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Compendium of Identified Research Needs

The following research topics were identified during the workshop as needing further research either to extend current research or as new areas of investigation. Therefore, these needs do not represent the view of a single individual or even the workshop participants as a whole. They are presented in order of discussion and are not ranked in any other order. Regardless, these research needs do provide insight and guidance to FHWA, DOT, and others on the current state of the research and the emerging issues that likely will need to be addressed.

Future Markets for Public-Private Partnerships

The following research needs were identified by workshop participants as priority needs within the realm of Public-Private Partnerships.

Public Sector “Comparator” Model

A key issue in public-private partnerships is the ability to compare the relative costs of public versus private development and implementation of a given project on a comprehensive and even-handed basis that accounts for the complete range of costs—and makes the comparison based on a carefully defined common alternative. The Europeans, Australians, and Canadians have perfected a standardized template for analyzing costs on both a direct and indirect model that is a PPP comparative model. One key feature of the comparator approach is the systematic incorporation of risk (construction, financial, revenue, environmental, etc.) and how these risks are borne by public or private sector. The new U.S. DOT Fair Market Value Rule would enable such a tool to be utilized in the United States. One research need is to develop a “U.S. version” of the comparator.

Procurement Risks to Private Sector for Public-Private Partnerships

Potential PPP project proposal process – solicited or unsolicited – is very expensive to private entities. Without a clear competitive procurement process – or a commitment to move ahead with the project, these risks can discourage private initiatives. In the case of Virginia, there has been the development over time of a highly organized, transparent approach – in which there appears to be a high degree of industry confidence. In other cases such as Pennsylvania, a highly politicized process substantially increased the risk to the private entity. Research needs to be conducted, both domestic and international, on the procurement process and how it has dealt with issues such as transparency and compensation to insure an attractive process to mitigate risk and entice private entities to engage in PPPs.

Outsourcing Operations and Maintenance on a Broad System-Wide Basis

The business models of various state DOTs vary widely with regard to activities carried out with in-house staff versus private sector contractors and service suppliers. There is a wide range of experience on outsourcing (beyond design and routine maintenance). Florida and Virginia are on the leading edge in the outsourcing of a broad array of functions related to both maintenance (asset management contracts on a network basis) and systems operations functions (TMC operations, traveler information, safety service patrol, etc.). There is difference between the two states and even districts within the states as to how this is operated. Key issues include the development of a performance-driven approach both to procurement and contract management. Best practice needs to be compiled and reported and key management issues need to be identified.

Model Concession Agreements

Workshop participants agreed that there isn't a single best model for concessions. A few states such as Texas, Florida, and Virginia have had considerable experience and learning in concession agreements. In particular, there may be different models for different types of PPP projects including variable terms, up-front payments, and public sector competition. Research is needed to understand the relative pros and cons to the various concession models, particularly variable terms versus a fixed-concession agreement.

Tolling on the Interstate Highway System

Interstate facilities are the location of major traffic congestion and preservation needs. Currently, tolling of existing interstates is highly constrained by FHWA regulations. Tolling presents an opportunity for both generating revenue and congestion pricing. The workshop participants discussed the implications of tolling on the interstates to interstate commerce. There have been several proposals for “rules” regarding future interstate tolling, from the Finance Commission and Congress. A quick turnaround pre-legislative white paper, with pros and cons reported on as needed because this issue is clearly going to be dealt with in the next surface transportation reauthorization legislation.

Implementation of a Mileage-Based User Fee

Research is needed to assess the role of the private sector versus the public sector in the implementation of a mileage-based (VMT-based) user fees. In particular, one key question that has to be addressed is whether the implementation of VMT-based user fee collection system has to be performed as a public service – or would contracting the services (as in the case of Germany) make sense. For example, in the private sector, there are systems such as the Easy-Pass system that could be considered for administration of such a fee, with the trade-off being issues associated with privacy. Research is needed to understand all of the options, tradeoffs, and issues that should be considered when determining the appropriate mechanism for implementing a mileage-based user fee.

