Erlbaum - TRB Session 6811 Energy Price and Travel Behavior.

Erlbaum - TRB Session 681 1

Energy Price and Travel Behavior


Topics

Historical energy price and travel behavior Why can’t we see an elasticity on travel

demand related to gasoline price? Are we stuck in an environment of our own

creation? Is there some other effect that is not being

measured? Or is it the way we measure things?

Unintended consequences in the planning process


1973-74 Energy Crisis – Impact on Travel NYSDOT PRR 131, December 1977A review of a number of studies at that time

Travel demand

Gas availability more important than price Who is affected by increasing gas price?

Not affected: HHs in mid – upper income Severe impact: lower income HHs

Who Conserves? HH with travel flexibility

High Auto Ownership + Income High level discretionary travel


Individual Travel Behavior Under Energy Constraints

NYSDOT PRR 86, July 1975

NYS 3 surveys in ‘73-’74 period 80% at least 1 action

Work Related Drive slower Carpool Walk

Shop chain Recreation - less or closer


Individual Travel Behavior Under Energy Constraints (cont’d)

Observations Transit increases - not sustained Work trips remain unchanged Non - work trips decline Elasticity

Estimates vary widely Sensitive to study, source and control of other effects At best guesses


Individual Travel Behavior Under Energy Constraints (cont’d)

Government Response ’73-74 Odd/Even 5% Monthly Set aside CAFE 27.5 by 1985

Nothing until 2007 Increase CAFE 35 by 2020


Is History Repeating Itself? 1973/’79 v. 2007

Are travel options physically limited? Settlement patterns Infrastructure Historical modal investment

Is travel behavior/activity changing? Is it the economy (pending recession)?



VMT Bridging Trip Purpose with Activity Category

36%

28%

36%

Mandatory/Subsistence

Maintenance

Discretionary

VMT associated with the trip purpose "return to home" allocated to the three activity types shown.

Mandatory/Subsitence = Work, School and Food Maintenance = Scheduled Types of Activies. Discretionary is Discretionary. Maintenace and discretionary activities may be chained with mandatory activities.

Source: 2001 NHTS, VMT by WhyTrp01, http://nhts.ornl.gov, national dataset summarization

Activity Category

2001 NHTS – Trips v. Activity



Can we actually show the elasticity of travel demand related to gasoline price?

What are basic travel relationships we should understand?


1995, 2001 NHTS NYS Add-on Results

Residential Household Travel

95.695.2


Travel & The Economy

Assessing Trends Economy

Price or 2nd, 3rd order cascading economic effects? Pending recession? Is behavior influencing economic activity or

economic activity influencing behavior?


U.S. VMT v.s. GDP1983 - 2006

R2 = 0.96

0.00

0.50

1.00

1.50

2.00

2.50

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50

GDP

U.S.

VM

T Economy grows travel lags, distance between points is the

measure of the lag

Source: VMT – USDOT, FHWA – Highway Statistics

GDP – USDOC, BEA


George Washinton Bridge Traffic Volume vs GDP

R2 = 0.94

0

50

100

150

200

250

300

350

400

450

500

0 100 200 300 400 500 600 700

Milli

ons

Thousands

Vol

ume

GDP

Economy grows travel lags, distance between points is the measure of the lag

1966-2006

Source: GW Volumes - Port Authority of NY & NJ

GDP – USDOC, BEA


Statewide View of Travel

Assessing Trends Monthly data Linear trend line 12 month moving average Polynomial Peak v. valley growth


US VMT Trends

0.84

0.94

1.04

1.14

1.24

1.34

1.44

1.54

Upper Bound Polynomial Trend

Lower Bound Polynomial Trend

Actual Polynomial Trend

12 Month Moving Average

US VMT

Linear Trend

Source: Monthly VMT – USDOT, FHWA Traffic Volume Trends


US VMT Trends

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

Jan-

83

Jan-

84

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91

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99

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03

Jan-

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Jan-

07

US VMT 12 Month Moving Average Linear (US VMT)

RecessionPresidential Election



Elasticity?

Trend is Asymptotic after 2004 Synthesize historical MVMT trend for 2004-date Derive elasticity from change in real and synthetic

MVMT and actual price Is there a relationship between price change and

elasticity?


