Warren Buffett, CEO of Berkshire Hathaway holding group, is the world’s second-richest human. Buffett’s no stranger to the transportation sector, having mopped up profits with Geico, Forest River (RV’s), McLane Company (foodstuff distribution) and the XTRA Corporation (semi-trailer renting and leasing). Berkshire Hathaway recently took a ten percent stake in the railroad company Burlington Northern Santa Fe Corp. Warren Buffett’s seen the future.
The future will have fewer trucks and a lot more rail carriages. Fewer people and goods will travel by road. Cars will be smaller and cleaner. People will use them less. Diminishing oil supplies and increasing demands upon this declining resource (especially with the explosive economic growth of fomerly third world countries like China) will make it so.
And if that doesn’t do it, concerns about global warming, clean air and healthy living will. In fact, a few years from now, anyone cranking up an internal combustion engine close to children will be hauled out of the car and forced to suck his own exhaust—and then plant a tree. OK, maybe I got a little carried away there, but you get the idea: The Energy Lean Age is here.
While Americans are just waking up to the enormous implications of this shift, their European counterparts have been living it for almost a decade. For a quick look at America’s future, let’s hop over to the capital of The Land of Hope and Glory.
In February 2003, London introduced a Congestion Charge for motorists entering the heart of the City. Currently, motorists entering the Congestion Zone must pre-pay an eight pound ($16) fee. If they forget, they’ve got to pay $20 before midnight on the following day. If they miss that deadline, but pay within two weeks, it’s a $50 fine. After that, it’s $200. Remember: this is PER DAY.
London is now looking to modify the charge to change the automotive mix. To that end, Mayor Ken Livingtone’s administration is set to introduce ”Emissions Influenced Charging.” Cars entering the City which emit up to 120g/km CO2 will pay nothing. Cars emitting 121-225g/km CO2 will stump-up the current charge. Cars emitting more than 225g/km CO2 will fork over £25.
A Range Rover Sport entering London will cost its driver a staggering $50 a day. On the flip side, if your car is small and clean, you won’t have to pay for the privilege of using London’s roads (any more than you already do through petrol taxes). You’ll also get a Politburo-style fast-track through town during rush hour and special parking areas.
Other European cities and towns are contemplating similar moves. (As you’d imagine, Germany’s Green Party is all over this one.) Meanwhile and additionally, there’s a growing move towards emissions-based ”road pricing,” a pay-per-mile scheme that monitors driver behavior via a GPS tracking device or number plate recognition cameras. Since 2005, German trucks pay between €0.09 and €0.14 ($0.12 and $0.19) per kilometer depending on their emission levels and number of axles.
The road pricing debate is fierce; critics on the left attack it as a regressive tax, while critics on the right warn it will stifle economic growth. Even so, road pricing’s environmental component has given the concept a huge boost. It’s clear European governments are bound and determined to use dramatic (not to say drastic) measures to skew the automotive market towards smaller and more fuel efficient vehicles.
It seems highly unlikely that the widening rift between activist European governments pushing carmakers to go small and clean, and the American government’s relative tolerance for gas guzzlers, will remain forever. Whether it takes a cataclysmic economic shock, or a gradual increase in gasoline prices, or environmental concern/lobbying, the U.S. will eventually move more in line with the European model. And begin adopting European ”energy lean” solutions.
Meanwhile, Japanese and European-based automakers are busy building cars that conform to this political paradigm. You can also count on the Chinese accelerating production of the cars GM Car Czar Bob Lutz derided a few years ago, when he told the world that ”Rich people don’t care about the price of gasoline.”
Whenever Bob looks at a large car, he would do well to think of a spitoon. That’s how popular large cars with internal combustion engines will be a few years from now. And they’ll soon be just as gone as spitoons– unless they somehow manage to become Energy Lean and Air Clean large cars.
Which is why Warren Buffett’s moving his money to trains and evaluating other green energy alternatives, including electric cars. Trust me. Mr Buffett knows a sure bet. (He may even sell his shares in NetJets one day.) You better hope what’s in your garage is Energy Lean by then: the second hand value of voracious landcruisers will drop in inverse proportion to Berkshire Hathaway’s spectacular investment history.
I could see congestion charging being a viable option for cities in the US with highly developed public transportation infrastructures. How many US cities could make the switch today, however. Gov’t would do well to plan a new transit system before taxing cars.
As for big cars and internal combustion engines, I think where there’s a will (and money) there’s a way. Engines will become smaller, emissions tech will become more advanced. I wonder how many average Americans will want clean diesels, however. The new engines have rigid maintenace requirements for the emissions tech, filters that need to be changed regularly etc. Definitely not gas and go engines.
Ah yes, what a glorious green future where we can finally get all those poor people off the roads!
Warren Buffet drives a Loncoln Town Car
http://www.forbesautos.com/advice/toptens/billionaire/03-warren_buffett.html?partner=bill_cars_fdc
I guess he’s content driving a “spitoon”
Heard a blurb on the news that New York is considering an $18/day fee for cars in the city (I assume that means Manhattan only?) Just a few months ago this was called political suicide. We’ll see.
DW – we’ve already got most everybody trained that they have to take their car to the Jiffy Lube or wherever and get their oil changed every so often. With extended oil change intervals these days, filling up the urea tank and cleaning the particulate filter would all be part of the deal. I don’t see it as a problem.
It’s going to be interesting times to be sure. I doubt the gas guzzler is going away anytime soon, unless something REALLY catastrophic happens geopolitically or economically. People (Americans) are loath to give up their cars as they are their guns.
