Oil At $80/Barrel - - Regional Freeway Plan Tied To Much Cheaper Gas

World oil prices hit $80 a barrel on Wednesday, suggesting that gasoline prices above $3 a gallon are returning, probably to stay.

Seems they've been there pretty constantly since Hurricane Katrina and the emergence of China as a major world oil consumer.

Some relevant questions, then, for state and regional transportation policy-makers:

1. Will people keep driving as often and as far with these rising prices?

2. Do we still need that big, expanding regional freeway system from the Illinois line to Jefferson County, and into Walworth, Ozaukee and Washington Counties, too?

3. Will predicted traffic congestion actually materialize and require more lanes and bigger interchanges?

4. Has the Southeastern Wisconsin Regional Planning Commission adjusted its driving projections and formulas that produced the seven-county, $6.5 billion freeway plan - - a scheme of rebuilding and adding 120 new miles of lanes that was drafted, and is being implemented, based on gasoline priced at $2.30/gallon?

On August 30, 2007, I raised these sorts of issues in this email to Kenneth Yunker, SEWRPC's deupty director:

"Do I recall correctly that the freeway study used $2.30/gallon gasoline in its driving calculations to support freeway expansion?

"If so, does the commission stick by that estimate/benchmark now that gasoline bounces between $2.90-3.25, with $2.30 now but a Wisconsin motorist's daydream?"

Yunker responded with an email next day, August 31, 2007, explaining why the agency was not changing its forecasts, along with a few other details and observations:

'The forecast gasoline price per gallon used in the 2035 regional transportation plan was $2.30 per gallon in year 2005 dollars. This forecast was unanimously approved by the study advisory committee, and is based on the official long-term forecast to the year 2030 of the U.S. Department of Energy (USDOE) published in February 2006.

"The Commission staff monitors the USDOE annual updates of this forecast, and their update in February 2007 did not result in any significant increase.

"Also, it is generally accepted that the fuel cost-per-mile of vehicle travel will affect travel, rather than the cost per gallon of gasoline. (The fuel cost per mile of travel is a function of the cost per gallon of gasoline and the motor fuel efficiency of the vehicle fleet).

"It is also generally accepted that the motor fuel efficiency of the vehicle fleet responds to the price of motor fuel in the medium and long-term, with fuel efficiency expected to increase with increases in motor fuel price, thus moderating and potentially offsetting any potential increase in the per mile cost of travel and thereby moderating also significant effects on travel behavior and patterns.

"I trust the foregoing will help you to present an accurate discussion of this issue. In the further interests of accurate discussion, we would note that the regional plan does not propose “spending $6 billion on more freeway lanes in the seven-county Milwaukee region”.

"As you well know, most of the cost of rebuilding the freeway system is to reconstruct the system as needed as each segment reaches the end of its useful life, and to do so to modern design standards, and not the 1950 or 1960 design standards to which the existing system was built.

"The estimated cost in the year 2035 regional plan to rebuild the freeway system to modern design standards is an estimated $5.8 billion in 2005 dollars, and the cost of additional lanes (one lane in each direction of 120 miles of the 270 mile system) is $750 million, an increase in reconstruction cost of about 13 percent.

"Also, you may find it interesting that the existing long-range regional plan for the Seattle area includes a 33 percent expansion of freeway lane-miles, as compared to a 20 percent expansion in southeastern Wisconsin."

On September 3, 2007, I sent Yunker this response, with two additional questions:

"Thanks. All duly noted, though I wonder if the traffic projections really justify that portion of the plan that is expansion. Can anyone prove that as gas prices go up (and we're talking up to 50% at times since 2005) the fuel efficiencies of the fleet will wash out the effect of the increases?

"Is that the basis of independent studies, or oil company folks pushing their spin?"

No answer to these questions yet.

Note: This posting ended up on a German-language blog, sending SEWRPC, Ken Yunker and our regional freeway boondoggle international.