One rev forward, one screech back

Today’s Guardian G2 supplement asks: is the fuel crisis a blessing in disguise?

As with most questions posed by newspapers, or indeed in life generally, there’s no one simple answer; in some ways, it is a blessing, but in others the disguise is perhaps rather too good.

I can recall reading not that long ago – but certainly before such a prospect looked remotely feasible – that the price of petrol would have to reach £2 per litre before the UK would start to see the sort of modal shift away from cars and onto public transport which London has bucked the trend with over the past few years.

Now prices are about 20% closer to that than they were when I read it, is this an unalloyed good thing?

There’s little doubt from an environmental point of view that there is almost no such thing as too high a price for oil. It’s going to run out, and until it does it’s going to cause dangerous damage to the environment, so the sooner we can cut down on its use, the better.

From a social justice point of view, though, high petrol prices hit poorer people harder, as do most environmental taxes, which makes things that bit more awkward.

The well known difficulty with making the transition from cars to public transport is that public transport needs to be good to encourage people to leave their cars at home. More ideally, public transport needs to be so good that people don’t have a car in the first place.

The problem with the costs of running a car is that so many of them are one-off, up-front, ‘sunk’ costs: the moment you opt to own a car, you effectively commit to throwing hundreds of pounds at it each year in maintenance, insurance, road taxes and loss of value. The incremental costs which actually vary with the car’s use make up a relatively small (but increasing) proportion of the cost of owning a car.

The result of all this is that for anyone who owns a car, public transport simply can’t compete on a fair basis when deciding how to embark on a particular journey. Sure, the overall cost of taking a car on each trip to the supermarket over a year may be similar to the cost of hopping on the bus instead, but that’s not how decisions are made. Sunk costs are irrelevant to any individual decision, so you’re comparing – in the case of our small, fuel-efficient car – an incremental cost of about 15p a mile with a return bus fare, even in the cheap bus paradise of Greater London, of £1.80 per person.

It’s clear that to enable fair competition between private and public transport, as many of those sunk costs need to be removed and replaced by incremental costs which vary with distance travelled instead. So, for instance, the government’s much-maligned (and even now, I understand, not expected by anyone in the Department for Transport to be implemented for at least a decade) national Road Pricing Scheme would be an ideal replacement for road tax, arguably fuel duty (although this is of course already incremental), and perhaps more radically some sort of MOT system funded from the scheme, if they really wanted to try to win over the usually unappeasable motorists. The more sunk costs they can apportion per mile in this way, the fairer the comparison can be between taking public transport and taking the car.

As things stand, too much of Britain is too difficult to navigate by public transport, so many of us – even those of us who write blog posts like this and wish they didn’t feel the need to own a car – find ourselves reluctantly purchasing a car to get around.

Living 150 metres inside Greater London, with parents living a few miles outside London, I know I could very easily and happily go without a car if I only ever travelled in the 180° zone on one side of my home, but since I often need to travel to the other side, going without would be impractical, inconvenient and expensive.

This is why so many people, even those with decent transport links in their immediate vicinity, have cars, and as soon as they own the car, it’s a financial no-brainer to use it as much as possible.

So as the fuel prices begin to rise, and people are looking for ways to change to public transport, what progress is being made toward replacing one-off costs with incremental costs?

Sadly, very little. In addition to the aforementioned shelved National Road Pricing scheme, I arrived home (by sleeper train, not car!) last week to find a letter from my car insurance company, Norwich Union, telling me that the innovative product I signed up for last summer, Pay As You Drive, was being axed.

Apparently take-up was poor – poor to the point where they refused to say quite how poor but insisted it was “not less than” 10% of what they were hoping for!

I’d signed up for this as a first optimistic step towards enabling myself to compare public transport and car use fairly, and while I was pleased by how well it worked and did feel somewhat additionally rewarded each time I left my car at home and walked or cycled somewhere, the per-mile rates, even in rush hour, were minimal, and as nothing compared with all the sunk costs of owning the car. Nevertheless, it was a good start, but now even this small step towards a fairer transport market has been withdrawn.

Perhaps it will make a comeback, but in the mean time, is £2-a-litre petrol still our best hope for achieving modal shift? If there’s not a marked improvement in (and reduction in the cost of) public transport outside London, for the sake of the less well off, I rather hope not.

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9 Responses

  1. The problem with high fuel taxes is that they are regressive and so it tends to be the people in small businesses and those people on low wages that are effected the most.

    I think that the one mistake that Ken made with the congestion charge was that he should have given small businesses reduced charges or exemptions in return for increased charges for the 4x4s. He was going in that direction it seems, but if he had gone a little bit further and helped people with small businesses rather than just people with small cars, then he could have been on to a winner.

    As far as encouraging people onto public transport, the Oyster Card has been the biggest motivator. Ever since I got mine I have been using the buses well over twice as much as before proving that it is not just the cost but the ease of use which encourages people. If the oyster could be rolled out nationwide onto all bus and train systems then I think there would be a significant shift to public transport.

  2. It’s a difficult one: in a capitalist society, how do you force a cut-down in consumption of anything other than by putting the price up? But to do so does as you say hit the poorest first. I guess we’re stuck with a system in which the rich will always prosper!

    I’m actually in favour of personal carbon credits, which seem to be a win-win situation on this front. Either everyone can consume the same regardless of wealth, or the wealthiest can pay money directly to the poorest if they wish to continue consuming more than them. I can’t see a down side – but I also have my worries about the ability of Whitehall (or any organisation, public or private) to implement such an enormously complex system, so I’m not holding my breath.

  3. […] suppose this comes back to the same principle as my thoughts on car running costs last week. In a capitalist system, to tackle environmental problems, the costs of polluting/ […]

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