Road PricingRoad Pricing

Anthony M. RufoloAnthony M. RufoloSystems Science SeminarSystems Science Seminar

May 7,2010May 7,2010

Perceived Need To Replace Fuel Perceived Need To Replace Fuel TaxesTaxes

Concern About Alternative Fuel Concern About Alternative Fuel VehiclesVehicles

Current Revenue Not AdequateCurrent Revenue Not Adequate Resistance To Fuel Tax IncreasesResistance To Fuel Tax Increases Pricing Could Help Manage DemandPricing Could Help Manage Demand But Imposing Prices Is CostlyBut Imposing Prices Is Costly

Federal43%

State34%

Local23%

FY 2006 Highway Capital Funding Sources

HTF Receipts By CategoryHTF Receipts By Category

0%

20%

40%

60%

80%

100%

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

Con

stant

$ (M

illion

s)

Gas Diesel Non-Fuel

Mileage Fee ExperimentMileage Fee Experiment

Oregon Department of Oregon Department of Transportation (ODOT) Tested a Transportation (ODOT) Tested a System to Replace State Gas Tax System to Replace State Gas Tax With Mileage FeesWith Mileage Fees

When Fueling at a Participating When Fueling at a Participating Station, System Subtracts Gas Tax Station, System Subtracts Gas Tax And Adds Mileage FeeAnd Adds Mileage Fee

Other Vehicles Still Pay Gas TaxOther Vehicles Still Pay Gas Tax

Basic SystemBasic System

GPS Used To Allow On Board Unit To GPS Used To Allow On Board Unit To Determine Time And Location Of Determine Time And Location Of TravelTravel

Up To 30 Time And Location ZonesUp To 30 Time And Location Zones All Miles Driven Allocated To A ZoneAll Miles Driven Allocated To A Zone Could Be Different Fee For Each ZoneCould Be Different Fee For Each Zone All Data Stored In VehicleAll Data Stored In Vehicle

Data TransferData Transfer

When Fueling, Vehicle Communicates When Fueling, Vehicle Communicates With Pump Via Radio SignalWith Pump Via Radio Signal

In Baseline, Mileage Data By Zone In Baseline, Mileage Data By Zone UploadedUploaded

In Experiment, State Gas Tax In Experiment, State Gas Tax Deducted And Mileage Fee Added At Deducted And Mileage Fee Added At The PumpThe Pump

BaselineBaseline

Two Service Stations Equipped With Two Service Stations Equipped With TechnologyTechnology

Volunteers Recruited Who Lived Or Volunteers Recruited Who Lived Or Worked Near The StationsWorked Near The Stations

Vehicles Equipped With DevicesVehicles Equipped With Devices Approximately 4.5 Months Of Baseline Approximately 4.5 Months Of Baseline

Data Collected On Driving By ZoneData Collected On Driving By Zone Participants Instructed To Regularly Use Participants Instructed To Regularly Use

Participating StationsParticipating Stations

ExperimentExperiment

At Midpoint, Participants Assigned To At Midpoint, Participants Assigned To One Of The Three GroupsOne Of The Three Groups

Data Collected For About Another 4.5 Data Collected For About Another 4.5 MonthsMonths

For Experiment Groups, Gas Tax For Experiment Groups, Gas Tax Deducted And Mileage Fee Added At Deducted And Mileage Fee Added At Participating StationsParticipating Stations

Participants Were Reimbursed For Participants Were Reimbursed For State Gas Tax Paid At Other StationsState Gas Tax Paid At Other Stations

ObjectivesObjectives

Test Functioning Of Equipment In Test Functioning Of Equipment In Vehicles And At PumpsVehicles And At Pumps

Identify Problems With Using The Identify Problems With Using The System For Users Or StationsSystem For Users Or Stations

Evaluate Behavioral Responses To Evaluate Behavioral Responses To Flat VMT FeeFlat VMT Fee

Evaluate Behavioral Responses To Evaluate Behavioral Responses To Congestion PricingCongestion Pricing