Actual U.S. VMT and Forecast U.S. VMT

190.0

200.0

210.0

220.0

230.0

240.0

250.0

260.0

270.0

280.0

290.0

Jan-

00

Mar

-00

May

-00

Jul-0

0

Sep-

00

Nov-

00

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep-

01

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-02

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2

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-03

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-04

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06

Mill

ions

Month

MVM

T

Derived Forecast Actual 12 per. Mov. Avg. (Actual) 12 per. Mov. Avg. (Derived Forecast)

A function of historical % chg in MVMT- forecasts future MVMT (January 2004-date)

Actual

Derived


Actual


Elasticity?Elasticity v. Percent Change in Gas Price

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

-20.0% -10.0% 0.0% 10.0% 20.0%

Change in Gas Price

Ela

stic

ity

To derive monthly elasticity from previous graphic, use the change in the forecast MVMT and actual MVMT and solve the following equation for the elasticity (E) : [(1+ chg gspr * -E) * (1+ chg MVMT) * MVMT)]

Elasticity v. Time

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Oct

-04

De

c-0

4

Fe

b-0

5

Ap

r-0

5

Jun

-05

Au

g-0

5

Oct

-05

De

c-0

5

Fe

b-0

6

Ap

r-0

6

Jun

-06

Au

g-0

6

Oct

-06

De

c-0

6

Fe

b-0

7

Ap

r-0

7

Jun

-07

Au

g-0

7

Ela

sti

cit

y

R^2~=0.05


Elasticity

Not evident Highly volatile Increase and then decline Inadequate periods of significant and

sustained price increase Not a player yet Similar observations to 1973/’79


Why is elasticity not evident?

Economic Rule of Thumb People react to price increases only when they can turn

to substitutes Even price doesn’t do a really good job

Price Increases Alternatives? Can’t change the type of fuel you use Can’t stop going to work

Gasoline purchases are closely tied to things we own Home – location choices Car – mobility choices


Why? Since the 1980s

Gasoline has been cheap Cars minivans SUVs

More fuel efficient Less fuel efficient Increasing Property Values

Move further from place of work Suburbs Ex-urbs

1990 average commute time rose 15% 3 in 4 Americans commute

Jobs move out of central cities into suburbs Difficult to carpool Public transit unavailable < 5% of American Public uses Transit


Why?

Hefty Price Increase >> 30% for 5+ years Time to come up with substitutes Higher Commuting Costs

Smaller car Move closer to work Find a Carpool for the kids Take transit?

Consumers don’t change behavior for blips


Unintended Consequences


Cascading Impact of Changes in Travel Changes in behavior Less travel Less fuel tax/toll revenue Less infrastructure investment Increasing energy and material prices Projects become more costly Projects delayed or re-scoped Less alternatives due to cost Need for new revenue sources

Congestion/time of day pricing

Law of unintended consequences


I Want You

To Give Me More Gas Tax Money


Energy Impacts on Capital Program Time line Issues

Projects: bid in advance Start ~ 3- 6 months later

Energy price/material adjustments over project life Preparation of site (Fuel) Material (Asphalt) Delivery (Fuel) Placement (Fuel)

Net Result – Project cost escalation Drag on funding


Price Trends

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00A

ug-7

9A

ug-8

0A

ug-8

1

Aug

-82

Aug

-83

Aug

-84

Aug

-85

Aug

-86

Aug

-87

Aug

-88

Aug

-89

Aug

-90

Aug

-91

Aug

-92

Aug

-93

Aug

-94

Aug

-95

Aug

-96

Aug

-97

Aug

-98

Aug

-99

Aug

-00

Aug

-01

Aug

-02

Aug

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Aug

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Aug

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Aug

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Aug

-07

Fu

el $

/Gal

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Asp

hal

t $/

To

n

Fuel

Asphalt

Source: NYSDOT, Construction Division


1/20

05

2/20

05

3/20

05

4/20

05

5/20

05

6/20

05

7/20

05

8/20

05

9/20

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10/2

005

11/2

005

12/2

005

1/20

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2/20

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3/20

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5/20

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6/20

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7/20

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8/20

06

9/20

06

10/2

006

11/2

006

12/2

006

1/20

07

2/20

07

3/20

07

Bid

3 Months

9 Months

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

Millions $$

Bid Cost Components Subject to Energy Price Adjustment

Bid

1 Month

3 Months

6 Months

9 Months

Bid Price has been adjusted for future energy cost at 1, 3, 6 and 9 month intervals.

Source: NYSDOT, Construction Division


Recap

History: Changes come out of discretionary travel

NHTS 2001 Discretionary and maintenance activities are

60+% of the pie Travel demand 2004 – date

Apparent dampening trend Underlying economic uncertainty?


Recap

Its not gasoline price No elastic effects identifiable

Revenue forecasts Over estimate, if based on simple trends

Capital program expenditures Subject to fuel price escalation and volatility Difficult to forecast Hard to budget for Increasing at a rapid rate


The End

Nathan Erlbaum

NYS Department of Transportation

[email protected]

518-457-2967

Erlbaum - TRB Session 6811 Energy Price and Travel Behavior.

Documents

erlbaum trb session

travel behavior slide

activity slide

bea slide

closer slide

elasticity of travel

valley growth slide

planning process slide