Best Markets for Public-Private Partnerships

The type of projects that are most appropriate for PPP (Brownfields versus Greenfield) is an important consideration for state programs – both with regard to the revenue potential and the need for mixed funding – and with regard to revenue risks. Certain types of PPP arrangements shift the revenue risk in various ways – such as the Availability and Lane Rental approaches. There needs to be a better understanding of the best markets and risk transfer aspects. What are the aspects of the different markets and the implications for PPPs?

Multi-State Public-Private Partnerships

Increasingly, the U.S. DOT has recognized the corridors of the future such as I-95 and the I-70 truck lanes where projects will be operating in multiple states. One model for multi-jurisdiction operation is the Easy-Pass model. However, what are other models for multi-state environments and what are the institutional mechanisms?

The Impact of the Current Financial Climate on Public-Private Partnerships

The current condition of the credit market and VMT growth has thrown many of the PPP projects under development into an uncertain context. Previous estimates of project velocity need to be revisited. New models of PPP with different financial structures need to be reviewed.

Implications of Alternative Fuels on Transportation

Impacts of Alternative Fuels on Safety

Safety, specifically personal safety, includes consumer safety for fueling and operating/riding in alternatively fueled vehicles. Consumers need to have information that demonstrates that if their vehicle operates on a different fuel that the vehicle will be at least as safe as a vehicles operated on conventional fuels, such as gasoline and diesel. More broadly, research is needed to assess whether there are safety issues emerging from the distribution of alternative fuels or of the feedstocks used to produce alternative fuels. From the distribution standpoint, research is needed to determine what changes may be necessary to the distribution system to safely accommodate new fuels or fuel additives. Further, consideration needs to be made for safe collection, distribution, and storage of feedstocks, in consideration of where these feed stocks are grown, turned into fuels, and ultimately used.

Impact of Production and Distribution of Alternative Fuels on Infrastructure

Research is needed to assess whether the manufacture of alternative fuels will require a greater demand for new or expanded modes to distribute and consume the fuels. For example, will the existing transportation infrastructure support a change in how fuel for alternatively fueled vehicles is transported? Will increased transportation needs ultimately result in increased emissions due to an increase in freight that may offset potential gains in passenger vehicles? More broadly, research is needed to assess whether there are specific infrastructure issues emerging from the distribution of alternative fuels or of the feedstocks used to produce alternative fuels. From the distribution standpoint, research is needed to determine what changes may be necessary to the distribution system to efficiently and cost effectively/competitively accommodate new fuels or fuel additives, including consideration to infrastructure needs for collection, distribution, and storage of feedstocks, in consideration of both where these feed stocks are grown, turned into fuels, and ultimately used.

Characterization and Prioritization of Collective Alternative Fuels Public Policy Goals

Cross-agency research is needed to determine what the collective public policy goals are with respect to alternative fuels (i.e., is the term alternative broadly applied to all feedstock and fuel sources, or is it restricted, for example, to renewable fuels) and what the priority of objectives is across the Federal Government. Currently, the primary policy focus is on reducing energy dependence to foreign entities and other objectives have a secondary focus. This has consequences with respect to the ability of the government to meet multiple objectives. Research and collaboration is needed across the Federal Government to determine the collective goals and the impacts of policy decisions and mandates on the fuels that are currently in use or those new fuels that may be pushed more into the mainstream.

Assigning a Dollar Value to Impacts

Assigning a dollar value can be difficult. Consideration of costs and/or benefits, such as those for addressing climate, safety, energy security, etc., certainly will enhance the ability of the government to optimize future policy and support a more informed debate and decisions on how alternative fuels should be utilized in the future. Research is needed to develop tools and metrics to make these dollar assessments.

