Month: March 2020

We can’t rely on the gas tax anymore

Ok I wasn't the only one that said it. Overnight, global markets tanked in reaction to falling gas prices, which affected the North American exchanges and prompted a briefly halt to trading moments after the markets opened this morning.

It is now time to revisit this need to rely on oil.

In 2009, as a green planner, I read Jeff Rubin's book Why Your World is About to Get Smaller: Oil and the End of Globalization. In 2012, he wrote a second book, The End of Growth. While it has been a while since I read both books, his wild predictions were interesting. He wrote them during a time when global gas prices were astronomical.

People will not just abandon their cars en masse, but they will use them less and less. If I have to drive to work, I might not be able to afford to use my car anywhere else when the cost of filling the tank is going to run north of $100. And for some 10 million Americans or so, the cost of driving will rise so high that they really will have to get off the road. As people start to park their cars for longer and longer periods, they will increasingly want to get on the subway or LRT. And when they do, the legacy of North America’s past transportation choices will come back to haunt the continent.

Excerpt from Why Your World is About to Get Smaller

The opposite has happened!

Senior governments saw an opportunity to close the gap on already decreasing transit funding by introducing gas taxes. The Canadian and American governments pegged the dollar to the price of oil. Now that peak oil has come and gone, it is time to rethink how public transit is funded.

Over the course of the last year, there have been several shocks to the oil markets - 2 times in a month alone gas prices have been below $1 a litre. Psychologically, drivers will naturally line up at gas stations to take advantage of these low prices. Many will abandon transit in the short term. But change must occur.

Road pricing, when proposed, has literally been deemed political suicide. While for over a decade, London has had cordon pricing in their downtown core. New York City has proposed one for Manhattan, but now New York State Governor Andrew Cuomo stated that the Trump government is holding it back based on technicalities with FHA funding.

The Federal Highway Administration can derail congestion pricing because federal law prohibits the installation of tolls on roads built with federal money — and some of the streets inside the toll cordon, Manhattan south of 61st Street, minus the FDR Drive or West Side Highway, are part of the National Highway System.

Streetsblog February 11, 2020

Late last year, the Residential and Civil Construction Alliance of Ontario published a report "Ontario's Downward Trend for Fuel Tax Revenue: Will Road Pricing Fill The Gap?" In the report, the points emanated from their analysis:

  1. The growth of fuel-efficient and hybrid vehicles will rise.
  2. Behavioural and technological shifts will result in decreasing gas tax revenues even though congestion will remain constant.
  3. The Province should implement dynamic pricing and parking levies, especially in larger municipalities.

In 2015, the Canadian Urban Transit Association put out an Alternative Funding Report, but did not insofar, make any recommendations on the best way to fund transit.

It's not the first time these were proposed. Metrolinx, in 2013, released its investment strategy, years after their first Regional Transportation Plan - The Big Move. There were public consultations throughout the region to garner support for their proposal. Seeing waning support especially in the GTA suburbs, the Liberals kiboshed the plan and the results of the public consultation were scrapped from their website.

In 2018, when Toronto mayor John Tory proposed tolling the Gardiner Expressway to fund transit, GTA politicians cried wolf. The Provincial Liberals panicked and nixed the idea. They lost the election.

Just like this Streetsblog article proposes, it is time for Canadian transit agencies a wage an aggressive campaign and take advantage of the falling gas prices. This has to include, parking levies and congestion pricing as the RCCAO proposes. Also it is time for a carefully administered and equitable regional sales tax, like in California's cities, to fund major transit projects, purchase more buses and to fund operations.

While Jeff Rubin was partially right with his predictions, we both told you so.