When gas prices rise, more people start taking the bus, train, or subway. Not everyone can do this — only about 54 percent of U.S. households have access to public transit, after all — but economists have found that the relationship is quite robust.
This research is all discussed in a new policy brief (pdf) by the American Public Transportation Association, which notes that the United States appears to have entered a new era of oil volatility. (They’re not alone in thinking so!) And that means that demand for public transportation is likely to keep surging. If gas prices spike, more people will try to ride the bus or train to work. If gas prices then settle down again, many of those people will stick with transit.*
Why does this matter? Because, APTA argues, public transportation systems are expected to add some 200 million new trips this year “even as gas prices fluctuate by as much as 50 cents per gallon.” On the bright side, that means fewer emissions and congestion on the road. But on the downside, most transit systems are poorly equipped to deal with this surge.
We’ve seen plenty of evidence of that already in cities like Pittsburgh. Ridership on trains and buses keeps swelling, even though many agencies have had to make cuts because of budget shortfalls. APTA estimates that 71 percent of transit agencies around the country have either cut services in the past year or are currently considering it. Some 39 percent of transit agencies had reported that “overcrowded conditions were such that they were turning away passengers.”
So is there a good policy solution here? Transit advocates tend to say more money is the answer. One problem, though, is in the peculiar way that the federal government provides money. Transit is funded through a dedicated fraction of the gas tax. And that can create havoc: Whenver oil volatility pushes people away from driving and toward transit, that means there’s less gas-tax revenue available. We’ve seen this during the current recession — driving has plunged, which means gas-tax collections have fallen, which means Congress is bickering about whether to cut money for transit systems.
For its part, APTA still wants transit to be funded through a dedicated portion the gas tax — they’re worried that they’d get even less money otherwise. But the current set-up doesn’t appear to be sustainable in the very long term.
* Specifically, APTA estimates that if gas prices spiked from $3.50 per gallon to $4 per gallon, overall transit trips would increase by around 289 million trips. But if gas prices then sunk back down to $3.50 per gallon, overall transit trips would still be 200 million higher than they were originally. There’s a ratcheting effect.