Impact of Alternative Fuels on Highway Revenue

Research is needed to assess the current impacts of alternative fuels on federal aid or the financing programs in the future because there are different taxes, incentives, etc. In particular, research is needed to investigate various options for informing future policies as they pertain to fuels/energy use in the transportation, including non-liquid fuels such as electricity.

Policies to Reduce Greenhouse Gas Emissions Associated with Freight Movements

Imposing Pricing Mechanisms to Promote Fuel Efficiency Gains in the Freight System

The objective of this research project is to determine which fuel pricing mechanisms should be developed and implemented to encourage fuel efficiency gains in the freight transportation system. Reducing freight transportation fuel use and greenhouse gas (GHG) emissions can best be achieved when the cost of fuel and GHG emissions are accurately reflected in the price of freight transportation shipments and passed along to manufacturers, retailers, and final consumers who purchase freight transportation. Transportation will be expected to help meet the 60% to 80% reduction targets for 2050 GHG emissions that currently are being discussed in proposed state and federal legislation. To have a substantial impact, truck GHG emissions, which represent over 80% of all freight GHG emissions, must be greatly reduced. Some freight can be shifted to rail and waterborne freight transportation, but truck vehicle-miles of travel cannot be reduced significantly without affecting logistics costs for businesses and industries and driving up the cost of goods and services for consumers. This points toward the need to price freight transportation to encourage fuel efficiency and adoption of alternative fuels while providing sufficient service levels to support economic activity.

One approach for using pricing mechanisms to reduce freight GHGs would be a cap-and-trade-style approach for diesel fuel (the primary fuel for truck and rail engines). Most of the GHG cap-and-trade bills introduced in the 2007-2008 Congress included transportation among the capped sectors through an upstream cap on the CO2 content of petroleum fuels, implemented at the refinery. Alternate market-based approaches, such as carbon taxes, also could help encourage fuel efficiency gains in the freight system. A low-carbon fuel standard, such as that being implemented in California, is another type of market-based approach; it will require fuel providers to reduce the carbon intensity of transportation fuels and most likely will include diesel. There are also other forms of pricing that could encourage reduction in fuel use, including an increase in diesel taxes or variations in state weight-distance fees for trucks.

The analysis should evaluate the effects of different pricing mechanisms on the fuel efficiency of the freight system, including trucking, rail, marine, air, and pipelines. Fuel efficiency improvements could be derived from technological or operational improvements, and they could be associated with a single mode or due to the shift to a more fuel-efficient mode. The development of pricing mechanisms needs to take into account that different types of fuels are used in different modes (e.g., diesel fuel for truck and rail, bunker fuel for marine, and jet fuel for air cargo), so pricing mechanisms might be applicable to a single mode or multiple modes depending on how they are configured (i.e., if pricing mechanisms are applied to crude oil, then all modes would be affected). For those cases in which different pricing mechanisms affect modes in different ways, the analysis should determine how the implementation of such mechanisms would affect mode shift.

Because the implementation of such schemes could encourage the development of alternative fuels and technologies, the analysis should be on a well-to-wheels basis. Because a shift toward electric-powered vehicles or alternative fuels (e.g., biofuels) is possible, the energy associated with land-use changes, harvest processes, fuel refining and distribution, as well as electricity generation and transmissions, should be taken into account.

Improving Truck Fleet Fuel Efficiency

The objective of this research project is to determine and evaluate policies to encourage the implementation of fuel-saving strategies for heavy-duty trucks. Government regulation, market-based approaches, voluntary programs, and complementary support for research and development as well as deployment can help advance technologies and strategies that reduce fuel use and emissions from trucking. Previous research indicated that transportation will be expected to meet between 60% and 80% of GHG emissions reduction targets for 2050 that currently are being discussed in proposed state and federal legislation. Improving the fuel efficiency of heavy-duty trucks will play a significant role in achieving such targets. With the doubling of truck fuel efficiency between 2005 and 2035, it would be possible to reduce 2035 freight-related GHG emissions to 2005 levels. Oak Ridge National Laboratory has developed several scenario forecasts of truck fuel economy using the National Energy Modeling System (NEMS). In their most aggressive scenario, long-haul combination truck fuel economy would rise from approximately 5.6 mpg today to 9 mpg by 2020. However, such improvements will only materialize if the right set of incentives and regulations are in place to encourage the adoption and ensure the successful implementation of fuel-saving strategies.