Not RandomNot Random

The Sample Was Not RandomThe Sample Was Not Random All VolunteersAll Volunteers

– Must Be Able To Fuel At Participating Must Be Able To Fuel At Participating Stations At Least Twice Per MonthStations At Least Twice Per Month

– All Vehicles In Household Must All Vehicles In Household Must Participate And Be 1996 Or NewerParticipate And Be 1996 Or Newer

– $300 Or More Per Vehicle In Incentive $300 Or More Per Vehicle In Incentive PaymentsPayments

– No Motorcycles Or Diesel Vehicles In No Motorcycles Or Diesel Vehicles In HouseholdHousehold

Location of Study Participants and Location of Study Participants and Service StationsService Stations

Volunteers RecruitedVolunteers Recruited

Installation Of On Vehicle Devices Installation Of On Vehicle Devices Occurred Between June 14,2006 and Occurred Between June 14,2006 and July 11, 2006July 11, 2006

Initial Sample Was 201 HouseholdsInitial Sample Was 201 Households But Useable Data From 168 But Useable Data From 168

Households With 207 VehiclesHouseholds With 207 Vehicles

Experiment BeginsExperiment Begins

In November 2006, Households Were In November 2006, Households Were Assigned To One Of The Three Experiment Assigned To One Of The Three Experiment Groups: Control, Mileage Fee (VMT), Or Groups: Control, Mileage Fee (VMT), Or Congestion Pricing (RH)Congestion Pricing (RH)

Given An Endowment Account Based On Given An Endowment Account Based On Baseline Driving And Price SystemBaseline Driving And Price System

Mileage Fees Deducted From Endowment Mileage Fees Deducted From Endowment And Any Remainder Paid At EndAnd Any Remainder Paid At End

VMT FeeVMT Fee

The Basic System Tested Was A Simple The Basic System Tested Was A Simple Vehicle Miles Traveled (VMT) FeeVehicle Miles Traveled (VMT) Fee

Charge of 1.22 Cents Per Mile Traveled In Charge of 1.22 Cents Per Mile Traveled In Oregon (On Average Equal To State Gas Oregon (On Average Equal To State Gas Tax) And Refund Of Gas TaxTax) And Refund Of Gas Tax

No Charge For Miles Outside Of OregonNo Charge For Miles Outside Of Oregon No Refund Of Other State Gas TaxesNo Refund Of Other State Gas Taxes

Congestion ChargeCongestion Charge

Value Pricing Program Provided Value Pricing Program Provided Funding And Congestion Charges Funding And Congestion Charges Added As Part Of TestAdded As Part Of Test

10 Cents Per Mile For Travel In 10 Cents Per Mile For Travel In Congestion Zone During Weekday Congestion Zone During Weekday Rush Hours (7-9 a.m., 4-6 p.m.)Rush Hours (7-9 a.m., 4-6 p.m.)

0.43 Cents Per Mile For Other Travel 0.43 Cents Per Mile For Other Travel In OregonIn Oregon

Rush Hour ZoneRush Hour Zone

Control GroupControl Group

No Change From Baseline-Continue No Change From Baseline-Continue To Fuel At Stations But Pay Price To Fuel At Stations But Pay Price Including State Gas TaxIncluding State Gas Tax

Intended To Control For Seasonal Intended To Control For Seasonal Effects, Changes In Price Of Gasoline, Effects, Changes In Price Of Gasoline, And So OnAnd So On

Data Collection DesignData Collection Design

Mileage By Zone Collected Whenever Mileage By Zone Collected Whenever Vehicle Was Fueled At A Participating Vehicle Was Fueled At A Participating StationStation

Data Collected At Independent Data Collected At Independent Reader Station To Mark Beginning, Reader Station To Mark Beginning, Midpoint, And End Of StudyMidpoint, And End Of Study

Data Collection RealityData Collection Reality

Reported Reads Varied Between 66% Reported Reads Varied Between 66% And 88% Of Detected Vehicles By And 88% Of Detected Vehicles By Station By Month During Baseline Station By Month During Baseline

