Boom, Bust, Echo and gas price sensitivity

Posted on August 31, 2008 at 12:01 pm by Mark Kuznicki

Friday’s Globe and Mail featured a prediction by Jeffrey Rubin, the CIBC World Markets economist, that damage from Hurricane Gustav and other intense storms this season could cause a sudden spike in gas prices to $1.75 a litre.

Every time there is a price spike, the media runs to the local gas station to cover the “pain at the pumps”. But does that pain translate into a change in behaviour? How much of an impact do gas prices have on the commuting public in the GTA? Do increasing gas prices cause people to make different personal transportation decisions, or are households just absorbing the extra costs?

It appears that gas prices are affecting vehicle purchasing decisions (sorry GM), but are consumers switching from private vehicles to other modes of transportation? I would love to see the research on that. (Perhaps our friends at Metrolinx have some sources they can share? If readers know of recent research on this question, please leave a link in the comments.) [UPDATE: High gas costs pushing people to use public transit, survey finds, Globe & Mail]

Surely demographic factors influence gas price sensitivity and the substitution of one mode of transportation for another. It makes sense that household incomes will affect price sensitivity, with the working poor being hit hardest. At the same time, many service workers need to use private vehicles to get to or perform their work (i.e. not the GO train Bay Street crowd) and have few alternatives. This creates a political problem that will bring calls for action.

But I also believe that there is a relationship to another familiar demographic trend with political and policy implications: Boomer parents versus their Gen Y children.

Older upper middle-class car owners who live in the bedroom communities surrounding the City of Toronto and other major urban centres in the 905 will not be terribly affected by increasing gas prices – at least not enough to effect a historic shift to more sustainable modes of transportation. In addition to enjoying relative affluence, my guess is that this group have deep-seated cultural habits and experience systemic barriers that make switching costs relatively high.

Meanwhile young, newly urban professionals, creatives and knowledge workers who are repopulating our city centres (like Metronauts writer Adam Schwabe) are moving en masse to enjoy the vibrancy of city life, reduce their carbon footprint and increase the quality of their lives by spending less time in the daily commute. Generation Y workers, the Echo, the Millennials – or whatever you want to call them – are changing the workplace, the urban fabric and the nature of the transportation problem. This is more than a stage of life question – research points to a values-driven shift towards more sustainable choices by young people for environmental and financial reasons:

Workers under the age of 25 in the Toronto region use public transit 30.8 per cent of the time, while a further 9.5 per cent walk and 1.5 per cent use a bike.

That’s a considerably higher reliance on environmentally friendly means of getting to work than the average commuter in the Toronto region, who commutes by public transit 22.2 per cent of the time, by foot 4.8 per cent of the time and 1.0 per cent by bike.

Which of these two groups receives the lions share of attention in the media and the political conversation that surrounds the work of Metrolinx planners and the development of its Regional Transportation Plan? I don’t think anyone should be surprised to see plans and investments that reflect the needs of the suburban Boomer commuter class, but what of Gen-Y and the New Urbanists?

Ultimately, and historically in this region, the allocation of scarce funding is a question of politics, not planning. So here’s the political question:

Should governments dull the pain of those making energy-intensive choices about where they live and work and how they choose to travel, or should governments reward those that make more sustainable choices with the required supporting infrastructure, planning policies and design of dense mixed-use city centres?

I believe that the Gen-Y shift to urban life is a generational opportunity to shift behaviour and a leverage point for systemic change, if our planners and politicians can find a way support and embrace it. But can planners and politicians hear their voices?

Image by Will Gotshall-Maxon

Tags: cars, Commuters, economics, energy, gas, gas prices, metrolinx, new urbanism, oil, planning, Politics

15 Comments »

[...] Cross-posted from Metronauts.ca: [...]

Pingback by Remarkk! » Boom, Bust, Echo and gas price sensitivity — August 31, 2008 @ 12:22 pm
Planners might, but politicians don’t listen to planners nevermind the low-voter-turnout bracket of voters under 30.