A variety of strategies currently are available to improve the fuel efficiency of trucking operations, including the introduction of alternative engine technologies, tractor and trailer aerodynamic improvements, use of single-wide tires, use of alternative fuels, automatic tire inflation systems, options to reduce extended truck idling, improvements in truck routing and utilization, and driver training programs.

Many players could be involved in the implementation of fuel-saving strategies. Governmental agencies could provide support for research development and equipment testing, possibly subsidies for new technologies, as well as the development of regulations. Equipment manufacturers would have to accelerate the development and deployment of fuel-saving technologies, while carriers would have to adapt to a new framework where regulations and incentives would be in place to promote a faster adoption of more fuel-efficient trucks. Finally, manufacturers and end consumers might need to accept higher transportation costs as a result of investment in fuel-saving technologies.

Programs to promote the implementation of fuel-saving strategies for heavy-duty trucks fall into four categories: (1) support for research, development, and deployment of fuel-saving strategies, (2) market-based approaches (e.g., carbon taxes, cap and trade systems), (3) regulatory programs (e.g., fuel economy standards), and (4) voluntary programs (e.g., U.S. EPA's SmartWay Transport Partnership).

Encouraging Mode Shifts to more Fuel-Efficient Modes

The objective of this research project is to determine and evaluate policies to encourage mode shifts to more fuel-efficient modes. More aggressive mode shifts to more fuel-efficient modes, especially from trucking to rail, could play an important role in achieving the necessary GHG emissions reduction targets for 2050 that currently are being discussed in proposed state and federal regulation. In general, rail and water transportation are associated with lower emissions (on a ton-mile basis) than truck transportation, although these benefits depend on the length of haul, equipment, and the use of drayage trucks to access intermodal facilities. However, there are constraints to increasing rail and water transportation mode shares due to supply chain configuration, service requirements (i.e., speed, travel-time reliability, damage), logistics costs, and mode capacity. This research should point to policies that could encourage mode shifts beyond those created by “business-as-usual” market conditions.

Understanding the Effects of Congestion on Truck Fuel Efficiency and GHG Emissions

The objective of this research project is to understand the effects of congestion on fuel efficiency and GHG emissions from heavy-duty trucks. Congestion can affect truck fuel consumption (and consequently GHG emissions) to the extent that it requires vehicles to accelerate and decelerate more often to adapt to network traffic levels. Because fuel consumption is significantly higher in acceleration mode than while traveling at constant speed, fuel consumption is typically higher in congested roadways. There has not been much published research to date on the effects of congestion on fuel consumption nationwide. The 2007 Urban Mobility Study makes an attempt to do so, but it does not single out the effects of congestion on freight movements. An assessment of freight bottlenecks on highways has estimated delay incurred by heavy-duty trucks.1 However, there has been no published research assessing the effects of congestion on fuel efficiency of heavy-duty trucks.

This research project will examine how fuel or emissions models consider traffic inputs that could characterize congestion levels. A methodology to quantify the congestion experienced by heavy-duty trucks in current and future years, as well as traffic inputs (to fuel and emissions models) that properly characterize congestion, will need to be developed.

Linking Transportation and Land Use

Enhance Commercial Vehicle Modeling and Analysis Capabilities for Local Jurisdictions

Participants of the workshop felt that there was a need for research to be conducted to improve commercial vehicle modeling and analysis capability for jurisdictions that are making land-use decisions regarding commercial vehicles and their emissions. Also, this research needs to include a focus on some of the new data collection technologies and sources for information on commercial vehicle movements within metro area regions.