Could Be Problems With Data Could Be Problems With Data Transmission, Drive By, Or Stop For Transmission, Drive By, Or Stop For Other PurchasesOther Purchases

Problems With Independent Reader Problems With Independent Reader Either Due To Failure To Try Or Either Due To Failure To Try Or Failure To Transmit DataFailure To Transmit Data

Problems CreatedProblems Created

Less Than Half Of Control Group Less Than Half Of Control Group Provided Useable DataProvided Useable Data

Vehicles Spent Varying Amounts Of Vehicles Spent Varying Amounts Of Time In Baseline And ExperimentTime In Baseline And Experiment

New Change In Daylight Savings New Change In Daylight Savings Time Was Not Programmed Into The Time Was Not Programmed Into The Units, So Rush Hour Changed On Units, So Rush Hour Changed On March 11, 2007March 11, 2007

Responses To ProblemsResponses To Problems

Data Calculated As Miles Per Day And Data Calculated As Miles Per Day And RH Miles Per Weekday To Account RH Miles Per Weekday To Account For Varying Times Of ParticipationFor Varying Times Of Participation

Data Analyzed For Experiment Data Analyzed For Experiment Ending On March 11, 2007 And For Ending On March 11, 2007 And For Experiment Ending On April 1, 2007Experiment Ending On April 1, 2007

Data Analyzed By Vehicle And By Data Analyzed By Vehicle And By HouseholdHousehold

Group SizeGroup Size

Control Group Was Intended To Be Control Group Was Intended To Be 27 Vehicles (About 10%), But Only 10 27 Vehicles (About 10%), But Only 10 Provided Useable DataProvided Useable Data

VMT Group Ended With 95 Vehicles VMT Group Ended With 95 Vehicles Providing Useable DataProviding Useable Data

RH Group Ended With 102 Vehicles RH Group Ended With 102 Vehicles Providing Useable DataProviding Useable Data

Control Group Results Not Control Group Results Not Statistically SignificantStatistically Significant

Average Mileage Per VehicleAverage Mileage Per Vehicle

ControlControl VMTVMT RHRH

Base Base RH/WKDYRH/WKDY

7.507.50 4.674.67 8.418.41

BaseBase

OR/DayOR/Day23.6123.61 22.8322.83 30.9230.92

ExpExp

RH/WKDYRH/WKDY8.688.68 5.255.25 7.317.31

ExpExp

OR/DayOR/Day22.6422.64 20.8820.88 26.5126.51

Change In RH Miles Per WkdyChange In RH Miles Per Wkdy

MeanMean T-RatioT-Ratio % Change% Change

ControlControl 1.181.18 1.081.08 15.7215.72

VMTVMT 0.590.59 2.122.12 12.5412.54

RHRH -1.10-1.10 -3.63-3.63 -13.08-13.08

Change In OR Miles Per DayChange In OR Miles Per Day

MeanMean T-RatioT-Ratio % Change% Change

ControlControl -0.97-0.97 -0.58-0.58 -4.10-4.10

VMTVMT -1.96-1.96 -2.93-2.93 -8.57-8.57

RHRH -4.41-4.41 -4.48-4.48 -14.25-14.25

ResultsResults

VMT Reduced Mileage Relative To VMT Reduced Mileage Relative To Control But Increased Rush Hour Control But Increased Rush Hour MileageMileage

Not Statistically Significant, But Not Statistically Significant, But Survey And Focus Groups Found Survey And Focus Groups Found Participants Stating That They Participants Stating That They Reduced MileageReduced Mileage

Congestion Pricing ResultsCongestion Pricing Results

Paired Means Shows About 13% Paired Means Shows About 13% Reduction In Peak MilesReduction In Peak Miles

Further Reduction In Off-Peak Miles Further Reduction In Off-Peak Miles Rather Than A Shift To Off-PeakRather Than A Shift To Off-Peak

