other level of people," Miller continued. If so, she said, it would be a hardship for the 54 percent of Americans who, according to the Census Bureau, do not have access to public transit.

Public transportation is not an immediate solution for people who do not have that option available to them, but expect to see other behaviors--carpooling, telecommuting, or changes in jobs or residence--increase as the cost of gas continues to increase.

A question for policy makers to consider is whether the adjustments that individuals make on their own is sufficient to deal with the problem of high gas prices and precludes additional governmental intervention. Some have argued for years that Americans paid too little for gas and made careless decisions about work, travel and commuting as a result. Perhaps this is an opportunity to change those decisions.