Rising Fuel Costs Drive Up Carpooling Rates

No one likes sitting in traffic, but vehicle congestion is a growing problem for American cities—one that increases air pollution, CO2 emissions, and frustration over mounting travel times. A report by the Texas A&M Transportation Institute found that road congestion costs each commuter about $820 every year. At the same time, gasoline prices are increasing, and expenditures on gas now account for about 4 percent of US household pretax income. The situation may seem untenable, but will drivers really alter their behavior in response to increased congestion and prices, or are they set in their habits? A new report from authors Antonio M. Bento, Jonathan E. Hughes, and Daniel Kaffine examines how drivers respond to increases in fuel prices, specifically in regards to carpooling and High Occupancy Vehicle (HOV) lane usage. The authors find that a rise in fuel price is associated with an increase in carpools and a decrease in the number of automobiles on the road, with stronger effects on highways that offer an HOV lane.

The authors hypothesize that there are two ways drivers could change their behavior in response to higher fuel prices: by forming carpools and increasing HOV lane usage, or by finding a substitute mode of transportation. Which of those behaviors occurs depends on the strength of people’s preference for driving versus finding another mean of transportation; it is likely that highways that offer HOV lanes will see an increase in carpool formation, since it provides an easy substitution to driving alone.

To test the relationship between fuel costs and driving frequency, the authors used eight years of data from Los Angeles’s Freeway Performance Measurement System. They measured weekly traffic flows for 1,727 locations, focusing on the hours of 6:00am to 8:00pm and representing a mixture of HOV lanes, regular lanes, and highways that offer both. They also collected data on weekly average gasoline prices in the area.

The theoretical model that the authors use interprets traffic flow as a function of gas prices, people’s value of time, fuel consumption over the commuting distance, the cost of carpool formation, highway congestion, and people’s preferences for driving. Since many of these characteristics are unobservable, the authors employ mean fixed effects to model most of these variables. By inserting location fixed effects and year fixed effects in their regression, the authors are able to remove the effects of any characteristics that are constant within each of their 1,727 locations, or over time.

Overall, the model shows that higher fuel prices are associated with increased traffic flow in HOV lanes (more carpooling) and decreased traffic flow in regular lanes. The authors estimate that a 10 percent increase in fuel price corresponds with an average of 10 additional cars in HOV lanes. Traffic in regular lanes decreases at different rates depending on whether there is an HOV lane available. On highways with no HOV option, a 10 percent increase in fuel price is associated with 27 fewer cars per hour, while a highway with an HOV option sees a decrease of 45 cars per hour; they posit that people are more likely to stop driving completely – and either forgo their trip or use public transportation – only if there is no carpool option available.

Understanding the relationship between fuel prices and driving behavior is important as the price of fuel and number of drivers both continue to rise. Additionally, the authors note that policies that reduce the number of vehicles on the road also reduce the negative effects associated with driving, such as traffic-related accidents, pollution, and congestion. But these policies need not try to directly alter people’s driving behavior. Decisions on cap-and-trade regulations, efficiency standards, carbon taxes, and gasoline taxes will all impact the price of fuel and consequently, as this study shows, the number of vehicles on the road. From a cost-benefit perspective, there has been substantial investment in HOV lanes and support for carpooling in places across the country. These findings suggest such policies are based in evidence and do make drivers more responsive to changes in fuel prices. Lastly, the authors’ model demonstrates that consumer do, in fact, take into account fuel costs and fixed costs when choosing a transportation option, an important behavior for policymakers to keep in mind.

Feature Photo: cc/(Steven Vance)