Assessing the Feasibility of Sustaining Projects Combining Transportation and Land Use

Research is needed to understand the likelihood that the visions of projects like the blueprint planning and smart growth can be realized at a national level. Additional research is needed to define how the success of those smart growth visions can be monitored over time to create a template for regions to follow.

Enhanced Household Travel Surveys

Current travel surveys, particularly the National Household Travel Survey (NHTS), are not longitudinal in nature, which makes their use for land-use planning more limiting. Research should be conducted to investigate the feasibility of enhancing the NHTS by making it a longitudinal survey and including more information on land-use contacts for survey respondents to link land-use context to travel behavior. Alternatively, household travel surveys planned for regional implementation should be modified to include a longitudinal component.

Macro versus Micro Characterization of Land Uses

In assessing the effectiveness of influencing travel behavior through land-use planning, one basic issue is: at what level of detail are land use data available for use in doing planning or analysis? Definitions of very basic land-use characteristics like density can vary widely, according to the geographic scale of data available. The oft-quoted chestnut that “Los Angeles is denser than New York” is only true if you expand the geographic scale to include the entire metro area—the developed, urbanized areas of New York are far denser than Los Angeles. As micro-level (i.e., parcel or small grid-cell) land-use databases become more common around the country, there is a growing realization that characteristics of land use at micro level are far more predictive of variation in travel behavior than are macro-level characteristics. The devil (or angel) is in the details. Research is needed to address the geographic scale of land-use data, which is optimal in terms of capturing major variations in travel behavior, and provide guidance for development of future travel-demand models.

Achieving Intermodal Interoperability for Freight Movements

Examination of Improvements Through Information Technology

Interoperability of information technology systems is important in itself for the management of supply chains, as well as for the facilitation of physical and market functions. The difficulties of linking legacy and proprietary systems are an established barrier to interoperability that the advent of the internet, and the more recent development of web service environments, has begun to break down. Information networks and resources developed for one purpose – such as highway management for passenger mobility – could be sharpened, extended, and reconceived for mobility in the freight sub-system. A variety of research has been done in information technology; what are the most promising ways it can aid freight interoperability, and which ways would be most useful for improving supply chain performance? What role should government play, what can be expected from private players, and what connections could be cultivated between the two from the grass-roots level on up? Research would be valuable to a) reconsider the existing body of literature from the perspective of interoperability opportunities; b) delineate the opportunities in terms of their achievability and their importance; c) explore the roles and interrelations of the public and private sector, including the possible functions of government as a demonstrator of systems, a convener of participants, and a short term spur to longer range programs.

Role of Governments in Facilitation of Common Asset Pools

Asset owners want asset control, yet proprietary fleets forego some opportunities for utilization efficiency. Industry groups sometimes are formed to overcome this, such as the TTX equipment cooperative in the railroad business. In circumstances where utilization inefficiency imposes a marked penalty on public systems – such as the congestion effects of container cross-hauling in port cities – there may be a rationale for public action at the federal or some more local level. The options are various: there may be reason to encourage more efficient patterns of private ownership, there could be performance standards that only pools could reach, or there could be an outright federal or coordinated government program. Research would be useful to clarify the public interest and the range of policy choices that could serve it.

Adaptive Solutions for Improving Interoperability

Equipment differences are a common and often entrenched barrier to interoperability. Overcoming them would be best, but more rapid benefits may be available from improving the interoperation of the current assets. For example, 40' marine containers are unattractive to domestic users and ship lines keep them close to ports when demand is healthy. Nevertheless, the public pays a price in emissions and congestion when high proportions of these containers return empty to portside markets. Are there pricing mechanisms that could encourage a different result, or operating configurations (like an LCV) that might be permitted for the sake of better utilization? These are possible ways to make do with what exists, and support a better result. Research is called for to a) explore options for make-do improvements to interoperation; b) analyze benefits, costs, institutional friction, probabilities of adoption, and the actions required in the public and private sectors; c) recommend polices consonant with these findings.