I think this spike in gas prices couldn’t come at a better time. High gas prices are going to increase the likelihood we will have a change of “leadership” (and I use the term loosely) in this country.

Comment by Karl Junkin — August 31, 2008 @ 1:15 pm
Accommodating bad choices, is always a bad choice.

However, to some degree, car-oriented suburbs (the well established ones) are here to stay.

There is no practical method or proposal to tear down suburban Markham, Brampton or Whitby.

As such, the question arises of what to do with the people that are there?

Not merely ‘accommodating’ them, but considering what’s good for the rest of us.

While I would very much oppose any further highway widening or extensions; I do realize the congestion and smog of badly planned suburbia are an issue in need of solving.

There are, of course, different ways to get to that solution.

Beyond prohibiting highway expansion:

1)Do not extend GO Rail to completely greenfield areas, and make sure both municipalities and the public are told these areas will NEVER be serviced by GO Rail.

That should have the effect, along with enlarging the Greenbelt, and upping intensification targets, of making greenfield suburbia more of a past problem to correct, as opposed to a growing problem.

2)Do boost GO Rail (and local transit) to established suburban areas, but maintain distance pricing, as this penalizes those choosing to live unreasonably far from their work.

3)Introduce Road Tolls, so as to penalize drivers by distance, for living too far from where they work!

4)You can’t do any of the above without also dramatically improving local transit, intensifying suburban nodes, AND more substantially growing the transit capacity of the core of Toronto, where there is little room left to get people to switch.

On this last point. A downtown relief line should move up the priority list (as opposed to the Greenfields subway in Vaughan). More capacity at Union Station needs more action and less talk…. AND.. various existing subway stations need considerable enlargement, Yonge/Bloor, St. George, and King are all busting at the seams in rush hour.

Comment by James — September 1, 2008 @ 9:15 am
3)Introduce Road Tolls, so as to penalize drivers by distance, for living too far from where they work!

So you expect us to sell our houses and move every time we change jobs?

Comment by M. Briganti — September 1, 2008 @ 12:06 pm
“So you expect us to sell our houses and move every time we change jobs?”

In a word, NO. You needn’t change homes to change jobs.

However…

I do expect, that if you live in Oshawa, you will not even consider a job in Oakville, unless you intend to move to the area.

I generally expect, most people, most of the time, should plan on working within 15km of where they live or living within 15km of where they work. (15 is not a magic number you could pick a bit higher or lower)

That’s not only ecologically responsible, it just makes good sense. It provides a shorter, lower-cost commute, makes it easier to run home from work quickly, if needed for a family emergency, or to run into work quickly if needed urgently at work.

Its one of those win-win-win things. It also helps keep sprawl under control, reduces the amount of infrastructure required, saves tax dollars and keeps good farm land as what it should be, farm land.

I fully appreciate this choice is not always possible for every person, every time.

But part of saying you have the legal right to move further away from work if you need to do so or just want to, is also saying you have to pay for the privilege.

By choosing to commute for an extended distance, you are choosing to compel the government to increase investment in otherwise un-necessary infrastructure. You are choosing to compel more highways, wider highways, new and longer commuter rail services, extended sewers, water mains, pumping stations and on and on.

IF you really feel the need, so be it; but don’t expect me to subsidize your lifestyle choice.

You can pay your own way.

I think that’s good economics, good planning, and ecologically responsible.

No one is saying you can’t change jobs, just do so within a reasonable distance of your home; OR be prepared to move; OR pay for the additional burden you’re placing on both infrastructure and the environment.

Comment by James — September 1, 2008 @ 12:58 pm
James, we can’t all physically fit downtown you know. Downtown has become ridiculously expensive, and more and more employment centres are in the 905. This is the typical “I’m better than you” live/work downtown yuppie attitude.

It’s not easy to sell your house and uproot your children just because of a job change. Most people have to take the first job that comes along, wherever it happens to be.