@le poet perdu
I’m not holding up Buffett as a paragon of virtue — his stake in NetJets should speak to that. But he’s seen the future, and he’s moving his money in that direction.
Bloomberg just proposed an $8 charge south of 86th street (less any tolls paid to get into Manhattan). Drivers crossing the GWB for instance ($6 toll) would only pay $2 more. Considering that they already pay about $20/day for parking (at least) it’s pretty minimal.
This is why the 2.5’s constant carping and opposition to Federal fleet gas mileage requirements is a joke. The market will proabably end up making them produce fleets with far better gas mileage than the gov’t (paricularly any Republican Administration) is likely to require.
Sid, Michael Bloomberg is on his second term and cannot run for reelection due to term-limits. If he pushed this same proposal during his first term, he wouldn’t be mayor now.
Stein, this is a huge improvement in writing over your previous article. Way to go!
Agreed. Thanks for the clarification.
@whitenose
Thanks. What was wrong with the previous article? You’re referring to the one where Tesla was mentioned?
I do remain convinced the Tesla, as “advertised”, is vaporware.
Lostpoet,
However, his Lincoln Spitoon gets better mileage than the new Lexus LS Hybrid according to what Edmunds observed.
This site appears to have taken a consistent stance regarding Bob Lutz. Interesting. A few years ago, the popular press slated him as a savior of GM. After all, he is the one behind the Viper. He could build cars with passion, which GM sorely lacked at that time. How about an article covering his success at GM?
Actually, in a show of support for Rick Waggoner, Mr. Buffett purchased a Cadillac DTS. Shows how much he knows about cars.
http://money.cnn.com/magazines/fortune/fortune_archive/2006/05/29/8378053/index.htm
And guyincognito makes a solid point. This tax will hurt lower and middle income motorists.
The trouble with rail is that it is pretty congested, especially the parts leading out of southern and central California. That said, rail does make better sense than long-haul trucking in most cases.
I agree with the European left and right. It is a regressive tax and it does damage their economy.
I don’t think we’ll see much of people being dragged from their cars and forced to breathe the exhaust in this country. Fortunately we have lots of people carrying guns in their cars and they would put paid to that garbage in a hurry.
I think government meddling is the wrong way to fix global warming, if it can be fixed or even ameliorated. If a way could be found to make money off of the CO2 and other greenhouse gases in the atmosphere, we wouldn’t have a problem.
Frankly, what has happened in Great Britain sickens me. What was once a land of liberty has come more and more under the control of Big Nanny, with its constant surveillance and measures like the Talivan. Maybe after Blair is gone things will improve.
Is the world running short on oil, or is it just another 70s style the-sky-is-falling notion?
Not living in a major city, the investment required to build public rail transportation is prohibitive. Not that the local Mass Transit District hasn’t tried.
Most people here don’t use mass transit because the time to get to work would increase from average of 15 minutes to 30-40 minutes. My 5 minute ride would increase to 30.
That being said. There are a lot of bus riders, they are several park and ride solutions for university employees because there is so little parking room on campus.
actually, berkshire hathaway’s interest in the transportation sector has more to do with cargo transport than people moving. burlington northern is a freight line. mr. buffett believes that the growth of the asian economies is creating an increase in the long term demand for coal and other shipments by train.
In NYC at least, where the congestion charge has been proposed, the average income of drivers is above that of the general public. Charging the (wealthier) drivers in order to speed the busses hardly constitutes a regressive tax.
I had to register for this one.
Warren Buffett has repeatedly stated that he ignores macroeconomic trends when choosing his investments. I really have a hard time seeing this move as a bet against the automobile. For Mr. Buffett, it’s about sustainable competitive advantage, buying at a discount to intrinsic value, and return on investment.
In fact, do we even know for sure this was Mr. Buffett’s doing? Lou Simpson is responsible for investing GEICO’s float; maybe he bought all those shares.
“The market will proabably end up making them produce fleets with far better gas mileage than the gov’t (paricularly any Republican Administration) is likely to require.”
Market forces can act far more efficiently to change buyer behaviors than mindless bureaucrats issuing edicts. This is precisely why Republicans have not pushed higher CAFE standards. The last price shock, after Katrina, killed large SUV sales, and they haven’t returned.
By allowing the market to ration resources like gasoline, we will achieve what we want without the side effects that gov’t meddling inevitably produces.
Right now, CAFE standards are so arcane and so full of loopholes that they are incredibly inefficient at changing the vehicle mix. Carmakers produce what people want to buy, and unless you want to ride around in a Trabant, you’ll really want to keep it that way.
As gas prices rise, consumers will choose vehicles that meet their needs and are more fuel efficient, and the carmakers that can meet those needs will succeed. Honda and Toyota saw this coming and planned accordingly.
In Honda’s case, they have always had an engineering-driven culture that values efficiency, resulting in V-6 NSX’s and efficient SUV’s like the CR-V. It simply in Honda’s DNA.
Toyota’s early commitment to hybrids is the same thing. They correctly foresaw that the market wanted these vehicles, and delivered them. Now they’re reaping the benefits of being seen as “Green”, whether that’s entirely true or not (think Sequoia and Tundra).
On the other hand, Detroit saw SUV’s and trucks as as HUGE cash cow, and milked it for all they could. Unfortunately, they doubled-down and bet the ranch that cheap gas would always be there. They lost, and now they’re sitting on piles of unsold 14 mpg behemoths. Meanwhile, they neglected the bread and butter sedan market and abandoned it to the japanese. When the market shifted, as it inevitably does, the cupboard was bare. Now they’re reaping the whirlwind.
