Transportation Continued

I was happy to find gas cheaper last night than I first thought. Driving back into town Sunday, the first "cheap" gas stations I saw were charging $3.999 for regular. Fortunately, I paid $3.799 last night using a site called gasbuddy.com to check local prices before I left home. I was also again pleased with the mileage on my last tank: close to 30 mpg (which is the EPA estimate for highway driving on my nine-year-old car). I added a new feature to the blog on the right column tracking this information. Note: gas prices are per gallon and rounded to the nearest cent.

The local paper again today had an article on how bus ridership is up in my area, with a lot of people who wouldn't ordinarily consider riding the bus buying their first bus pas. The article also mentioned one couple who have taken to living apart during the middle of the week (not coming home at night) so that they can save gas. That would be tough on me personally, but I guess desperate times call for desperate measures. The problem is the I think we are in “desperate times” for good now.

In my town, we are somewhat fortunate with one of the best bus systems in the area. Buses here are entirely supported by tax dollars and there is no additional fare for riding. While the Libertarian in me bemoans the $100 a year I pay in student fees to support the bus system, from a public policy perspective, this system undoubtedly makes the town a more attractive place to live, allows low-income people a good method of transportation, keeps more cars off the roads and improves air quality.

Perhaps this run-up in gas prices is what is finally needed to get us as a whole to shift toward more fuel-efficient options, like smaller cars, bikes, carpooling and public transportation. It all but seems inevitable, since I don't think gas prices will recede substantially anytime soon. It wouldn't surprise me if within a few years, most families drove small cars getting mileage in the upper 30s, garaging or just renting larger vans/trucks/SUVs/station wagons for occasional hauling or road trips. One of the biggest impediments to people buying smaller (more fuel-efficient) cars seems to be that so many people still drive big cars/SUVs and new car buyers do not want to risk their lives driving a less-safe smaller car. This is a main reason my brother likes Jeeps and won’t buy a smaller vehicle. What happens is that the new car buyer ends up buying a larger vehicle and the process becomes a vicious cycle. Hopefully gas prices will break this cycle, but one possibility is that the government might have to offer an incentive to drive smaller cars or disincentive to drive larger SUVs.

P.S.
In nearly every political science class I've taken (and I'm a poli sci major), we've discussed game theory so I thought I would take this opportunity to point out how buying big vehicles is in some ways a Prisoner's Dilemma. Though not a perfect example, generally speaking, most people would be better off if everyone would buy smaller (more fuel-efficient) cars. Individually, they would spend less on gas because of their efficiency savings, and prices in general would likely drop because of an aggregate drop in demand. The problem is that individually, it is in each side's best interest to buy a big vehicle for safety. Let's simplify this to Jim and Sally, two people in the market for new cars. We'll look at Jim first. Jim knows he wants to be safe (one of his top criteria for a new car) and he knows that if Sally buys a big vehicle, he wants to buy a big vehicle, because he doesn't want to be killed if his small vehicle gets hit with Sally's big vehicle. Even if Sally buys a small vehicle, Jim still wants a big vehicle, because now he will be even safer in a crash with Sally. Sally will make a similar decision and both will end up with big vehicles, whereas they both would have been better off buying small vehicles. However, they can not trust each other to buy small vehicles. They need some third-party action to keep them both from buying big vehicles. This is where I'm hoping the high price of gas (or possibly, the government, though the chances of that are slim) will force both Jim and Sally to buy small vehicles.

Alternative Transportation

I returned from the beach yesterday, arriving home with my tank nearly empty. I avoided filling up anywhere near the beach because I was convinced gas prices would be cheaper inland. Was I ever wrong. When I left for the beach a week ago, gas was around $3.78 per gallon. I filled up once at the beach for around $3.80. I return yesterday to find gas at $3.999 (Four Dollars!). I am hoping prices will drop slightly after the Memorial Day weekend.

Regardless of my minimal success in attaining better gas mileage (checked my tire pressures before I left yesterday and used cruise control most of the way back), gas this expensive makes me wonder about alternatives. Apparently, I'm not the only one. Last month, Toyota sold its one-millionth Prius, the preeminent mass-market gas-electric hybrid. In my area, bus ridership rose by double digit figures in the same month.

Also last month, for one of my video journalism classes, I shot a story about the owner and driver of a restored 1964 Vespa scooter. The woman who owns it bought it about two years ago, largely for the appeal of classic Vespas and aesthetics as much as gas savings, but recently, she said the fuel savings are unbelievable. She estimated the scooter with a two-gallon tank gets around 70 miles per gallon. She couldn't remember spending more than $5 to fill her scooter tank, whereas she easily spends $40 to fill her car gas tank when taking longer trips or when she needs to haul cargo.

One of the reasons I decided to work on this story was the appeal of scooters from a value perspective. Obviously, they are cheaper to buy than most cars, use little fuel and parking is generally cheaper, quicker and easier than with a car. I told my subject I imagine that if I have a twin out there from whom I was separated at birth, he owns a scooter; I figure he is just as value-conscious as I am, but has fewer inhibitions and is a little wilder. I can't see myself owning a scooter now (for one, I think my mother would kill me), but depending on where I end up working after college and the state of gas prices, it may be a viable alternative to firing up the car every time I want to go across town.