Reflects A Pure Price Effect Since Reflects A Pure Price Effect Since There Was No Change In Congestion There Was No Change In Congestion For This GroupFor This Group

Effect Of Price On Mode ChoiceEffect Of Price On Mode Choice

12 Of 84 Households In RH Reported 12 Of 84 Households In RH Reported Someone In Household Changing Someone In Household Changing Mode To Save MoneyMode To Save Money

10 Of 79 Households In VMT 10 Of 79 Households In VMT Reported This As Well Although On Reported This As Well Although On Average The VMT Fee Was Equal To Average The VMT Fee Was Equal To The Gas TaxThe Gas Tax

Effect Of Congestion Charge On Effect Of Congestion Charge On TravelTravel

26 Of 84 RH Households Reported 26 Of 84 RH Households Reported Changes In Either Time Or Distance Changes In Either Time Or Distance TraveledTraveled

23 By Avoiding Driving During Rush 23 By Avoiding Driving During Rush HourHour

4 Reported Consolidating Trips And 4 Reported Consolidating Trips And One Joined A CarpoolOne Joined A Carpool

Response To Fee SystemResponse To Fee System

145 of 163 Households (91%) Would 145 of 163 Households (91%) Would Be Willing To Stay With System If All Be Willing To Stay With System If All Service Stations ParticipatedService Stations Participated

Response Drops To 105 (64%) Who Response Drops To 105 (64%) Who Think Other People Would Be Willing Think Other People Would Be Willing To Use The SystemTo Use The System

CaveatsCaveats

Self-Selected SampleSelf-Selected Sample Effects Of Being In An ExperimentEffects Of Being In An Experiment Limited DurationLimited Duration Congestion Price Is Per Mile But Does Congestion Price Is Per Mile But Does

Not Reflect Direction Of Travel Or Not Reflect Direction Of Travel Or Other Differences In Actual Other Differences In Actual CongestionCongestion

AccuracyAccuracy

OSU determined that readings from OSU determined that readings from system deviated as much as 20% system deviated as much as 20% from odometer readingsfrom odometer readings

Some problems with zone boundariesSome problems with zone boundaries Many missed reads at the pumpMany missed reads at the pump

CostCost

Retrofit would be expensive, so Retrofit would be expensive, so phase in with new vehiclesphase in with new vehicles

Change station accounting softwareChange station accounting software Equip pumpsEquip pumps Accounting and billing systemAccounting and billing system

Potential Use of Road PricingPotential Use of Road Pricing

Two Congressional Commissions Two Congressional Commissions Have Recommended Replacing Fuel Have Recommended Replacing Fuel Taxes With PricingTaxes With Pricing

But The Cost of Pricing is Much But The Cost of Pricing is Much Higher Than the Cost to Collect Fuel Higher Than the Cost to Collect Fuel TaxesTaxes

Many Types Of PricingMany Types Of Pricing

Targeted Tolling and PricingTargeted Tolling and Pricing– TurnpikesTurnpikes– Bridges, Tunnels, And Related LinksBridges, Tunnels, And Related Links

Cordon PricingCordon Pricing Comprehensive PricingComprehensive Pricing

– Flat ChargeFlat Charge– Variable Based On Congestion, Variable Based On Congestion,

Emissions, Road DamageEmissions, Road Damage

Cost IssuesCost Issues

Few Taxpayers Pay The Fuel Tax, But Few Taxpayers Pay The Fuel Tax, But There Could Be Millions Of Accounts With There Could Be Millions Of Accounts With PricingPricing

Technology May Be CostlyTechnology May Be Costly Cost To Manage Accounts And Enforce The Cost To Manage Accounts And Enforce The

SystemSystem Research Needed To Better Understand Research Needed To Better Understand

Cost Trends And Possibilities To Use Cost Trends And Possibilities To Use Technology Available For Other PurposesTechnology Available For Other Purposes

Tolls With Closed SystemTolls With Closed System

Tolls paid at designated areas with Tolls paid at designated areas with barriers to entry/exitbarriers to entry/exit