Comment by M. Briganti — September 1, 2008 @ 2:40 pm
My opinion is neither snobbish or yuppy-esque, kindly don’t
denigrate the opinions of others or personalize discussion…

As you well point out, many employment centres are in the ‘905′, in which case, logically, people would live in the ‘905′ near those locations, if that’s where they are employed.

I have not taken a position that one must live in downtown Toronto, or within (15km thereof).

My position is that someone ought, where ever possible and practical, to live somewhere vaguely near to where they work, wherever that may be.

I would, however, add that for those who do work downtown, there is housing catering to every socio-economic class within 15km of downtown Toronto, it is not all North Toronto/Rosedale.

There is housing in East York, York, The north-west urban core (Seaton Village/West Annex)and many other areas with a range of housing types and prices.

I would also point out that I understand some people for whatever reason may be unable; and/or choose not to live near where they work. However, there are many low-income people and middle income people (never mind rich people) who do make that choice. Should they be required to subsidize someone else’s lifestyle preference? That hardly seems fair.

Living far from one’s job is also not good for the environment or taxpayers. So while I support anyone’s right to make any legal choice on where to live or work; I don’t support their right to bill me for that choice.

If the cost for a family of a given parent’s/spouse’s commute is too great, they can choose not to accept a given job; OR they can choose to move OR they may feel free to pay the cost of their commute.

I’m not proposing to take away anyone’s job or home or commuting option. I’m simply stating that I live in the City, own a car, AND choose to take transit almost everywhere. I pay a fare for that, why shouldn’t a driver pay a similar fare for road use? Why shouldn’t that fare reflect the cost of the road, accidents/healthcare, pollution and sprawl?

For the sake of sparing other readers a long-winded back and forth, I will say that I have said my piece on this subject and move on.

Comment by James — September 1, 2008 @ 5:02 pm
I happen to live in Seaton Village, and the housing here is not cheap. Also, some people don’t want to live in termite/cockroach infested 100 year old houses that constantly need work. In Canada, we subsidize. If you don’t like it, move to the United States.

Comment by M. Briganti — September 1, 2008 @ 5:15 pm
I’m in support of James view. Where we live is a choice, and it is the sum of our personal priorities. I’m tired of people saying they “have no choice” but live in the exurbs and commute ridiculous distances daily, when what they really mean is that they can’t afford a 3000 square foot home with a huge yard closer to the city. Simple solutions like living in a smaller space or living with fewer (or no) automobiles are usually not even on the table.

Certainly this is a free country where we can live where and how we want; but the reality is that a big house, yard, and multiple vehicles is a privilege, not a right, and those who want those things should have to pay for them. “Needs” and “wants” have been blurred. Right now, living in a small space and relying on transit requires great personal sacrifice, even though it is better for society as a whole. Meanwhile, wasteful consumerist lifestyles are rewarded and encouraged by both governments and marketers. Highways receive billions in government funding and are free to drive on while transit is perpetually underfunded and requires payment for every trip. 2L bottles of cola are on sale, but only if you purchase in multiples of four, so those carrying their groceries home on foot pay full price while those with the SUV in the parking lot get the deal. Society needs to reverse those types of incentives to stop rewarding the types of behaviour we’re supposed to be discouraging.

But as the author of this blog post points out, the baby boom generation is coming to terms with this very slowly — and many probably never will. The post WWII explosion of suburbia and auto-centric living is an aberration, not the norm as most boomers see it. Generation Y and onwards will we the ones to spearhead changes that bring us back to the true “norms” of walkable mixed-use communities and public transit; sensible things that existed long before ultra-cheap gasoline made hopping in a car the easy solution to every problem.

Comment by Garyo — September 1, 2008 @ 7:25 pm
Thanks for the great comments!

From a public policy point of view, the mobility of human capital/labour/talent is very important to a vibrant knowledge-based economy. At the same time, some of the costs created by this mobility (environmental, social and infrastructure) are externalized or born by the public.