Guess who else feels pain at the pump

As depressing as gas prices appear these days, I knew gas station owners/operators (especially independents) weren’t reaping the windfall profits. However, this is a new twist. I knew that station owners tended to make a larger profit on a bottle of water than a tank of gas, but the credit card fees associated with charging customers never occurred to me. Even as oil companies like Exxon and Chevron make record profits, local competition and limited choices of supply tend to limit local station profits.

It seems like everybody pays for gas with credit cards these days, and for good reason. In the old days of paying with cash (back when a $20 bill would buy a tank of gas plus a bag of chips), customers would generally only put $5, $10, $20 of gas into the tank. Of course, this is inefficient compared to actually filling your tank and paying the cost, regardless of the required uneven change. Also, credit cards are safer to carry than cash and offer rewards. Gas cards in particular tend to have special deals, and it seems like most major gas brand credit cards are offering even sweater deals- like 10% off for 60 days with no annual fee. As the article mentions, however, credit card companies do not offer these rewards from their philanthropic arms- they pass on the costs directly to gas station owners, cutting into most of their profit margin. I don’t have a solution for station owners, but it is just something to think about when visiting the pump or pondering the wonders of those little plastic cards.

I see a trend starting...

In another sign of the current state of the airline industry, American Airlines today announced it would start charging extra for any checked luggage, as of June 15. This comes as no surprise, given the surging fuel prices and decreased demand for air travel facing the industry.

I can see why people hate this idea. Shareholders, of which I am one, apparently didn’t take well to the news and caused the stock price of parent company AMR to drop about 20% today. The Association of Flight Attendants president also voiced concerns over the safety issues and congestion that will result from more people carrying on their luggage. My mother got hit by someone’s large carry-on and now believes airlines should basically forbid carry-on luggage. Ultimately, if more people check all their luggage, security check-in will also be slower since more people will probably try to carry on forbidden amounts of liquids. At the same time, initial check-in times with ticket agents should be shortened since agents will handle a lighter load of luggage.

However, I recognize that airlines have to pull in more revenue one way or another and I think ala carte fees (which now-defunct discount airline Skybus used extensively) make the most sense. Instead of charging every passenger for the costs incurred by some passengers, I prefer to only pay for those costs I incur myself. I believe if given the choice of keeping my flight cheaper or getting more “conveniences” (more leg room, food on the plane, checked bags, curbside check-in), I can and will choose to keep my costs down. I want that kind of choice these kinds of fees allow me to do that.

P.S:

(In a microeconomics class I took this past semester I learned about price discrimination, which is basically the same concept as the ala carte fees mentioned above. Price discrimination means charging different people different prices. For instance, airlines charge business travelers more than leisure travelers for their flights by charging more for tickets booked closer to the flight and making flights which require a Saturday night stay cheaper. Price discrimination helps some people while hurting others. With airlines, business travelers pay a higher price than they would if all seats cost the same price. Leisure travelers benefit from the higher prices paid by business travelers by paying lower prices than they would if all seats were priced the same. When it comes to charging a fee per checked bag, those passengers who check bags are worse off (compared to an across-the-board fee imposed on all passengers instead of a checked bag fee) than passengers who do not check bags. Essentially, passengers who don’t check bags therefore benefit from the higher prices paid by those checking bags. I put myself in the leisure traveler and no checked bag (or maybe just one checked bag) traveler, so I see myself benefiting from the price discrimination here.)

My Gas Challenge

I left on a class trip to the beach a few days ago (sweet class, right?) and during the preceding week, I busied myself on the latest gas mileage-improving methods available without cost on the internet. I ran across a few myths (like properly inflated tires don’t really save gas, nor does replacing a dirty air filter) and re-affirmed some old knowledge (cruise-control is good so long as you’re on a flat road; going 75-80 mph cuts travel time but worsens fuel economy compared with driving 55-60). I still changed my air filter (in my mind, it will help the engine start a little smoother) and properly inflated my tires (over-inflated tires have less of a tread and less resistance on the road, therefore they actually improve mileage; however, over-inflated tires also wear faster and are less safe since they provide less traction). Being the rebel that I am, I didn’t bring directions to my destination, instead relying on one of my co-pilots’s “navigator,” a GPS mapping function available on Verizon phones. For whatever reason, her navigator took us away from the interstate and onto smaller highways. This route still worked out well, because: 1)the scenery was better 2)we were not in a hurry 3)I could cruise at around 55 mph, a much more fuel-efficient speed than the 65-75 norm on an interstate.

I tend to avoid using air-conditioning to save gas (instead just cutting up the fan on the car HVAC unit), but my passengers preferred AC and one of them bought me a tank of gas, so that was a good trade-off. I have also been trying to accelerate usually slowly, in addition to my heavy reliance on 55-mph cruise control travel. I was reasonably pleased when I got my last gas, topping off my tank with 10.3 gallons after driving 309 miles- or about 30 miles per gallon. This pleased me because my nine-year-old car is rated by the EPA (which Consumer Reports has shown over-estimated many of its mileage figures) to get 30 miles per gallon on the highway (19 in the city). Basically, I consider it a victory when I can achieve the stated highway mileage in my car while running the AC while mixing some city driving with my highway treks. I think I’ll continue my gas-sipping routine on the ride home, too.