AGI Critical Issues Forum: America’s Increasing Reliance on Natural Gas: Benefits and Risks of a Methane Economy

I will be at
AGI Critical Issues Forum: America’s Increasing Reliance on Natural Gas:
Benefits and Risks of a Methane Economy

November 19-20, 2014
Fort Worth Club, 306 W. 7th Street, Fort Worth, TX 76102

I am in a session on November 19

1:15-2:45 – Session 2: Forecasts of natural gas demand
Kenneth Medlock, Rice University
David Levinson, University of Minnesota
Jesse Ausubel, Rockefeller University (Moderator)


Futures of Energy for Transportation
Vehicles powered by electricity or other non-oil-based energy sources will eventually become a mainstay of the American garage. As the market adjusts and early adopters experiment with new vehicles, each energy source, be it electricity, fuel cells, biofuels, natural gas, or something else, may come to temporarily dominate a market niche. But in the end, economies of scale suggest that one technology will win out for a long time. And so the battle for the automobile now looks much like it did at the beginning of the twentieth century.

Complementary Modes Should Be a Primary Local Planning Goal

In earlier posts I highlighted the breadth of complementary transit systems that exist along with primary ones in New York City, and in another I proposed that transport project evaluation should account for pricing and zoning policies in place before new investment is made. Here what I argue is that the complementary aspects to any primary transport system are nearly always local concerns, and too little is known about how complementary local policies can make or break successful primary systems.*

One way to think about urban transport networks is that there are primary systems complemented by secondary systems. The primary systems are the highest capacity networks, spatially fixed and designed to broadly serve the population of the region. Freeway networks, rail transit and bus rapid transit are examples of primary systems in this way. Secondary systems are those that serve smaller, sometime niche, populations and act as complements to the primary systems. These secondary systems are critical to the overall success of the transport networks as primary systems are very good at serving predictable travel such as rush hours but less adept at serving lots of different types of trips to lots of different places.

One reason automobility is so pervasive is that the primary systems (freeways and other large roads) are nicely complemented with hosts of local policies that make driving really easy. Parking requirements, street design, signal timing and other aspects all come together to create a seamless driving experience in most US cities. No other travel mode has such an advantage and transit, taxis, cycling and walking are too often left to cobble together whatever kind of system they can. Rarely are these “alternative” modes granted the luxury of integrated primary and secondary systems, and even more rare are integrated transportation providers that manage all primary and secondary transportation. Transport for London is an example of an integrated approach.

Consider the U.S. investment made in transit over the past few decades. Transit now accounts for close to 20 percent of total Highway Trust Fund spending, yet the share of travelers using transit has barely moved nationally. This is not an indictment of transit as a worthy mode, just suggestive that we can spend that money more wisely. New York City is a true success story for transit ridership yet has received very little new investment for system expansion relative to maintenance costs (mostly through state of good repair programs) and broadly supportive complementary systems of taxis, liveries, jitneys and 24-hour service. Parking is also very expensive in New York and often not required for new construction and adaptive reuse. Road tolls—which account for about 25 percent of all road tolls collected in the country—have increased dramatically over the past few years. Over the past decade transit fares have been followed by increased rail ridership, though fares have largely kept pace with inflation since 2003. This does mean that New York’s relatively high farebox recovery rates —for the U.S.— have remained an important source of operating revenues. Taken together New York is doing lots of different things that support robust transit services that have little to do with the built environment and density, though these obviously help, but lots to do with complements to the primary systems.

Other cities certainly do a lot to support transit investment, but none support alternatives to the auto to the same degree that autos benefit from complementary policies. One challenge for cities is that the available complementary systems are not very well understood. As one example, current policy debates about taxi services and app-based ridesharing companies often minimize the complementary role of taxi services for transit-oriented cities. Even car sharing studies have largely viewed car sharing as a replacement for auto ownership (e.g. “how many cars does a shared car replace”) rather than an extension of transit policy (“how can shared cars extend access for transit users?”**). Obviously there are nuanced analyses of these complementary systems and the researchers involved know this. The point is that many systems that are sometimes considered substitutes (car sharing or taxi services) are more accurately considered complements, and necessary but not sufficient systems to support primary transit and road networks.