Incentives for Innovation in Interoperability

Pricing mechanisms could be employed to prompt adaptive solutions; they could also be directed toward innovation. GHG emission charges would fall more heavily on poorly utilized equipment, and could cause owners to operate differently. Alternately, the incentive system and performance goals built into a program like EPA's SmartWay could be generalized to incorporate utilization factors, and to reflect positively or negatively upon the supply chain customers the operators hope to attract. How could direct or indirect economic prices like these two examples be employed as a market mechanism, charging for the externalities the public bears and encouraging the markets to create solutions? Research would be useful to identify a) the types of incentives that could be employed; b) the behaviors desirable and undesirable they could help bring about, and the risks they might pose; c) the best policy recommendations in light of these findings.

The Effect of Interoperability Improvements on System Capacity

Limitations to interoperability between modal networks inflate asset requirements and highway VMT. How large is the effect on available transportation system capacity; how much capacity could be released if certain types of limitations were removed? While capacity assessments are complex, their results would be informative for transportation policy, and the benefits should accrue to passenger as well as to freight uses. Research would be valuable to determine a) methods to measure the amount and types of capacity restriction imposed by certain kinds of interoperability limitations (types would include intercity, urban, and gateway, for passenger and freight sub-systems); b) estimates of capacity restriction using one or more of those methods; c) policy implications based on the magnitude and form of capacity that interoperability improvements could make free.

Case Studies of System Change

A substantial obstacle to interoperability gains is the satisfaction of industry players with their conventional roles. A drayman, for example, will never buy an asset that someone else will provide for him, and consequently will never be much concerned for its utilization. Some of the radical improvements in intermodal freight operations in fact have come from the outside, from new players with a different set of objectives and incentives. Stack trains were an innovation of steamship lines, not railroads; similarly, the entry of the JB Hunt fleet to the domestic intermodal market allowed railroads eventually to require all players to bring their own equipment. What lessons can be taken from examples like these? Are there ways that new entrants could transform the interoperability of freight operations in some sectors, and should their entry be monitored, encouraged or supported? Research is called for to analyze a) examples of historical shifts, and the conditions under which they; b) the motivations of the prime movers; c) the process by which change spread in the industry; d) the applicability of historical lessons to current challenges in interoperability; and e) policy options derived from these conclusions.

Impacts of Higher Fuel Costs

Further Investigation of the Leveling of Vehicle Miles Traveled

Further research is needed to understand the factors that caused vehicle miles traveled (VMT) to level off in 2004. Currently, the root cause of this leveling is not well understood. This research also should be expanded to better understand the causes of changes in VMT between 2007 and 2008.

This research follows up on prior research. There are some published papers that investigate VMT elasticities using 2004 and more recent VMT data. However, the published studies do not use data on the rapid rise in gas prices that took place in the first six months of 2008, nor do they take into account “the full efflorescence of the economic decline” since August/September 2008.2 Gas prices in the United States fluctuated between about 80 cents and $1.70 a gallon for unleaded regular gas between 1983 and 2004, accompanied by a fairly steady increase in annual average VMT increase of about 2.9%. However, 2004 marked the beginning of a gradual price rise above these levels, culminating in the rapid rise in gas prices to over $4 a gallon in mid 2008. We are clearly living in a different world of volatile and higher gas prices. We also need better information to help evaluate possible national policies like cap and trade that would purposely increase gas prices to respond to energy conservation, energy security, and global warming concerns. A systematic explanation of the VMT leveling since 2004 and the VMT declines from 2007 to 2008 also is needed to inform essentially all of the other six research areas identified and discussed below. Research in this area also will benefit from the research results in the second identified research area discussed next.

