Randal O'Toole, Transportation

Reason #3 most Americans don't ride transit: It's expensive

(Editor’s note: This is third in a series on why Americans don’t ride transit.  The first is here, the second is here,  the fourth is here, the fifth is here, and the sixth is here).

Public transit is the most heavily subsidized form of transportation in the United States, with subsidies per passenger mile that are 50 to 100 times greater than subsidies to driving. But people who use transit are only dimly aware of the subsidies. Even without counting the subsidies, most people don’t ride transit partly because the alternatives, including driving, cost so much less.

File photo - Todd Shepherd
File photo – Todd Shepherd

The 2015 National Transit Database shows that people pay an average of 28 cents per passenger mile to ride transit. To compare this cost with driving, the American Public Transportation Association uses American Automobile Association (AAA) calculations of the cost of driving, which show an average cost of about 57 cents a mile for medium-sized cars. So it seems like a no-brainer to conclude that transit saves money.

AAA, however, assumes that everyone buys cars when they are brand new, pays full financing charges, and then replaces their cars every five years. That may be the way some people buy cars, but most cars last far longer than five years. According to the latest data, the average age of cars on the road is 11.6 years, which means cars last an average of 23 years. The AAA numbers fail to account for 78 percent of a car’s lifespan, during which time monthly payments and finance charges may be irrelevant.

icon_2016_report_commIf you have a car, no matter how old it is, you only pay the variable cost whenever you drive it on any particular trip. According to the AAA data, that variable cost–fuel, maintenance, and tires–averages less than 15 cents a mile, and would be even lower if you had a more fuel-efficient car. So right there you are saving at least 13 cents a mile over transit.

If you don’t live alone, you probably often drive with a passenger. That cuts your cost per passenger mile in half. Transit makes no sense if you and one or more other people in your household regularly travel together.

If you don’t have a car and live alone, transit might cost less than buying a brand-new car. But what about buying a used car? If you spend, say, $5,000 on a used car instead of $25,000 on a new one, then your depreciation is less than $1,000 a year instead of the $3,759 calculated by AAA. Insurance on a used car costs a lot less than a new one. If you pay cash for it, you save the $683 in annual finance charges calculated by AAA. AAA also estimates taxes, license, and registration fees of $687 a year; in Oregon, which has no sales tax, it’s only about $40. But not everyone lives in Oregon.

Counting the higher number for taxes and fees, but lower numbers for insurance and depreciation, annual fixed costs might be around $2,500 a year. If you drive 15,000 miles a year, that’s less than 17 cents a mile. Add the fixed costs of 15 cents a mile and the cost of driving your car each mile is slightly more than the cost of riding transit. But you could have saved money by buying a more fuel-efficient car, an older model that costs less than $5,000, getting basic insurance instead of full comprehensive coverage, or any of a number of other ways. Most importantly, if you have a passenger in your car at least some of the time, the cost per passenger mile quickly drops below the cost of riding transit.

Bottom line: If you already have a car, the variable cost of taking your car on any particular trip will be far less than the cost of car-buyingriding transit. If you don’t already have a car, it is easy to find ways to buy a car so that, even including the fixed costs, driving costs less than transit–which explains why 92 percent of American households have cars.

Many people buy their first car because they need it to do something that transit can’t do. But, once they own it, the variable cost of driving is so low that they use it on trips that could have been taken by transit.

That’s the basic story of transit decline in the 20th century.

Randal O’Toole directs the Transportation Policy Center at the Independence Institute, a free market think tank in Denver.  A version of this article originally appeared in his blog, TheAntiplanner.

 

 

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