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Driving: Fixed versus variable

Wanted to point readers to a discussion between Austin Contrarian and myself about fixed versus variable costs of driving, and how best to account the fixed costs. One thing many commute calculators get just absolutely and stupidly wrong is the idea that depreciation is a factor of miles driven (it's actually far more a factor of age - miles a distant second). For instance, this is a comparison I ran for one of the early comment's on AC's post: a 1998 Honda Civic LX, automatic, all other values default. All values as "private party" and "excellent condition".

Miles drivenValue
20,0006,540
90,0005,640
180,0004,825

(KBB said 86,000 would be "typical", but actually seems a bit low to me).

A 1998 Civic would be either 9 or 10 years old today, depending. The added depreciation due to driving normally versus the little-old-lady case is no more than $100 per year ($8.25 per month). The depreciation due to age swamps this figure by a factor of 10 or more. This stands to reason - would you really pay a ton of money for a 9-year-old Civic just because it wasn't driven very much? Of course not.

What does this mean? Ignore the commute calculators which include depreciation, insurance, and registration, unless you're one of the vanishingly rare few people who can completely get rid of a vehicle. Instead, use one of the calculators which only includes truly variable costs, like mine (originally written for bike commutes, but can be used to compare the cost for transit commutes just as easily - just zero out the cost of bike tubes and tires and put bus fare in "extra costs"). For instance, at gas prices of $3.00, and with $80 tires (about what our last set cost, each), you end up with these values for some of my old commutes (assuming I got to use our Prius instead of what I actually drove back then, which only got 38 mpg):

TripCarBus
Home to 183/Braker (Netbotz)$1.31$1.00 / $2.00 (regular / express)
Home to downtown (free parking)$0.46$1.00
Home to downtown ($8 parking)$8.46$1.00

Now, if AC's parking cost was unbundled - charged per-day, his commute would actually come out cheaper on the bus by a fair margin, as indicated above. He indicated a monthly cost of $100, and I'm just guessing that $8 might be the price on the spot market, but that means that if he drives even about half the time, it'd be smarter to pay for the parking pass and then drive every day.

How can we fix this? If more of the costs of driving were borne directly by drivers, at the time they drove (or at least paid for gas), it wouldn't be so artificially cheap. For instance, when I drive downtown, I'm using roadways which were paid for out of property and sales taxes - not the gas tax. If we were to pay for all major roadways out of the gas tax, well, first, Round Rock would start to have to finally pay something approaching the cost of their infrastructure without free-riding on Austin, and second, at the extra buck a gallon I figure it would take, the math would shift a bit. It'd shift more if we could get auto insurance priced by the mile (although you keep hearing about it, it's never been an option for me or anybody I know personally). And, of course, if we paid for the costs of our Iraq adventure by gas taxes instead of through income taxes, the story would be even more different. But in the meantime, it rarely makes sense on purely economic grounds to ride the bus, even at our currently way-too-low fares so we're going to have to keep working on the other reasons. Like reliability. Light rail, dependable in time and at least competitive with the car, on which you could comfortably work or read, would be an easy winner. City buses - well, I salute AC and Tim for being able to work and/or read on the jerky city buses, but I was never able to, and I doubt most people would consider it acceptable even if saving a couple of bucks. Unfortunately, of course, our brand-new commuter rail line is going to inflict two of those jerky bus rides on every single rail passenger every single day. Oops.

This entry was posted in the following categories: Economics , Funding of Transportation , Subsidies to Suburban Sprawl , Transit in Austin , Transportation , Use Cases

Comments

test comment

The bus let me get rid of my car completely. I guess that makes me "vanishingly rare," but really it hasn't been at all difficult -- my wife still has her car, so we can get groceries, or on vacation, etc., without any hassle. She drives it to work and I take the bus to UT, which is convenient and free. Shrug.

Yes, people that have been able to completely get rid of a car in this town are vanishingly rare - because they're limited mostly to people who work downtown or at UT, and in both cases, more and more reasonable parking options come online every day (i.e. the car option has gradually become more, not less, attractive).

I'm one of them, by the way (although I work at home). 1 car, 2 adults. But I don't make the mistake of assuming that very many others can do what we did.

I like the work you've done on this analysis, but to maintain apples-to-apples comparisons, if we're going to capture all the subsidies to driving in driving, we should do the same for public transit.

Of course, this is hard to do. Many of the benefits of public transit would only become apparent once driving became more expensive (and only fully apparent once development patterns were reoriented around public transit), so accounting for that eventuality requires a lot of guessing. It's a moving target.

Adam,

This wasn't really an effort to capture subsidies per-se; a much longer post would be required to do that. I was just pointing out some of the reasons why driving's "fixed costs" are so high compared to its "variable costs".

Anyways, for the benefit of others (I'm sure you know most of this already), the subsidies for transit are well-known and up-front; a small portion of the Federal gas tax, and 2/3 to 3/4 cent sales tax here (1 cent minus the 1/4 to 1/3 of that gets spent right back on roads and sidewalks). There's helpful metrics like FRR to tell us very quickly that fares cover about 10-15% of the cost of providing service over the whole system (although you can't get anything worthwhile for an individual trip).

This argument doesn't hold water. Are you saying that are car that sits in a garge for 10 years and is driven only 20k miles will be in the same condition as one that is driven every day for a total of 180k miles?

M1EK, I know you're smarter than that. If I don't drive the car I don't spill coffee on the carpet, I don't get gravel dings on the hood, and I don't wear out the clutch. Comparing to cars of the same condition with different mileage isn't an accurate comparison. You know that.
Treat me as a thinking person and argue your point. I can understand that there is a fixed cost to owning a car, but there is a variable cost to driving it.

chopChop, I said there's both variable and fixed cost, but that the fixed cost is much larger. Go to kbb.com and plug in whatever mileage you like and you'll see.

chopChop, I said there's both variable and fixed cost, but that the fixed cost is much larger. I used the same condition for the cars because we're assuming the same person in this case - i.e. the same maintenance. I was also using an automatic transmission, by the way.

Go to kbb.com and plug in whatever mileage you like and you'll see.

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