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| Thu May 21 23:02:43 2009 Fighting Traffic |
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| Tue Jun 24 22:04:19 2008 Gas Prices |
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| May | |
| Mon May 19 23:06:50 2008 More Bad Gas |
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| Thu May 21 23:02:43 2009 Fighting Traffic Why do cities persist with bad solutions? |
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| I often think about traffic. Usually because I'm stuck in it.
I have a short but sometimes brutal commute to and from work. Typically it is 20 minutes, but occasionally I'll get stuck in stop-and-go traffic on the Interstate. And on the weekend I sometimes have to drive long distances, and again I'll run into traffic jams. Traffic isn't exactly a recent phenomenon. Julius Caeasar once banned carts during daylight in Rome because of the severe traffic. Today we have other methods of attempting to control or reduce traffic. There are HOV lanes, express lanes, and other ideas such as stoplights at on-ramps, and road pricing. I've found HOV lanes the most frustrating. Of course, I'm usually driving alone, so I could just be jealous. But I find that they are underused when there is very little traffic, so that most of the time they just reduce road capacity without adding any benefit. And when traffic does pick up, the HOV lanes are usually just as clogged as any other lane. There may be times when the HOV lanes are moving and other lanes aren't, but I rarely see that. Which means that most of the time, HOV lanes are ineffectual, and maybe cause more congestion than they relieve. It's possible that relieving congestion isn't the point. Perhaps HOV lanes are known to cause additional congestion, but are meant to reward carpoolers? But then I don't understand the motivation. It seems like we should only care about two things:
Express lanes seem to actually work. They add capacity to the highway when needed. And they are reasonably efficient, since cities can build for asymmetric traffic (rush hour in the morning is usually a different direction than rush hour in the evening). Stoplights at onramps also seem to work. You end up with traffic flowing smoothly into the interstate, instead of getting surges of cars that can then cause backups on the Interstate. When driving long distances, I definitely notice that unmetered onramps can cause a larger interruption to other drivers. Best of all, in my opinion, is road pricing. With road pricing, people pay money when they are in a traffic jam. (Or, depending on the city, they pay money if they are likely to be in a traffic jam, given when and where they are driving). Especially in the next few years, as we get to cars that will be more aware of other traffic in the city, the ability to charge people that are in congested areas will do the most to motivate people to change their habits, or think a bit further ahead before driving into congested areas. I've seen some arguments that road pricing isn't fair because it charges everyone the same rate. But that's just a problem with the pricing, not road pricing in general. A city could always charge based on the price of the car, for instance. Beyond traffic flow, the best fix for congestion is urban planning. I think urban planning is a misunderstood art. Central planning at large scales doesn't work--just ask the former Communist states. But by using game theory and more general economic strategies, urban planners can influence a complex system such as a city so that it optimizes for less congestion and emissions, without planning every last road. Comments |
Related: economics > energy < environment Unrelated: books geopolitics lists mathematics predictions science |
| Tue Jun 24 22:04:19 2008 Gas Prices They will just get worse... |
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| In
The Great Stagflation of 2008 I made the amazing prediction that gas prices would reach $4.50 per gallon
"before 2010." Well, I was right! Although I wasn't expecting it to happen
so quickly.
