How much does it cost to drive?

The IRS formally increased the number it uses for cost per mile car travel, from 50.5 cents per mile, to 58.5 cents per mile. The question for drivers is -- are you sharing that cost or sucking it up all by yourself?

I recently did an analysis of AAA 2007 cost data for driving. I wanted to understand how much the rising cost of gas is actually changing the real costs of driving. [These aren't quite real costs since they don't include any of the externalities associated with driving like global warming, protection of oil resources, asthma, car accidents, among others.] AAA numbers are averaged over five years, assuming you own the car for the first five years of its life.

Today, with gas at $4 a gallon, looking at the two extremes of car types, it costs

$18.60/day for a small sedan ($6,795/year)
$31.00/day for an SUV or pickup truck ($11,309/year)

This covers travel of 41 miles per day (15,000 miles per year), average for Americans.

When -- not if -- gas goes to $5 a gallon, it'll be

$21.66/day for a small sedan ($7,906/year)
$33.32/day for an SUV or pickup truck ($12,161/year)

What was particularly interesting to me is how the rising price of gas has transformed the variable costs of driving. When gas was $1/gallon, it was only 9% of the total cost of owning and operating a small sedan. Today, at $4/gallon, gas ranges between 28 and 30% of the cost of operating a car. When it is at $5/gallon, that'll be 32-35%. With such high variable costs, people are really having to think twice and three times about when and how they drive. [see blog entry on changed driving behaviors]

This is so much money!!!

Back in 2006, 17% of household income went toward cars. I ask myself: if the median household income in the US is $48,000/year, what percent of income is going to car transportation today? A recent study found that in households with cars, they own on average 2.28 cars per household. Now comes some very murky and suspect assumptions, just to get it into the ballpark. Those households are unlikely to have 2.28 new cars, so what if we just round down and say 2 cars that are 0-5 years old are going to stand in for 2.28 cars of unknown age. And that households will have one big car and one little car, which is kind of like saying they have 2 average-sized cars.

OK, if we accept these bad assumptions, the answer to the question:

What percent of household income is going today to car transportation when gas is $4/gallon?

[drumroll]

38%

wow.

Another way to look at this is to use a a report written in September 2005 by Mark Singer of the Consumer Federation of America. His estimates of gas prices for 2005 were about $1.80/gallon. For prices found between 1995-2003 (his baseline) he found little elasticity in demand. Here is his table:



We know that $4/gallon seems to have been a tipping point for demand. And $4 is more than double $1.80. But what if we imagine that people today are spending about double on gas, taking into account some reductions in demand? That would put low income groups spending 20% of their incomes just on the gas.

Washington, I think we have a problem.

Americans need options to traveling around by car all by themselves. Some of those options can happen fast (GoLoco! and for those lucky enough to live in cities feet, bike, transit, train); some will take longer (changing where we choose to live, work, shop, creating dense mixed use communities, adding more transit of all kinds, reducing fossil fuel dependence on all motorized modes).

Next Mr. President: are you listening?

The thrill of success

Since I live in the city, and work a few blocks from home, I don't get many chances to go loco. So right after I had booked my plane trip to attend a conference last weekend and then a rental car, I posted the trip on GoLoco: National Airport to Loyola College, Columbia Maryland. The likelihood of actually sharing the ride and rental costs was incredibly low, but at least I was trying to share.

I was shocked to see the GoLoco email 12 hours before my flight to DC: "Someone wants to join your trip." Incredibly low now modified to incredible.

I click through. His note says he is going to the International Community Wireless Summit which is the same one I'm attending. So now I know he is one of about two hundred people. And note the "he." Just like most women out there, I'm not about to jump in a car with a man I don't know. I click through to his profile.

Doesn't look like an axe murderer - whatever that might look like. And then I see that he belongs to the wri.org community. That's the World Resources Institute, a Washington-based non-profit. Then I see his blog. Hey! I know a number of people at Embarq and have had meetings there discussing wireless applications in the transportation sector. We obviously know people in common. I suppose I could have emailed them to double check. Instead, I choose "accept" and write him a note about the best place to meet up.

Success #1: Hey, hey, hey! This works! Context, content, and social networks do what we had hoped they would do.

But wait, there's more. Getting out of DC and onto the right highway to Columbia was nontrivial. I handed Rhys (my GoLoco co-pilot) the directions, kept my eyes on the road, and listened to him guide me through the quick series of lefts, rights, merges, on those blasted high speed parkways that DC loves so well. I absolutely positively would not have gotten to Loyola College without mistake without Rhys. The stress reduction probably added a couple of minutes to my life. Thanks Rhys. That was unexpected Success #2.

Expected success #3 was that he paid for a quarter of my car rental (one half of half the travel I was doing with the car) and expected success #4 was that we had a great conversation in the car about transportation, developing countries, travel, and spouses.

Now I have even more connections at WRI.