So, nobody would want to regulate that “thou shalt live within X km of your work” – that’s certainly not in the public interest. However, I think it is reasonable to make sure that previously externalized costs are brought back into the marketplace of private decision-making. That is a role for government.

The smart growth and the mobility hub concepts that the Province and Metrolinx have developed call for a change to a more networked regional economy, with multiple dense centres of mixed-use, where living and working in the same place is possible and desirable as a way of life, and where one can easily and quickly connect to a network of regional and local (and international) transportation options.

But how are these ideas going to be implemented? As we have seen before, the best policy statements and plans can be disregarded and killed in the day-to-day trench warfare of the marketplace, self-interested citizens and opportunistic politicians at all levels.

Where is the citizens movement for change to continue to drive these plans towards reality?

Comment by Mark Kuznicki — September 2, 2008 @ 11:27 am
Matt said:

“Where is the citizens movement for change to continue to drive these plans towards reality?”

Hear, hear! Urbanites and transit riders are underrepresnted in this region. If you want to toll roads to pay for transit, the CAA comes out screeching at the top of their lungs for their constituency. But where’s the flip side to that coin? Where’s the organization of transit USERS who will defend the politcians who have the guts to propose it?

We have many well-informed individuals (hats off to Steve Munro here!) who keep a close eye on the shenanigans at City Hall, but without the authority granted to a formal spokesperson for a constituency, it’s too easy for politicans and others to write them off as self-interested individuals. On the flip side, Transportation Alternatives in New York has been instrumental in implementing cycling as a form of transportation in the Big Apple.

I’m curious to know what everyone here thinks about it. Is there enough interest? What should be the mandate of such a group? What obstacles are in the way?

Comment by Peter Kucirek — September 2, 2008 @ 1:19 pm
re. behaviour shift articles… It’s not as insightful as the FCM survey and it’s a US story but… CNN ran an article back in May noting that the federal DOT recorded the sharpest annual drop in driving ever (comparing March 2008 to March 2007).

http://www.cnn.com/2008/US/05/26/gas.driving/index.html

Comment by DylanP — September 2, 2008 @ 2:20 pm
I’ll chime in since I was oh so gracefully referenced in the post

For me, the choice to move from the burbs to downtown was always a no-brainer. I have a job on Bloor Street, 90% of my friends are down here, and I’ve always loved being in the city.

Beyond the practical factors though, it wasn’t so much an economical motivation to make the move. It was a quality of life decision. I could continue to spend 2+ hours a day sitting on the GO Train or revolving my life around its schedule, or I could reclaim that time and hop on my bike.

Again, it’s a no-brainer.

Comment by Adam — September 2, 2008 @ 4:26 pm
Boomer parents versus their Gen Y children.

It’s simpler than that, actually. Parents versus their children. That is, families and childless singles and couples.

It is extremely easy for a single to pick up and move to where their new job is. It is a bit tougher for a couple to ensure that they live close to where both their jobs are, especially when one changes jobs.

For a family with expenses and errands to ensure, long-term, that they live somewhere that would allow neither parent to have to work in a non-transit-friendly location — and to do so somewhere affordable, to boot — is tougher still.

For a similar family that identifies with a given ethnic minority and wants also to live in proximity to that community and its amenities — even tougher.

It’s not exactly by accident that the downtown area has been gentrifying and most immigrant communities have been recentring on the outer 416 and inner 905. Someone above wrote about the idea that planners pay little attention to twentysomethings. The corollary, of course, is that twentysomethings, empty-nesters, and other SINKs and DINKs are the prime target of developers. Sub-thousand-square-foot two-or-less-bedroom condos have been the focus of downtown development. That’s not about generational shifts. It’s about family size.

Comment by Disparishun — September 2, 2008 @ 5:11 pm
Gas prices these days are just getting higher, i think the government should focus more on alternative energy.”":

Comment by Tyler Young — May 11, 2010 @ 3:27 pm