When you’re on the lot looking at the Tahoe that gets 18 mpg (if you’re REALLY lucky), and you drive 30K miles per year (Not unusual in a city like Atlanta where everyone commutes from way out in the ‘burbs), you’re staring at $100 per week in gas costs. Drop the real mpg to 14, and now its $125 per week. Is it any wonder that they’re not selling as well as they did when gas was $1.50 per gallon?
Sales of these beasts has tanked, and far faster than if the gov’t had issued higher CAFE standards, which would probably be phased in over a few years.
I trust an efficient free market to drive higher efficiency. It does so faster and with less disruption than gov’t intervention. Of course, it stops the social engineering wackos from putting themselves in a position to dictate what we drive (See Trabant above), and so they are pushing for more power, which is what they want.
The best way I can put it is to say that I trust an Invisible Hand far more than a Jackboot.
as a manhattan car owning resident, i’d like to chime in that i’m all for the congestion tax. as nyc points out, driving a car here is a luxury. we suffer significant health risks from car pollution and auto-pedestrian accidents. if this keeps even 10% of the jersey drivers off the road and on the train, it will be well worth it. also, for those instances where it is worth the cost of the congestion tax to drive, it will save a lot of time driving on the less congested streets.
@mdanda
The Viper’s impact was probably more significant than its contribution to the bottom line, or what do you think? In 1992 they produced 275 of them, and 1000-2000/year in the period following.
The car did influence others into staking a bet on large cars with lots of horsepower again, and as such may possibly be responsible for the dire straits that these carmakers find themselves in today – when their production lines are geared for huge, and customers are looking for compact.
Lutz is a talented and driven man – I just feel he’s spent his energy going down the wrong track …
The Chevrolet Tahoe for instance was definitely an answer to a question nobody was asking, and I think it’s Lutz responsibility to be ahead of the curve, not tracking a non-existent market.
While I’m sure it is inevitable and necessary it does make me a little sad. For those that truly enjoy driving, as in sportscars a low hp clean car is just not appealing. While 500hp two ton lead sleds aren’t either at least they can be fun. I for one will continue to pony up the extra cash just like some budget extra money for movies, eating out and so forth. A future where all you hear on the roads is the whisper of an electric engine and everyone has a glorified golf cart is just a sad future to me.
Driving is an experience not a task; it is equal parts tactile, audition, vision, and olfaction. The feel of the torque and cornering forces, the sound of the engine and exhaust, the blur of the roadlines and constant checking of road conditions and the smell of burnt clutch and rubber are a combination that evokes joy on a daily basis.
I was recently passing through a small town that I pass through daily on my way to and from work when I spotted in the distance what I thought might be a Z06 Vette coming at me. As I got closer I could tell it wasn’t a vette but wasn’t sure what it was. I’m still not positive but I think it was a Ferrari F430, all I know is as I passed it there was the most beautiful sound that I had never heard before. No high-pitched 6 or rumbly 8, no buzzy fartcan 4 but something beautiful and sonorous. Had I not been expected home for dinner I would have made a U-turn and followed it for a bit, regardless I had a smile for the rest of the day.
Steve_S: a lot of driving enthusiasts find the Miata to be a very enjoyable car despite its low power, low emissions and relatively good economy.
And you say driving is an experience, not a task. Well speak for yourself. For the vast majority of drivers it is a means to get from one place to another. (Witness stellar sales of Camacords).
The upshot is that with higher gas prices (through what I believe should be higher fuel taxes), the people that use a car solely to get from A to B are a lot more likely to choose efficient means of transportation instead of driving the Suburban they no longer need now that the kids have all grown up.
Those that enjoy the driving experience and assign it sufficient value will pay the price of admission. If you can’t afford to feed your Shelby GT500 then maybe you’ll find enjoyment of a different kind in a WRX, or an Evo, or a Miata. Or better yet, a motorcycle which can deliver mind-blowing acceleration at 30mpg.
All that said, I’m not a big fan of congestion charges, or with the emissions-based model proposed for London. As others have said it is way too nanny state-ish; throw in all the video surveillance and it is downright Orwellian.
The single best means is a straight consumption tax. The more you use, the more you pay. Everyone knows it, but since most US voters are also drivers, the politicians avoid it like the plague.
Stein,
You are so depressing…
Are you driving a Prius? Yes? That explains it…
Robert, please stop this guy writing here, it is hurting your business. Nothing personal, just MHO.
Steve_S:
April 26th, 2007 at 10:38 am
While I’m sure it is inevitable and necessary it does make me a little sad. For those that truly enjoy driving, as in sportscars a low hp clean car is just not appealing. While
uhh…the Lotus Elise has 189 hp, the base US-spec Ariel Atom looks to have a whopping 230 hp. I don’t think anyone thinks those cars aren’t fun to drive. Smaller engine – better mileage, cleaner fun.
I’m somewhat disappointed that the London lawmakers decided to complicate this whole matter by making the “congestion” tax contingent on pollution, rather than the amount of congestion (i.e. size) generated by a single vehicle. Traffic congestion is an excess of demand for streets; the clearest, and most efficient way to compensate for that (since the free market evidently does not) is a tax on congestion, NOT a tax on pollution.
Otherwise, it makes perfect sense, and can be made less regressive (which all non-income taxes are) by using some of the revenues to displace other forms of tax burden which are incident on the poor.
I hope the proceeds of this tax goes to something like the Second Ave subway line (which has been in a state of perpetual planning since 1929), or at least fund an upgrade of the subway system so that it has more trains and better security (cause I don’t like it when I’m mugged in the darkness of night). Oh, such irony that it would be if the congestion tax passes and the MTA cries broke and raises subway and bus fares again.