Another challenge for complementary systems is that autos are sufficiently utilitarian that once a city is designed for cars then all trips can be made with one vehicle. Auto drivers are unimodal, whereas transit riders, walkers and cyclists tend to use many more modes through the courses of their lives. This means that complementary systems for non-auto uses require many different types of investment, many of which will have small obvious payoffs. Less obvious payoffs may be large, however, which is a large reason we should study complementary modes more. For instance, based on work by Dan Hara in San Francisco we know that people are much more likely to take transit to work if they know they can get home by taxi if they have to work late. This holds even though most never use the taxi option. In New York it is common for office workers to get a guaranteed taxi ride home if they work past a certain hour (9pm in many cases). This program leverages the availability of complementary travel modes to reinforce the primary transit modes.

By focusing on complementary secondary transport systems cities can lay the groundwork that supports investment in primary systems. Investment in primary systems alone will not produce modal shifts. What if Interstate freeways had been built without minimum parking requirements as part of the zoning code, or a hierarchy of road networks designed to funnel drivers onto ever-faster roads? US cities would look and function very differently. The policy shifts toward automobility was comprehensive and included federal, state and local policies all working together to complement each other. Such voluntary coordination simply does not exist for any other mode.

*A search for “complementary transportation” returns pages of results that misspell “complimentary”.

**Many car share studies and advocacy pieces do mention access to cars for those who don’t have one as a benefit, but most research examines how car share can reduce the need to drive by car owners.

Highways’ Hidden Subsidies

Highway users of course pay a user fee to pay for the cost of highways. Federal gas taxes are dedicated to the federal Highway Trust Fund, and many states, including Minnesota, have similar rules at the state level. So far, so good. The trust fund has in recent years fallen short of the amount that politicians want to spend on roads, but that is in principle easily corrected with an increase in the user fee or a decrease in spending. Most local roads (municipal and county) are paid for via local general revenue. This is also well known in the community, if not the general public. The hidden subsidy is in states which have general sales taxes, but don’t apply them to gasoline. Thus, in Minnesota, I pay a sales tax on prepared food, but not gasoline (or clothing, or random other things). Thus relatively, spending is encouraged in those untaxed areas, which are 6.875% less taxed than other goods. This lack of a tax is not a subsidy in a state which doesn’t tax sales, and instead taxes income or property. But where sales are taxed, but gasoline is exempted, other goods are implicitly taxed more so gasoline can be explicitly taxed less. Note this is not universal across the US. In California, there has long been both a sales and use tax. However the value of the sales tax on gasoline is now lower the sales tax on general goods, though for many years it was close or the same. There is argument about the fact that the sales tax is levied on both the gasoline and the user fee associated with the gasoline. In short, the general principal is that gasoline cannot be simultaneously be taxed with the funds dedicated to highways (thus acting as a user fee) and exempted from sales taxes without there being a subsidy that at least partially offsets the user fee. At a $3.00/gallon price of gas, a 6.875% tax raises $0.20625 per gallon. To compare, the state  gas tax is $0.286 per gallon. Thus, in Minnesota  the net state user fee is only about $0.08 per gallon, not the $0.286 per gallon widely advertised. The federal gas tax is $0.184 per gallon. This is more truly a user fee. Also since there is no federal sales tax, gasoline is not disproportionately favored.  The tax in Minnesota is higher in some localities to pay for other things. We could similarly look at the motor vehicle sales tax (MVST), which is dedicated to transportation in Minnesota. It is 6.5%. Nothing wrong with dedicating the funds, but as a result, they cannot be counted as user fees, since sales tax revenue would otherwise go to general revenue. Based on this document, since 2011, 60% of the MVST goes to the Highway User Tax Distribution Fund, and 40% goes to the Transit Fund. The general sales tax should apply to all goods equally to minimize distortions. Better, a value added tax should be used. Special taxes on beneficiaries should be used where they can be, but not in lieu of general taxes. There is sufficient economic capacity in the highway system for users to pay for the whole thing (the evidence being how much people have paid for gasoline per gallon in the past here, and how much they pay in other countries), it’s a shame we don’t take advantage of that. After paying for roads, and their externalities, and their share of the general tax burden, road users will be paying about their fair share. Taxes are needlessly complicated by special interests in the United States. This allows all sorts-of hidden subsidies. Let’s expose them to the sunlight, and then make objective decisions about whether we should lower the general sales tax on all other goods, and impose that tax rate on fuel.

