Research Rest-Stop │ The Price-Induced Energy Trap

Every Wednesday, the Mayor’s Office of Transportation and Utilities (MOTU) highlights some interesting research related to or innovations in transportation, sustainability, or energy.

The New America Foundation has released its newest working paper, “The Price-Induced Energy Trap: Exploring the Impacts of Transportation Expenditures on the American Economy.” The report argues that rising gas prices are impacting the lower- and middle-class, while traditional public policies for reducing fuel consumption support the wealthy.

With the demand for energy growing steadily, total expenditures for gasoline are expected to increase 25 percent to $489 billion dollars in 2011. The report maintains that the rising cost of gasoline will likely impact individual and household incomes. To navigate these costs, policymakers have traditionally looked to subsidies and incentives to promote smart energy use and energy conservation measures. Many times, however, when fuel prices rise, people are more likely to purchase a used car than a new, fuel-efficient automobile.

The report notes: “Better understanding why very high gasoline prices do not lead to dramatic reduction could lead to policies that more quickly, and less painfully, reduce gasoline demand and consumer spending. Data from the Bureau of Labor Statistics suggest that what households spend on transportation services, including expenses and payments for the car, is more than what they spend on both health care and taxes combined.”

Looking at ways to supply a variety of lower-cost choices and provide better consumer education may be avenues to explore in the future as ways to reduce the cost of transportation.

What do you think? Do people today spend too much on transportation costs? What are some good alternatives?


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