Postjosh, sorry, but Jersey can’t be your scapegoat, not when Bergen and Hudson counties make up only 5% of the total commuter traffic into NYC.
The dif btw Europe and the US has to do with the dif in population density as much as anything else. Much of the US is not as densely populated as Europe, so it may take a while for the pressure to biuld. Or not–if my Senators have their way. Last year’s Kennedy-McCain “immigration reform” bill would have added about j100 million to the population over the next 20 years (we’re probably about 305-310 mil now), not only through amnesty for illegals (who probably number around 20 million, according to the investmnt firm Bear Stearns) but through huge guest worker programs that would have created an industry devoted to outsourcing by importing the cheap labor from abroad, and then given the guest workers the “path to citizenship.” Thn there’s chain migration, children born to immigrants (whose fertility is higher than that of native US citizens), etc.
In general, I thjink things like congestion charges make some sense, and a carbon tax should certainly be enacted, but I woiuld rather see the population quit growing. Like probably most everyone else who visits this site, I love cars and driving, and I like for there to be places I want to drive to–e.g. I don’t want endless sprawl. Enough’s enough. I urge those interested in trying to do something about the US population problem to go to numbersusa.com, which has easy opportunities for influencing Congress on these issues.
Rocketman: Please email me robertfarago@thetruthaboutcars.com about your comment. Your registered email addy is bouncing.
I think they let motorcycles and scooters into these charge-for-cars areas without fees.
Just checked. Yes indeedy.
http://www.bbc.co.uk/london/content/articles/2006/11/14/congestion_exemptions_feature.shtml
Mu-ha, muhahahaaaaaaa.
warren buffet is not the second richest person. he was passed by carlos helu from mexico. just FYI.
Interesting article. I’m not sure it’s as dire for automobile fans in the US as it appears to be in Europe, since alot of their ‘solutions’ don’t translate well to the US infastructure. I would expect gas (and diesel, kerosene, etc.) to continue to get more expensive. Whether it be boring old supply/demand, or if our beloved ruling classes decide that we ought to pay more taxes, I think it’s pretty much a given. I’d would anticipate a larger market for smaller, more efficient cars, and hopefully some diesels as well (it appears the German manufacturers at least are ramping up for both of those paths). I’d like to see an increased market for motorcycles/scooters, but given our highly safety-conscious culture, I kind of doubt it (sad, really – I get ~50 mpg on my Sprint ST, and ~70 on the EX250).
Congestion charges and their ilk will likely be confined to very large, older cities. As far as road-charging goes, there’re a lot of older cars on the roads, and that’s one good way to make sure they stay there…
Anyhow, good article (as much as we may not want to hear about these things).
-S5
>bfg9k:
uhh…the Lotus Elise has 189 hp, the base US-spec Ariel Atom looks to have a whopping 230 hp. I don’t think anyone thinks those cars aren’t fun to drive. Smaller engine – better mileage, cleaner fun.
The Elise looks like a wonderfully fun toy just like the ariel atom but again it’s a toy not a daily driver. It also clocks in at 40k+. Even if it’ was your daily driver it seats 2 and not the 4 that i need. Try to keep a car under 30k that seats 4 and its a great enthusiast machine while getting great performance and fuel economy. Not seeing many out there.
I know a great many view driving as a task that must be done, my wife is one of them. I wrote entirely from my perspective and that I fear the visceral essence of driving will be lost in the near future.
WRT the article, it has many valid points. But unlike London, where public transportation is pervasive and relatively inexpensive, most US cities, especially those west of the Mississippi or south of the Mason-Dixon line have virtually NO public transportation. I live near Seattle and beyond a few busses and single rail line being built, there is no option for commuters. In fact if you live north of the Seattle area, Interstate 5 is your ONLY path into the city, period (beyond surface streets of course.) The same can be said for many major metro areas in North America. As such implementation of these pricing schemes in most of the USA & Canada is untenable. That said, the other implication made, that consumers want, need, and will seek out more fuel efficent vehicles is a no-brainer… and that Detroit's inability to produce them will be their downfall… that's also a no-brainer. If you ask me, the big 2.5 are already dead, they just don't know it yet. What we are seeing is a real-life (corporate) Zombie-flick. Sit back and enjoy the show folks. My advice to anyone working for GM, Ford or DCX… get the hell out of there before YOUR brain gets eaten. –chuck
ttac is, by far, the most enjoyable car site i read on a regular basis and so far, stein’s series has offered fresh insight into an automotive future that should be of genuine interest to us all.
in fact, stein’s commentary is the primary reason i am now providing links to this website, to the people i correspond with most. and contrary to the comment above from biturbo [11:19], i hope stein and this series continue, just as the gm deathwatch series has. i find his writing, his choice of topic and the comments they inspire, engaging and informative.
Most of the time, I do not need a car. What i need is transportation. Living at the edge of a major city, there are other means of transportation available to me. Busses that can be noisy and crouded, trains that are quiet but run way too infrequently. If we are serious about cutting down on the use of cars, we need to fund public transportation that is clean, effective, safe, and frequent.
I also own a car, and I always can decide if I want to drive it into the city if there is no other transportation available. Public trans needs to be BETTER then cars.
My guess is that if Philadelphia were to implement these fees to get into center city (something has to be done about the ceaseless congestion), there will suddenly be better funding of busses and trains.
I want to be able to use my car for recreation purpses only. I am close to that, but not entirely there!
“fellswoop”: Too many people switched to motorcycles/scooters in London, so they are going to start being charged in the near future (see: current issue of “Bike”.