Today, I read a story on Yahoo that claimed we should start seeing lower gasoline prices "someday." In particular, they noted that high prices were causing a drop in demand in the US and China, Saudi Arabia was increasing supply, and Iraq was also beginning to increase supply. Great! But I still don't think we'll see lower gas prices anytime soon. For one thing, it does take a while for supply to come down. I predict US gasoline consumption will drop by around 20% between 2006 levels and 2010. But it will probably take 2 more years, since that's how long it took in the late 70's and early 80's for people to change cars, housing, and habits after the 1970 oil shocks. For another thing, gasoline prices still haven't caught up to oil prices. Crude oil prices have risen from around $11 per barrel in June 1998 to over $130 per barrel in June 2008 (see the historical prices at the US Energy Information Administration). That's a 12x increase in 10 years. Meanwhile, US gasoline prices have jumped from $1.10 per gallon in June 1998 to $4.13 per gallon in June 2008. That's a bad 4x increase, but only 4x. Gas prices haven't caught up to crude oil prices! Partly that is because crude oil is only part of the price of gas. But it is also partly because gasoline retailers aren't passing along the full costs of the gas. Even with the higher prices, many retailers are still selling at a loss! So I think it is reasonable to expect gas prices to rise another 25-30% in 2008. I'll make a new prediction: gas prices will reach $6 per gallon in the US before the end of 2008. And I think we'll never see gas prices below $5 per gallon again. There is a chance I'll be proven wrong in a year or so, as demand comes down temporarily. But once production declines begin, gas prices will really skyrocket. Comments |
Related: economics predictions > energy < Unrelated: books environment geopolitics lists mathematics science |
| Mon May 19 23:06:50 2008 More Bad Gas Congress and the President pass a bad law. |
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| Today President Bush
signed into law a dubious bill submitted by the US Congress. It was another attempt
to reduce oil prices, and it may have serious consequences. (See
High Oil and Gas Prices for another even less effective Congressional attempt).
Senators had noticed that the US Strategic Petroleum Reserves were buying 70 thousand barrels of oil a day. Their thinking was that stopping these purchases would help reduce demand and therefore prices. Don't get me wrong, I hate high gas prices. I just filled my tank today and I was stunned (prices here are now well over $4 per gallon). I'd like prices to come down. However, the Congressional bill was ill-advised for two reasons: First, the strategic reserve purchases are a miniscule part of total demand. The United States consumes over 20 million barrels of oil a day. The 70 thousand barrels amounts to 0.3% of total US demand. Not 3%, 0.3%. Furthermore, oil is a global commodity, so the impact has to be judged relative to global consumption. The world consumes over 80 million barrels of oil a day. So the US Congress has removed less than 0.1% of global demand for oil. It is unlikely that the global markets will even notice that tiny drop in demand. But let's say the markets do notice, and the price drops by 0.3% (I've generously multiplied the demand drop by 3 since oil is after all an inelastic supply). In the best, most generous case, Congress may have reduced gas prices by one penny. Hey, maybe that's worth it, right? Wrong. That brings me to my Second reason that the Congressional bill was ill-advised: Congress is assuming that we are in a temporary period of high oil prices. Halting strategic purchases would help ameliorate the high prices, and then the purchases can resume when prices come down a bit. (The bill--now a law--stipulates that purchases can resume again at the end of 2008). However, there is a very good chance that prices will keep rising for the foreseeable future. Why would prices drop, after all? Demand won't drop very quickly, since a demand drop will require that large numbers of American consumers and industries replace their inefficient cars and factories with more efficient models, which will take a long time. (Based on the 1970's oil shock, it takes several years for demand to come down). But even if US demand is dropping, other world demand (China, India, others) continues to accelerate. A drop in US demand would help a lot, but this isn't the 1970's anymore. There are a lot more industrialized countries to buy that oil. And oil production is peaking. Russian oil production peaked in 2007, leaving only OPEC countries to keep up with production. However, only Saudi Arabia has significant reserves, and they are running out of easy-to-extract oil. Oil industry observers know all this. They expect prices to rise, not decline. Goldman Sachs recently predicted that oil prices would reach over $140 per barrel in 2008, up from close to $130 today. And they predict prices in the $150-200 range in the longer-term (6 months to 2 years). That would mean gas prices well over $6 per gallon. So what did Congress actually accomplish? We've saved a penny per gallon now (maybe), and then the strategic reserve will have to start buying again later when gas is even more expensive. And if you believe that stopping the purchases helped prices now, then you have to agree that starting the purchases later will hurt prices then. Comments |
Related: economics > energy < Unrelated: books environment geopolitics lists mathematics predictions science |
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