Impact of Gasoline Price Volatility

Research is needed to better understand the impact of gasoline price volatility as opposed to the price effects themselves. There is a need to develop better information on price elasticities and the impact of the volatility versus long-run changes in price. The rapid run up in gas prices in 2008 without the long gas lines of 1973 and 1979 is unique. The quick decline during the rest of 2008 from their very high July/August price levels also is unique, and has resulted in our new recognition that the volatility of prices itself is probably playing a role. Modeling the effect of fuel price volatility can test many hypotheses such as the presence of hystereses or “stickiness,” which causes lags in the response of travelers to changes in fuel prices, especially volatile changes. The interaction of this volatility with socioeconomic factors also is important, as evidenced by the current slowness of VMT levels to resume their historic gradients. There needs to be a market segmentation of travelers in estimating the impact of volatility because price elasticities have been shown to change with time, income levels, household car ownership and other socioeconomic characteristics, and importantly, location with respect to trip purpose opportunities (rural versus suburban versus urban) and other transportation services (e.g., transit and ridesharing opportunities). Including volatility may help narrow the current wide range of elasticity estimates.

Impact of Low Oil Prices

Additional research is needed to assess the overall impact of low oil prices across a wide spectrum of areas including transportation, national energy dependence, security, etc. Dollar values need to be assigned to the difficult-to-measure objectives so that trade-off analyses can be made to understand how a change in policy by one branch of the government may impact the ability of another branch to reach its goals. There are two components to this research need. First, research is needed to understand the environmental and economic impacts of low fuel prices. Several articles and opinion editorial (op ed) pieces from all sides of the political spectrum argue passionately for setting a floor under fuel prices to mitigate the damaging impacts of continuing our policy of low fuel prices. There is a large body of literature on these impacts of low fuel prices because we have lived through decades of them. However, there is an urgency now to take these impacts very seriously because we have seen that these impacts can be mitigated by higher fuel prices, and recent international developments have caused us to view these impacts as having very high costs.

The second component to this research need is the need to do new research on the dollar values of the physical impacts of low fuel prices. There is a fairly large body of literature on the dollar values of the national security cost of a gallon of gasoline, or a pound of CO2 emission, but times are changing, and a new full cost accounting of the cost of national policies to keep fuel prices low needs to be made. For example, currently, the cost of externalities in the market price of gasoline in not routinely included, but the time has come to update these costs of changing government policies by various branches of government. We also will be better able to conduct trade-off analyses to understand how a change in policy by one branch of the government may impact the ability of another branch to reach its goals. For example, in transportation, one goal could be to reduce VMT and congestion and another could be to increase highway revenue. Conversely, the Departments of Commerce and Labor may have a different focus and priority of wanting to increase auto sales. Better information that can be used to quantify the trade offs is needed to be able to make these tradeoffs in the public and national interest.

Understanding the Impacts of Fuel Prices on Travel Behavior

Research is needed to understand the impacts that changes in the fuel tax or movement to a VMT-based tax would have on travel behavior and resulting requirements of the transportation system. In particular, this research needs to address the impacts on travel behavior by making big changes in fixed versus marginal costs on highway travel. This is a new focus of research as it extends the discussion to the impact of VMT-based fees on travel behavior and the long-term impacts on land use and demographics.

Substantial increases in fuel taxes increase the price of fuel as perceived by the consumers of transportation. However, a VMT-based tax would mark a significant change from a less to a more transparent cost of driving. It could potentially make a big change in the perceptions of fixed versus marginal costs of highway travel. The State of Oregon has carried out experiments assessing the full marginal cost of highway travel, and data are available from those trials. However, given the current consumer awareness and probable sensitivity to higher costs of driving, new research with refined and expanded methods is needed. There also are a variety of low-to-high tech methods of recording mileage and collecting the tax. Research on the consumer perceptions of these methods could ease the transition and reduce the opposition to implementing a VMT-based tax.

