Monday, May 12, 2008

Laws of Supply and Demand Still Work!

High gas prices have had one effect that every environmentalist should cheer - an increase in public transportation usage:

DENVER — With the price of gas approaching $4 a gallon, more commuters are abandoning their cars and taking the train or bus instead.

Mass transit systems around the country are seeing standing-room-only crowds on bus lines where seats were once easy to come by. Parking lots at many bus and light rail stations are suddenly overflowing, with commuters in some towns risking a ticket or tow by parking on nearby grassy areas and in vacant lots.

“In almost every transit system I talk to, we’re seeing very high rates of growth the last few months,” said William W. Millar, president of the American Public Transportation Association.

“It’s very clear that a significant portion of the increase in transit use is directly caused by people who are looking for alternatives to paying $3.50 a gallon for gas.”

It would seem that polticians have competing goals. They would like to be seen as helping consumers by lowering the price of gasoline and at the same time be seen as good environmentalists - which requires a high price for gasoline. I guess that shouldn't be surprising. Logic has never been the strong suit of politicians.

Here in Miami, we face the typical catch 22 of public transportation. Public transportation is poor, in that there are not enough bus routes and the Metro doesn't serve enough areas, and therefore citizens don't use public transportation. Since use of public transportation is low, we can't justify the money to pay for improving public transportation. Well, this story provides an answer to the conundrum. If you want people to give up the convenience of their car, you have to make it prohibitively expensive to drive that car.

I can think of numerous ways to make that happen with public policy, none of which politicians are likely to be willing to support publicly.

1. Eliminate the parking requirement for new construction of commercial and residential structures. If there is no place to park or if parking is very expensive, people may be more likely to use public transportation.
2. Impose a moratorium on new parking structures.
3. Use variable pricing for the parking at metro rail stations. When the lot is near full, the price of parking rises. When the lot is near empty it might be free. Making it expensive to park during rush hour might force more to arrive at the metro via bus.
4. Impose tolls on cars that enter the downtown area and use those tolls solely to fund public transportation.

I haven't thought all of these through so there may be unintended consequences to some of them, but the idea is to look at ways to increase the cost, finanical and otherwise, of driving rather than taking public transportation. We know there is a point where the cost of driving becomes too high and forces the transition because we're seeing it now. But what happens if the price of gasoline falls again? Those increases will turn into decreases unless some policy is enacted to keep the cost of driving high.

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