388. OIL PRICES DROP, CONSERVATION CONTINUES
[Note from JD: This is a guest post from Ari, a new contributor here at POD.]
One of the big fears of falling gas prices was that people would hop back into their cars and start driving again. It makes sense, one supposes, that as the cost of a good goes down, then people start consuming it more, right?
Well, life isn't that simple.
The one thing that people often ignore is that consumer decision making is not based only on simple "single variable equations." We don't walk into a store, pick up one item, and decide to buy it solely because its price goes up or down in a specific span of time. We comparison shop. Transportation, despite its being a relatively inelastic good, is not immune to this economic behavior.
And lo and behold, people appear to be comparison shopping, even as gas prices fall.
The Road Less Traveled
Like never before, Americans' travel habits have a special place in our national conversation. The combination of gas price fluctuations, economic stress, energy concerns, and public financing woes have transformed transportation issues from inside baseball to front page news and water cooler conversation.
A primary cause for this attention has been the major shifts in travel patterns. Americans have simply been driving less, when considering both historic growth rates and the most recent annualized measures of vehicle miles traveled (VMT).1 At the same time driving has declined, transit use is at its highest level since the 1950s, and Amtrak ridership just set an annual ridership record in 2008.
Not convinced? Here's more anecdotal evidence of this trend:
Even before it was costing us $75 a week to fill our gas tanks, as it did this spring and summer, we had already started to change our driving habits in ways unexpected years ago," said John B. Townsend II, AAA Mid-Atlantic's Manager of Public and Government Affairs. "Despite the fact that gasoline prices have been in a freefall since mid-July, consumption is still declining. Last week, U.S. gasoline consumption was lower than it was the same week a year ago."
"People who began to take public transit in 2007 with the rise of higher gas prices are sticking with it now that prices have dropped back down to their lowest level since early 2005, Townsend said.
DART bus usage has backed off a bit since gas prices fell to near $1.50 in recent months, but remains strong. DART buses logged 850,260 fares in October, well up from the 746,731 rides during the same month a year earlier. But it's down from a high of 912,789 rides in July, when gas prices were sky-high.
SEPTA train use on the R2 line, which runs through Delaware, increased from 96,671 rides in October 2007 to 110,020 rides this October. Ridership in October was higher than it was during the summer: in July, riders took 105,768 trips on the line.
"What we believe is when people find out it does work for them, they continue to use it," said Darrel Cole, a spokesman for the state Department of Transportation. "There's nothing better than sitting on a bus, sitting on a train, being able to get work done while someone else drives for you."
The nation's public transportation systems saw the largest quarterly ridership increase in 25 years as more Americans shunned their automobiles even as gas prices began to ease, according to industry figures to be released today.
Subways, buses, commuter rail and light-rail systems saw a 6.5 percent jump in ridership from July to September, according to the Washington-based American Public Transportation Association. During the same quarter, Americans drove 4.6 percent less on highways.
The average price for a gallon of gas peaked at more than $4 in mid-July, then began falling.
They may have tried public transportation to get away from high gas prices, but many have since found it works for them," association president William W. Millar said. "I think this year has been a real turning point for the public's attitude toward public transportation."
Riders made 2.85 billion trips on public transportation during the third quarter, up from 2.67 billion trips a year ago. There have been gains in every quarter this year from 2007. Last year's 10.3 billion trips were the most on public transportation in 50 years.
Gas prices have plummeted during the past several weeks, but commuters do not appear to be returning to their cars, according to transit officials in the region and elsewhere, who say ridership is still increasing.
Transit officials attributed much of the ridership increase earlier this year to skyrocketing gasoline prices. But despite falling pump prices -- from a national average of $4.11 a gallon in July to $1.82 yesterday -- transit ridership is setting records in some parts of the country, officials said.
For the four months ending in October, Metrorail ridership in the Washington region was up 5 percent over the same period last year, senior planner Jim Hughes said. Preliminary data indicate that November rail ridership is up about 3 percent.
"Gas prices may have dropped dramatically in the past few weeks, but Windham County residents who discovered the benefits of riding the bus when the cost of gas was high are sticking to their new routines.
Local public transportation like the Brattleboro Beeline and Connecticut River Transit has not seen a decline in ridership.
"We haven't so far, but prices did just drop," said Gary Fox, executive director of Connecticut River Transit.
"If people are going to look at making that kind of switch, maybe it just hasn't happened yet, but I don't think it will," he said.
Fox said there was an increase in people trying public transit when fuel prices were sky-rocketing.
With prices dropping, he thinks it's likely that spike will stop, but not likely that he will lose current riders."
This is an interesting article because it shows how a poor economy can affect transit in ways we don't often hear:
And yes, some (maybe even most) of this has to do with the economy-- that is clear-- but if the Brookings study is any indication, then we may be seeing a shift in transportation habits in the long run. It's hard to say with any certainty (after all, prediction is a thorny business!), but it is interesting that a good with supposedly highly inelastic demand remains significantly down despite a price decrease of nearly 50%. Like most other "models" that the peak oil community has presented us, oil demand models are overly simplistic and do not account for enough variables. In other words, they have low predictive skill.Commuters who jumped onto buses and trains when gas prices soared stayed on board when prices started falling this summer, but transit operators fear the poor economy will erase the gains.
Ridership on public transit increased 7% to 2.85 billion rides in July, August and September compared with that quarter last year, a report to be released today by the American Public Transportation Association shows. Gas prices began to fall in July after reaching a high of $4.16 a gallon.
"As gas prices rose, more and more Americans made the choice to ride public transit," says William Millar, the association's president. "Now, even though gas prices are falling, Americans tried public transit and many find it convenient."
More than anything, however, this demonstrates that people are ADAPTIVE. Unlike those silly cartoons on YouTube that show people driving SUVs up and over a cliff to PEAK OIL DOOM, people react to signals and will change behavior fairly quickly. In just a few years, people have started using transit again in numbers that haven't been seen for almost a half-century! Unlike peak oil doomsters, who say that NOTHING WILL STOP DEMAND FROM INEXORABLY RISING, reality demonstrates that people consciously, and rather quickly, change behavior.