Guidance on Forecasts of Vehicle Operating Costs

Current modeling and planning efforts typically have assumed that vehicle operating costs stay relatively constant in real terms, but this may not be an appropriate assumption for future planning efforts. Research is needed to provide guidance to state and regional planners on appropriate assumptions for future operating costs of a personal vehicle. This research would build upon prior DOE research and work by others in the private sector that makes a living advising on futures in the oil market. However, the recent price increases and volatility in fuel prices highlights the need to revisit this research area.

Forecasts of highway and transit use in current modeling and planning work can vary in important ways depending on the inputs assumed for future fuel prices and the resulting vehicle operating costs. Fairness in distributing discretionary federal funds for highway and transit projects requires a level playing field in the vehicle operating costs used to forecast the benefits and costs of projects competing for discretionary funds. Also, the increase in public-private partnerships as a method of financing transportation projects with user revenues mandates due diligence and some kind of accepted consensus in fuel costs to minimize the liability from inaccurate user revenue forecasts. The guidance needs to take advantage of important advances in risk analysis and risk minimization methods now commonly used in the private sector, including the real options approach just now being investigated for use in transportation analyses.

Impacts of Fuel Price Increases on the Financing Capacity of States

As fuel prices increase, there may be a resulting decrease in vehicular travel that would result, under the current scheme, in reductions of funding available to states. This reduced funding level may ultimately affect state bond rates, Grant Anticipation Revenue Vehicles (GARVEE) bonds, etc. Research is needed to better understand the connectivity between increased fuel prices and state financing and the ultimate impact of reductions in state financing capacity.

Knowing the impact of fuel price increases on both fuel consumption and VMT would enable research on the revenue implications to the states of various financing methods. This research area is assuming much greater importance as states and toll road authorities, both public and private, are having their bonds downgraded or put on watches by the rating agencies due to recent declines in revenue from fuel taxes and toll revenue. This drives up borrowing costs, in some cases well outside transportation facility financing. The increase in negative ratings by the rating agencies is not only due to revenue shortfalls in transportation, but to their well-publicized recent mistakes in rating other types of securities. While we know that fuel consumption and VMT are far from elastic with respect to fuel price increases, and that we are far from the break point between increased revenue due to higher fuel taxes and decreased revenue from decreases in fuel consumption and VMT, the political break point is much more sensitive. In the long term, confidence in the sustainability of the existing gas tax is weaker than in the short term. Therefore, because increases in user fees take a long time to pass political tests, and even longer to change collection methods (e.g., from fuel taxes to mileage fees), work in this research area should be carried out now.

Public Outreach on Fuel Taxes

There was a consensus among workshop participants that the general public is relatively uninformed on the purpose of the existing gasoline tax. The workshop participants recommended that FHWA consider undertaking a public outreach campaign to better inform the public on the need and purpose of the gasoline tax and how this money ultimately is used. The need for this research is best summarized by the constant repetition in the media of this statement by ordinary citizens in many states now attempting to raise their state gas tax: “If I knew the gas tax increase was going to fix our roads, I'd be for it!” The need for public outreach is, of course, not new! However, it is needed now more than ever for several reasons (1) the public is not well informed on the purpose of the existing gas tax, (2) the public is uninformed on the consequences of not raising the gas tax, (3) the public is uninformed on alternatives to the existing gasoline tax, and (4) based on the state of the highway trust fund, we need to be able to test the acceptability of new concepts for raising revenue. The last point can extend to highly controversial concepts like road pricing. Methods for estimating the effects of advertising and public outreach campaigns are well developed. These campaigns generally emphasize the importance of the benefits from the proposed action, and portray very negative consequences of doing nothing. Political viability can change over time and what was once considered unacceptable can become quite acceptable after some change in circumstances, including appropriate public education efforts.

1 Cambridge Systematics (2005): An Initial Assessment of Freight Bottlenecks on Highways. Prepared for Federal Highway Administration.

2 March 30, 2009 New Yorker Article, p.21.

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