I think the GPS tracking systems monitoring us at all times (ooh, that automatic ticket generating revenue enhancement stream), is more along an Orwellian nightmare path than anything else. I know the Bloomberg’s of the world are not real happy with ordinary folk making independent choices, but why we should enthusiastically join him in putting ourselves in fetters is not something I quite understand. Put a monitoring device on my cars/bikes and I’ll rip the SOB’s off. Oh, and out here in the West, mass transit plans are ALWAYS
Steve_S:
In britain, where the taxes on company cars are based on mileage (well, CO2 emissions, but its the same thing), Lotus has been advertising to the effect of “Why get a Focus for your company car when you can get an Elise?”, as the Elise is in the same efficiency class. And nobody would call an Elise slow or dull to drive.
Likewise, you can always get a motorcycle. My Honda VFR was never tuned for fuel economy (its a 100hp V4 with a 780cc engine), accelerates like a bat outta hell, and I get a prius-like 45 MPG commuting with it.
If the engine was tuned for fuel economy, it would probably lose 10 horsepower and gain 5 MPG.
(finish my statement) always sold on the basis of “let us build it and the guy in the car next to you will be on it”.
CliffG:
“fellswoop”: Too many people switched to motorcycles/scooters in London, so they are going to start being charged in the near future (see: current issue of “Bike”.
Hmm. Searched the web, and dutifully went to the bookstore at lunch and searched the latest issue of “Bike” cover to cover. No mention of charging motorcycles for congestion.
There IS talk of charging them for parking (about $3, currently it is free) which is different ball of wax. Perhaps that is what you were talking about?
If not, links please.
I’ve put about 100k miles on motorcycles, mostly commuting. I’ve switched to a 50cc moped-scooter, and never commuted faster. As gas prices go up, they will become more widespread, even in macho USA.
Yes, let’s follow Europe’s lead, they really have it going on over there. Double digit inflation, stagnant growth, lagging productivity, unbelievable taxation, but hey!…..they have a successful, highly subsidized train system that wouldn’t even cover an area the size of Texas!!!! And, to boot, they have a $50 dollar tax to drive your car into the city!
Hoooray! Now we can all buy scooters, and hop on I-35E for our 25 mile commute to work! Yippie!
@biturbo
Sorry to be depressing the sweet turbo out of you! And I’ll leave it to Robert to decide to what extent I’m hurting his business and act accordingly.
Just tooled home in my Alfa 159 Sportwagon, squeezing lots of fun out of the Q-Tronic, using it to nudge gears and trying to trick the electronics guidance override as I accelerated through curves and left Bimmer owners wondering what that was that flashed past. Still in possession of my license.
Since my clients depend on my being able to take a realistic gander at the future, and tell them how to prepare, I’ll have to keep doing so, warts and all!
@phillipwitak
Thanks for the words of support. biturbo is entitled to his opinion, and as you I enjoy TTAC because of the diversity of viewpoints (and the immense knowledge) of its readership.
I wish the future held a promise of limitless energy and pollution free cars enjoying boundless roadways. It doesn’t, which is not depressing to me – it’s just a challenge to be met.
I don’t know about you, but I wouldn’t want to ride a motorcycle every day of the week for my commute.
1. I’m paranoid of all of you drivers. Of the ten or so accidents that I’ve seen or heard of my friends being involved in, only one of them was from rider error. The rest of them were from inattentive drivers. One motorcycle friend of mine nearly lost his leg after a driver cut across two lanes of traffic and slammed into him trying to get to an off-ramp that he almost missed. Should somebody crash into my car I’ll be pissed, but I’ll still have ten fingers and ten toes.
2. You can’t ride in the rain. Or in the snow. Or when it’s cold. The wind cuts through those leathers like a chainsaw through zombies.
In short, riding a motorcycle year-round is not an option anywhere north of the sun-belt, which coincidentally, is where most of the heavily populated cities are.
SXL Sorry to be depressing the sweet turbo out of you! And I’ll leave it to Robert to decide to what extent I’m hurting his business and act accordingly.
I don’t think you are hurting Robert’s business. Quite the contrary. I may not agree with everything, but I appreciate provocative theses and well thought out arguments.
Two words – Health Care.
Government interference in markets is mostly good. We forget that everyday, our government and the courts do a mostly good job keeping things on the up and up. These institutions are necessary.
Almost everything they do beyond that is negative, and congestion taxes and toll roads are just like this. Why? Because you cannot make these things truly free markets. As soon as you start playing with these things the external costs overcome the benefits in ways you just cannot track.
What will happen is that companies will leave these areas in droves reducing congestion, but increasing pollution because the infrastructure cannot keep up with the changes. London and New York may get away with this, but I doubt Chicago can. The suburbs will be too tempting. Counter intuitively, this can increase traffic because people mostly won’t move when the company does. For everyone who gets a reduced commute, three will likely get an increased one.
If you move to the west side, everyone living on the north, south, and east sides now have to drive farther because the roads likely do not go straight there. They all lead downtown.
Meanwhile, the cities will be unable to keep up with the changes and problems of all sorts will crop up. It’s simpler to just raise the fuel taxes and parking fees and be done with it.
Buffett may be right about his predictions because our politicians and wonks can’t likely resist having things like this to play around with. Even though they are bad policy.
Just quick note:
Although there are times when I profoundly disagree with a writer’s thesis, I have never declined to publish anyone’s work on that basis.
Strange but true: there is no TTAC “party line.” As long as a writer is willing to have their work edited for style and coherence, they are free to state their case– whatever that might be.
Indeed, many of our writers got their start on TTAC after I (or Frank Williams) read their combative comments and invited them to contribute.
