Are Rising Gas Prices A Tool Transit Agencies Can Leverage?

Rising gas prices have negatively impacted most of the world by inflating the prices of many things we enjoy. However, is it possible for Transit Agencies to leverage rising gas prices?

In 2012, The American Public Transportation Association (APTA) released a Policy Development and Research titled Public Transportation Protects Americans From Gas Price Volatility, centered around gas price volatility and its impact on public transit ridership. APTA states, “When gas prices cause a shift from automobiles to transit, the percentage growth in transit use will be much greater than the percentage decline in vehicle miles traveled (VMT). This is because the base of transit trips is much smaller than the base of automobile trips.”

Additionally, “[r]esearchers have found that the decline in ridership when gas prices fall is not as great as the increase in ridership when gas prices rise…Ridership then declines more slowly as gasoline prices fall because [customers] have developed the habit of riding transit.”

Rising gas prices allow transit agencies to deliver exceptional experiences to new customers and retain them as regular transit riders. APTA also mentions, however, that many factors can be attributed to increases in ridership aside from gas prices, such as unemployment rates, parking prices, fare prices, among others. APTA states, “regression analysis shows that 44% of the variation in ridership can be explained by changes in the price at the pump.”

“…44% of the variation in ridership can be explained by
changes in the price at the pump.”

A Mineta Transportation Institute (MTI) 2014 study by Hiroyuki Iseki, Ph.D. and Rubaba Ali titled “Net Effects of Gasoline Price Changes on Transit Ridership in U.S. Urban Areas” controlled several of the other factors known to affect ridership to isolate the impact of gas prices on transit ridership. Iseki and Ali found that “[i]n the short-term, positive effects were found only for bus and the aggregate transit: a 0.61-0.62 percent ridership increase in response to a 10 percent increase in current gasoline prices…”

Based on Iseki and Ali’s findings, we see that in the short-term, commuters do not make many changes to commuting patterns. However, “[t]he long-term effects of gasoline prices…were found for all modes and indicated a total ridership increase ranging from 0.84 percent for a bus to 1.16 for light rail. Commuter rail, heavy rail, and the aggregate transit placed in between in response to a 10 percent increase in gasoline prices.”

While in the short-term, commuters do not make many changes to their commuting patterns, in the long-term, they will seek ways to isolate themselves from the impact of rising gas prices. Evidently, one of the ways to do so is by riding public transit rather than driving a personal vehicle.

Interestingly, not only does the percentage increase in gas prices affect ridership, but the whole dollar amounts also affect it. Iseki and Ali go on to state that “[t]he effects at the higher gasoline price level of over $3 per gallon were found to be more substantial, with a ridership increase of 1.67 percent for bus, 2.05 percent for commuter rail, and 1.80 percent for the aggregate for the same level of gasoline price changes.”

Once gas prices peak at a higher whole dollar amount, commuters are hit with a wave of shock and are drastically more likely to seek alternative transportation methods such as public transit.

Since the impact of increasing gas prices is more prevalent in the long-term, transit agencies can leverage the signs displayed during the short-term and the lagging commuter response to prepare for the long-term increased ridership levels.

Iseki and Ali list a few policy recommendations “to accommodate the public’s higher transit travel needs during times of substantial gasoline price increases…” Two of these policy recommendations include “[a]ssess[ing] existing capacity of transit service especially during the peak period” and “[i]ncorporat[ing] potential fluctuation in ridership due to gasoline prices into planning for operations and capacity management in the short-term.”

“Since the impact of increasing gas prices is more prevalent in the long-term, transit agencies can leverage the signs displayed during the short-term and the lagging commuter response to prepare for the long-term increased ridership levels.”

While rising gas prices may throw a wrench in annual budgeting, there are ways to leverage the increased ridership that follows to satisfy new transit riders and retain them as customers.  

To read more about the APTA Policy Development and Research Public Transportation Protects American From Gas Price Volatility, use this link.

To read more about the MTI study by Hiroyuki Iseki, Ph.D. and Rubaba Ali titled “Net Effects of Gasoline Price Changes on Transit Ridership in U.S. Urban Areas,” use this link.

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