Updated: Ben Ross made a similar point in Maryland transportation “lockbox” has a big hole.

Creating Transitopolis

The City vs. Country mismatch (where we plan for transportation systems seemingly independent of the context: city or country (suburb)) is especially relevant in metropolitan areas constructing expensive medium and high capacity transit lines to presently undeveloped places, or (re-)constructing and widening freeways in the midst of core cities.

If we are building a city, that means focusing resources closer to the center than the edges, since that is where more of the growth will be.

So the question arises in Minnesota: Are we building a city in the Minneapolis-St. Paul region or not?

Some would argue the region is already a city. Clearly the downtowns and some nearby areas resemble cities. But much if not most of the population lives in single family homes with a yard. Not there is anything wrong with that, but that yard increases spacing between neighbors, lowers densities, and makes it harder to operate a successful transit system in the automobile era.

The decisions we make regarding transportation investment rest on what our collective vision is for this place. If we are building a city, going “all in” on transit is a lot more sensible than if we are not, and a lot more sensible than half-measures. If we are not, going even partly in on fixed rail transit is fairly pointless.

The evidence to date is fairly mixed. The region is growing at about 1 percent or so per year in population. That is a bit under 30,000 people or so per year. (Investing in transit will not put a measurable dent on this, as it is hard to imagine it either increasing or decreasing the birth or death rate noticeably or significantly affecting migration patterns).

Where are those people going? Most of them are not being added to the center. If all of them were added to Minneapolis and St. Paul proper, the populations of the core cities would rise from 667,000 in 2010 to about 950,000 in 2020. If more than half of them were added to the core cities, their population would be around 810,000. Current forecasts suggest the population of the core will be closer to 732,000. In other words, well more than half (around 80%) of the region’s growth remains outside the core cities, and not terribly urban. While the center is projected to grow at a faster rate than the edges, it is not growing faster in absolute numbers.

This region collectively much more resembles Broadacre City than Greenwich Village, and probably more Broadacre City than even Welwyn Garden City or Letchworth. While the density at the edges after development must (by definition) be higher than before development, the average experienced density (e.g. the population-weighted density) may continue to fall as the region expands.

In this dispersed suburban landscape, point-to-point transportation predominates.

In the not-quite-a-city urban areas, point-to-point transportation still predominates.

It is only in full-fledged dense cities (the level of density required depends on income, technology, and other factors), and dense cities that sustain, that full-fledged dense (fixed route, fixed infrastructure) transit is warranted. Loosely, the transit-city threshold is on the order of 10,000 persons per square mile, sustained over some region. This implies a Minneapolis population of 540,000 and a St. Paul population of 520,000. While those numbers are achievable in principle, they require significant changes in market demand and reduction in supply constraints to achieve. If it were to be achieved, still under 1/3 of the region would be in the transit city. The remainder would be the country, or its suburban simulacrum.

Certainly, some parts of the core cities already sustain this density, and there is no requirement that all of the core city achieves the density, just that a sufficiently large part does. Most doesn’t.

For the Metropolitan area, fixing the total space, this threshold implies a population of 63 million, or relaxing the space but fixing the  population, a shrinkage to a developed area of 345 square miles. I would consider either outcome highly unlikely.

The car-free lifestyle is sufficiently uncommon that the local newspaper does a feature on it.

In less dense cities, less transit is warranted. But if the transit is insufficiently dense (in space (coverage) and time (frequency)), anyone with a choice will anchor to the on-demand, point-to-point mode, which will be sufficiently faster to outweigh any additional expense


Creating Transitopolis: the Transit City

Positive (and Negative) Feedbacks in Transportation
Positive (and Negative) Feedbacks in Transportation

Building the transit city (Transit-opolis) requires most of  the region’s central city residents (20% today) to willingly abandon the automobile in the first place: creating an environment where car ownership can be voluntarily foregone because it is to the benefit of all concerned not to own the car. The more transit users there are, the better the transit service is, in a virtuous cycle. (And of course, the fewer transit users there are, the worse the service, in a vicious cycle).

This implies focusing transit investments in the central cities, and not diffusing scarce capital like peanut butter across the region.