In short, I am honored that Mr. Leikanger has chosen to grace us with his perspective on green issues.
quasimondo: Commuting on a motorcycle year round in the north is not that difficult or uncomfortable if you plan ahead properly.
Cold becomes a nonissue with proper riding gear for the weather and a full faired bike. Riding in the rain comes with the same challenges as being in a car, you just must be extra cautious of the other morons and SLOW DOWN.
Snow can be tackled aswell you just must SLOW DOWN more and be more cautious. Ice can be extremely dangerous but cars have the same problem.
I used to commute 80% of the year through all kinds of weather in Cincinnati and I would always get to work fully invigerated with a smile on my face regardless of how crappy the commute was or if I had just stared death in the face.
I can understand your fear of the oblivious SUV on their cell phone, I’m deathly afraid of them too, but if you learn to stay the hell away from those drivers and always have a way out from a bad situation riding is no more dangerous than riding in your cage.
fellswoop, you are correct, it is parking charges, not congestion charges. I apologize. Re: motorcycles, yeah the gear is all important, snow really sucks, rain, eh.
I am fairly sure that “Red” Ken could easily win the mayor’s job here in Seattle. This is a town with catastrophic transportation problems, admittedly some of which is geographic, so a congestion charge sounds like nirvana. Sorry.
Unfortunately, a fascination with fixed rail is going to spend all of our tax money on 19th century solutions to 21st century problems.
In general, I thjink things like congestion charges make some sense, and a carbon tax should certainly be enacted, but I woiuld rather see the population quit growing.
HALLELUJAH! I get so sick of population never being added to discussions like this. If the US is the world’s largest contributor to global warming, then the last thing we need is more people.
John
My main disagreement with Leikanger is that I think he confuses what he wants to happen with what will happen. Imagine predicting that the obesity problem will cause steamed brocoli to surpass hamburgers as the most popular fast food.
Example: he predicted that in 10 years personal auto transport in US will be almost gone. For many decades the death of the personal auto has been greatly exaggerated.
Consider:
1. Three dollar gas decreased large SUV and truck sales, but they have largely bounced back. The big iron still sells in huge numbers with big margins.
2. Toyota and Nisan spent huge amounts to enter the big truck market, and also sell a fairly large number of large SUV’s. Even after decline the US truck market is very, very large and profitable.
3. In Canada gas costs about 4 bucks a gallon and the F150 tops the sales charts.
No, this can’t go on forever. But it will go on for a long time. And even after huge gas prices increases (they can and will go much higher) driving will decline but not drasitcally.
@thx_zetec
Ten years? Personal auto transport in the US will be almost gone???
Where did I predict that?
What I have predicted is that it’s going to be a lot more expensive to move about in personal transport (cars); and that cars on average will become a lot smaller. Heck, don’t ask me for the lottery numbers because those are pretty obvious predictions.
Will Americans’ love of the automobile turn into hate overnight? Though there’s supposed to be a thin line between love and hate there are realities to living in the US that will require many to still be using cars.
Still, as this editorial tries to show, developments are pointing quite inexorably in one specific direction: we’ll find it harder to enjoy the mobility of having cars at our disposal.
Town planners are creating roadways that discriminate against large cars.
Fuel prices are jittery, and though many keep claiming we’ll find so much oil we’ll have enough in the fourth millennium that’s not going to happen.
The debate is still on, apparently, among those who wish to deny it – but it appears we’re putting too much CO2 into the atmosphere, with cars, planes and marine transport contributing a large share of that.
And forget about CO2 – cities are becoming increasingly aware of the health dangers of roaddust (asphalt particles, etc) from cars. You think the “health crazed” who won the fight against smoking are going to put away the artillery? They’re even eyeing heavy perfume users as a health hazard! And that’s not a joke.
Large, internal combustion cars are under relentless attack: from economic and energy realities, from public health concerns, from concerns about congestion, and from a rising awareness that it is one heck of an inefficient way of creating forward motion. Think tank being used to crush paper cups.
Is there a point to this article? It’s a bit incoherent.
Burlington Northern is a freight railway. Where are all these Americans you think will be riding railways going to be going anyway? Distances in the US are too large and the population too thinly spread for passenger rail to be anywhere as effective as it is in Europe. Where there is rail the infrastructure is falling apart after years of underinvestment and freight traffic is booming (shipping coal to power stations since oil and gas got more expensive). 50 years of car dependent development isn’t going to be overturned just because the price of oil spikes occasionally or some pacific islanders might drown.
As for congestion charging or road pricing? Yeah I could see some variable tolling on urban highways working but thats about it. Car parking in Manhattan or the Loop already costs enough to deter anyone who would care about a congestion charge but who knows what an ambitious mayor might do when he eyes a potential source of revenue and publicity.
I think you are right when you say that cars will become leaner and greener, but that isn’t actually news and all sorts of illogical things will happen (like producing subsidised ethanol from subsidised corn) before anyone asks Americans to give up their SUVs or V8s. The inexorable trend has been for cars to get larger and thats going to continue because thats what people want and what safety regulations demand.
Its worth remembering that the US is not always the laggard when it comes to environmental or safety standards. Sometimes Europeans seem to forget what a large and diverse place the US is.
Railway Freight is booming in the US but it is a huge leap to suggest that Buffett's investment in Burlington Northern has anything to do with passenger rail. Distances in the US are too large and the population too spread out to make passenger rail anywhere as effective as it is in Europe. 50 years of car based development isn't going to be overturned because the price of oil spikes or some Pacific Islanders might drown. I could see some sort of variable tolling on urban highways working well but a congestion charge isn't going deter anyone who can afford to park in Manhattan or the Loop. In any case congestion charging just diverts development, businesses would move out to the suburbs creating new problems of spawl (but who knows what an ambitious mayor might do when he spots an revenue/publicity opportunity). Yes you are right that the trend is for cars to get leaner and more efficent, that trend has been around for 100 years. But the trend is also for cars to get larger, more powerful and safer. (My Mom used to pack 5 kids into a FIAT127, I can fit 2 in a Passat). All sorts of illogical things will happen (like making subsidised ethanol from subsidised corn) before anyone asks Americans to give up their SUVs or V8s (or Germans to give up their M5s). It is sometimes easy for Europeans to forget how large and diverse the US is.
Oh and what is your problem with NetJets?
This was a good article. I think when we see $4 a gallon petrol this summer people’s perceptions will really start to change. I don’t commute so I don’t drive all that much, but the $70 it cost me to fill my Land Rover the other day gave me pause, and the $100 it cost to fill both tanks on my “dump run” F250 really gave me pause. Heck, if gas hits $5 a gallon next summer my wife will probably give up her beloved Outback and try to find something (diesel Jetta wagon? Who knows?) that gets better fuel economy. I’d consider trading in my 150bhp sport bike on a fully-faired cruiser for all of my “run into town” errands, rather than “nice days only” ones.
Maybe we’ll also lose the stupidity of people living 50 miles or more from their job. A friend’s brother, who doesn’t make much, drives that far in his Durango every day. He can barely afford it now, and at $4 a gallon he won’t be able to afford it at all. I wonder how the remaining payments are going to look then.
Regarding the London Congestion Charge (CC)
If you believe in the free-market, it’s hard to argue against congestion charging. If road space is scarce and demand is high, why not use the time-tested method of allocation: price. Pure capitalism. Price is the most efficient allocator of scarce resources. No system works better or is fairer (in an economic sense).
If you want a crude and inefficient way to allocate road space, then congestion is the answer. It wastes everyone’s time and those with a better use for it cannot pay more for better access.
An invidious example (but entirely appropriate for booming London): The thrusting young banker needs to jump into his Bentley Continental GT to drive across town and complete a £Billion deal. But he’s stuck in a traffic jam of unemployed people in 1979 Ford Escorts who don’t mind the wait.
London is an old and dense city, but it’s absolutely booming. Peak-time road space is very much a limited resource. A CC was inevitable.
Stifling congestion makes about as much sense as….. well, forcing airlines to have one ticket price, and letting the passengers fight it out for the 1st Class seats.
A flat-rate-any-time-of-the-day CC is crude in itself; but needs must. Variable pricing will no doubt come – just as soon as they get the GPS road use charging system going. The London CC uses number-plate reading cameras on the boundary.
I like the CC. I think it’s working. Unfortunately the Mayor is undermining its legitimacy by using it for emissions charging. Initially by an exemption of low nitrous oxides/hydrocarbon emissions cars (i.e. basically electric, hybrid and natural gas vehicles). Now the proposal is to vary the charge according to vehicle C02 emissions (i.e. fuel efficiency).
This is just bad. Not because emissions charging is bad, but because it shouldn’t be done via the CC. It confuses the picture and brings both into disrepute. If you want emissions charging, do that separately. That way the CC can be judged on it’s merits.
I live in central London (Wapping; just outside the congestion charge zone).
Cheers
Malcolm
As an aside, railroads have been very profitable lately, mostly due to demand for coal. That could really increase as plug-ins take hold.
I don’t see the connection between free markets and congestion charging. There’s only one provider of roads and traffic services in London and Ken has used his monopoly power to screw a road charge out of motorists.
Where’s the free market there?
Most people given the choice want to live in a house with a garden even if that results in a 50 mile commute or sitting in traffic jams for an hour. Just because someone makes a choice you don’t like doesn’t mean its irrational.
hal: “I don’t see the connection between free markets and congestion charging. There’s only one provider of roads and traffic services in London and Ken has used his monopoly power to screw a road charge out of motorists. Where’s the free market there?”
OK, free-market is a slightly odd term when referring to a natural monopoly (e.g. roads, rail lines, power transmission system etc). Notwithstanding, there is now a rudimentary market operating for the price of entry to central London roads during peak periods. Sure, there’s only one vendor, and the price changes infrequently, but it is ultimately set by demand – if the price is too low, there’ll be excessive congestion and the charge will rise. If it’s too expensive, the roads will be under utilized and people will rightly say the price should come down.
Natural monopolies aren’t incompatible with the free-market, but they do need a regulator. The regulator in this case is the Mayor and the small proportion of people who vote. Are they capable of running the system fairly? I’m not sure, but it will be all the more difficult if they add emissions charging into the mix.
The CC is a very crude market, at the moment (i.e. a flat price and you pay for entry rather than how long you’re in the zone etc etc). But it’s a step in the right direction and it has reduced congestion. As technology improves the market could become more fluid, e.g. the price could vary by the time of day, and how long you’re driving in the zone etc.
hal: “Most people given the choice want to live in a house with a garden even if that results in a 50 mile commute or sitting in traffic jams for an hour. Just because someone makes a choice you don’t like doesn’t mean its irrational.”
I wasn’t making a judgment on what people want. I’m just saying that price is good way to deal with congestion in central London. Almost everything is allocated by price. It works well.
In a somewhat related area, there was an interesting article, probably in Slate.com but may e the NYT, about street parking in cities. Researchers found that one third of the traffic in a major city was people looking for street parking. The economists said that the problem was that parking was too cheap, and that the cost should be raised to the point where only 85% of the street spots are taken. Then, you wouldn’t have to play musical cars for 10-20 minutes, and traffic woiuld move more easily. Although I don’t especially like having to store quarters for parking when I go to cambridge or downtown boston, if I knew that I was going to save time and aggravation, I’d be willing to pay more.