Why can’t we have the best of both worlds? There are a variety of interim or transitional strategies

  1. Park and ride lots accessed by private car may serve  the center-working/surburban-living suburbanite, which transfer the worker to a radial transit route. This serves a small fraction of workers, since most people don’t work downtown, where these radial services terminate, and the frequencies are typically not high enough (especially mid-day) to rely on for anyone with irregularity in their life.
  2. Single Car households  with multiple workers splits the difference, where presumably at least one of the workers does not use a car for travel to work, or the two workers carpool to the same location. This is certainly the most common hybrid case.
  3. Weekend Car households  in which the work trip is conducted by walking, biking, or transit, and the car is used for the weekend and special trips.
  4. Car sharing (on-demand car rental) allows the car-less transit user to have a car when needed for the less frequent trips. Taxis (and so-called ride-sharing services) serve a similar function.

These attempts at melding can serve specific niches and are potential transitional steps to the transit city, in that it is more likely to give up a car for some trips than all trips, or portions of trips than all of the trip. They are not however the end state.


 Like Clue, Pick your ending


My own prediction is that we are not in fact building a transit city. The densities that will emerge in Minneapolis and St. Paul in the next 20 or 30 years are insufficient to support a transit-based city for a majority of residents of even the core cities. (And, simultaneously and not coincidentally, the transit investments are insufficient to support a city where most people are car-less).

Pale Probiscidea
Pale Probiscidea

This explains my pessimism about the use of expensive (high fixed cost) city transit tools now. The right decision if you are certain you are building a transit city (or already live in one) is different from the decision if you are not.

While it is argued that never making the investments will ensure the transit city does not emerge, we can continuously ratchet up, rather than doing it in enormous steps. Not investing now does not mean never investing. “No” is reversible (in other words, “no” does not mean “no”).

On the other hand, “yes” is irreversible for a long time. But making the investment does not guarantee the transit city will emerge, plenty of cities, including our own, have invested in rail without seeing accompanying development, leaving an enormous pale proboscidea in its place.

Alternative Ending

My own prediction is that the core cities of Minneapolis and St. Paul are on a path towards Transitopolis. The necessary population densities to support transit are within striking distance, especially in Minneapolis, and the leadership of both cities is keen on achieving that. The big question is whether the demand for higher density housing is there in the cities, and with changing demographics, preferences, and technologies, the demand for suburban lifestyle is diminishing relative to that for urban living. Most people won’t spend their entire lives in either suburban harmony or at an urban tempo, but rather migrate between the two over the years.

The investments in the cities to support transit at a level that most people can avoid the car for most trips are still too low to make this work, there is a marked lack of ambition on the part of regional transportation officials to serve the transit cities they are building with actual rapid transit. This dysfunction has several causes, not the least of which is the leadership of planning organizations that don’t use the modes they manage, which we can attribute to the strange politics of regional organizations.

Winter Institute keynote speaker

Civil engineer and transportation analyst David M. Levinson

Civil engineer and transportation analyst David M. Levinson will keynote the Feb. 18-19 Winter Institute.

Civil engineer and transportation analyst David M. Levinson will keynote the 53rd Winter Institute.

St. Cloud State’s signature summit on economic and business issues returns Feb. 18-19 with events on campus and in the community.

Levinson, who holds an endowed chair at the University of Minnesota, leads the blog about Minnesota land-use and transportation issues.

He has authored or co-authored four books, notably “The Transportation Experience: Policy, Planning, and Deployment,” an Oxford University Press volume that argues transportation development lessons learned in the U.S. and Great Britain can be applied in developing nations.

He directs the Networks, Economics and Urban Systems Research Group at the University of Minnesota. Among other projects, Levinson’s group is investigating the efficacy of Twin Cities transportation investments, past and future, for the Metropolitan Council and Minnesota Department of Transportation.

In addition to Levinson’s 2 p.m. Feb. 19 keynote, the Winter Instutute program will include a reception with live music, the St. Cloud Area Quarterly Business Report economic outlook and breakout sessions on a variety of topics.

For more than a half-century, the Winter Institute has welcomed great minds to St. Cloud State, notably Nobel laureate Milton Friedman and former Federal Reserve chairman Benjamin Bernanke. It is sponsored by these St. Cloud State entitites: Department of Economics and School of Public Affairs.

a blog about Networks and Places


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