Malcolm by your definition there is already a market. There is a $$ and time cost to sitting in traffic and commuting long distances already without the addition of an arbitrary, untargeted and ineffective tax.
Hal and Malcolm are in a fascinating scrum here. But I think Malcolm has the proper insight. Perhaps to clarify what he is saying: there is no complete market for congestion without the tax. Consuming congestion has a cost to the driver, but it also has a cost to others. This cost to others is not captured in the price, i.e., the driver’s wait and frustration. The congestion tax brings the price more in line with the total cost: individual cost plus “social cost.” The good is thus allocated more efficiently and there is greater overall surplus, i.e., happiness. The CC is based on one of the a key insight of modern economics free market economics, not a socialist foil.
Hal: “Malcolm by your definition there is already a market. There is a $$ and time cost to sitting in traffic and commuting long distances already without the addition of an arbitrary, untargeted and ineffective tax.”
OK there’s a time and $ cost to sitting on congested streets. If you want to call that a market, then I’d call it a piss-poor one, because it’s setting the price too low. Too low because some people would pay more to get reasonable uncongested use, and too low because we’re getting congestion, at which time no one is getting reasonable use of the roads. The usefulness of the roads is being wasted.
What you’re calling a market is really just a queue (or maybe a lottery). If it was a market, I could pay the appropriate price and get uncongested access to the roads. Without the CC, I can only pay a small entry fee (the cost of access to a car) and take my chances.
I’m not an economist so I’m probably explaining it poorly.
Hal: “…without the addition of an arbitrary, untargeted and ineffective tax…”
How is the CC arbitrary and untargeted? If you enter the zone during the peak hours you pay the day fee. Sure it’s not sophisticated, but it’s probably as targeted as the current technology will allow. I would also dispute that’s it ineffective. Can you elaborate?
OK, I’ve just read DMW’s comments. He explained it nicely. Maybe he’s an economist.
Cheers
Malcolm
ok i am obviously out of my depth here (not an economist) but…
For the privilege of sitting in my car I have already paid lots of taxes, yup there are social costs to congestion but most (almost all?) of the cost is borne by the motorist, this seems quite efficent to me.
There are also social costs to a congestion charge; diverted investment as people decide to shop, live or work elsewhere and increased congestion in the areas on the fringe as drivers use side streets to skirt the charging zone. The end result is that congestion is diverted to other areas.
I also believe that forcing people off the road forces people out of employment. Making it more expensive or difficult for people to get to work doesn’t seem like a good idea to me. It mightn’t make much difference to a thrusting young investment banker but for a low wage single mom an extra 40 pounds a week might be the difference between being able to hold down a job or having to sit at home on benefits. Just a thought, maybe dmw can add to it.
Leikanger;
Sorry for the late response. You ask
“Ten years? Personal auto transport in the US will be almost gone??? Where did I predict that?”
Here is the quote I am refering to:
“Stein X Leikanger:
April 19th, 2007 at 1:35 pm
These things will sort themselves out, painfully. Hurting the wallet, and our desire to remain mobile.
We got a period of apparently limitless mobility at the cost of insane wastefulness – we’ll learn to be smarter with our energy.
I have a bet down that ten years from now, we won’t be driving personal vehicles over 50mph on any major road. ”
Maybe I misunderstood.
Steinkanger;
I mostly want your predictions to be right. I want smaller cars, more bicycling (I biked to work for 10 years in my last job), less sprawl. I think most of the “big iron” (5000+ trucks and SUV’s) are a waste of money and a hazard to other drivers. So I would actually be mostly happy if 10 years from now events prove I am totally wrong. Maybe I’m just a pessimist.
You make the claim that urban planners are making city streets less friendly to big cars, this is not my experience. I live in Phoenix AZ and the newer parts of the city seem to have wider roads, etc. I don’t claim to have data, but if you have any data that shows *on the average* roads are getting smaller I’d like to see it.
Looking at NY or London is completely different than looking at most of US. Most of US is suburbs, and easy parking, huge roads etc are standard.
One more interesting fact: Schwarzeneger (sp?) has green image, but polls showed the issue that helped him the most was his promise to get rid of the car tax in California.
I don’t claim that 10,000 years from now we’ll be burning petrol in most cars. I just think that in US we’ll go on for decades (which is both good and bad news).
Finally: US gasoline consumption is up 2.6% year on year, this is big increase even for US. Prices can cut consumption but they’ll have to go much higher.
@thx_zetec
My bet is about the speeds at which we’ll be driving, not as to whether we’ll be driving personally owned automobiles. This is because energy efficiency is going to become paramount (already is) – and pushing vehicles far in excess of 50 mph is bad physics. But we’ll have cars, and I am also willing to predict that they’ll be more fun to drive than today’s over engineered, heavy cars.
@ thx_zetec
Urban planners, or to be precise “New Urbanism” influenced planners in the US, are in fact discriminating against large cars. Look up Walter Kulash for one reference.
I averged right at 30 MPG over 100K miles in my last company car, a 2003 Impala. The idea that you have to fold yourself into a tiny subcompact to get good mileage is a myth. I’m frankly shocked at how poor the mileage is for most compact and subcompact cars. You give up an awful lot of comfort and utility for a very small gain in efficiency.
If you want people to use less gas, TAX IT!!! I would not look to Europe for solutions, since they came up with the disclacement tax decades ago. The displcement tax is the only thing I can think of more moronic than the CAFE law in the US.