Detection by toll gates, attendants, Detection by toll gates, attendants, police, and cameraspolice, and cameras

Advantage is low violation ratesAdvantage is low violation rates Disadvantages are cost, bottlenecks, Disadvantages are cost, bottlenecks,

and safety issuesand safety issues

Tolls With Open SystemTolls With Open System

Vehicles equipped with transponders and Vehicles equipped with transponders and tolls are paid as the vehicle passes tolls are paid as the vehicle passes throughthrough

Detection is mostly camerasDetection is mostly cameras Advantage is higher throughput and Advantage is higher throughput and

revenue generationrevenue generation Disadvantages are higher violation rates Disadvantages are higher violation rates

and costs for transaction recognition, and costs for transaction recognition, violation processing, and courtsviolation processing, and courts

Automatic Vehicle IdentificationAutomatic Vehicle Identification• Identify vehicles at fixed points• Wireless data/financial transaction via transponder/tag• Toll roads, tunnels, bridges, cordons• Video recognition of license plates for enforcement• London using high speed license plate matching only (no tags) for

cordon pricing

• Identify vehicles at fixed points• Wireless data/financial transaction via transponder/tag• Toll roads, tunnels, bridges, cordons• Video recognition of license plates for enforcement• London using high speed license plate matching only (no tags) for

cordon pricing

Tolling in U.S.Tolling in U.S.

277 toll roads, bridges, or tunnels277 toll roads, bridges, or tunnels $9.3 billion in toll revenue in 2006$9.3 billion in toll revenue in 2006 Operating costs tend to be a high Operating costs tend to be a high

percentage of revenuepercentage of revenue

Flat Versus Variable PricingFlat Versus Variable Pricing

Tolls That Do Not Vary Raise Tolls That Do Not Vary Raise Revenue But Do Not Manage The Revenue But Do Not Manage The Road SystemRoad System

Prices Based On The Level Of Prices Based On The Level Of Congestion Manage The Road Congestion Manage The Road System, But May Not Raise Desired System, But May Not Raise Desired RevenueRevenue

Types Of Congestion ChargesTypes Of Congestion Charges

Congestion Charge Varied By Time, Congestion Charge Varied By Time, Location, And Distance Traveled Is Location, And Distance Traveled Is Most EfficientMost Efficient

Dutch Have Proposed Such A Dutch Have Proposed Such A System, But None Currently ExistSystem, But None Currently Exist

Facility And Area Systems Have Been Facility And Area Systems Have Been ImplementedImplemented

Variable Toll FacilitiesVariable Toll Facilities

Growing Experience With High Growing Experience With High Occupancy Vehicle/Toll (HOT) LanesOccupancy Vehicle/Toll (HOT) Lanes

Generally Used For New Lanes Or Generally Used For New Lanes Or Underutilized HOV LanesUnderutilized HOV Lanes

Static And Dynamic Congestion Static And Dynamic Congestion Pricing Is UsedPricing Is Used

Some Use Of Variable Pricing On Some Use Of Variable Pricing On Previously Flat Toll FacilitiesPreviously Flat Toll Facilities

Cordon or Area PricingCordon or Area Pricing

In use in other countriesIn use in other countries– SingaporeSingapore– LondonLondon– StockholmStockholm

Proposed for New York, but not Proposed for New York, but not implementedimplemented

Cordon Pricing: SingaporeCordon Pricing: Singapore Demand management Demand management Initially, paper based system with Initially, paper based system with 31 checkpoints in morning peak 31 checkpoints in morning peak hourshours

Expanded to 66 gantries, 7:30 am Expanded to 66 gantries, 7:30 am to 4:30 pmto 4:30 pm

ERP system implementedERP system implemented– Vehicle transpondersVehicle transponders– Smart cardsSmart cards– Electronic gantriesElectronic gantries– OCR license plate recognitionOCR license plate recognition

Variable dynamic pricingVariable dynamic pricing– 8585thth percentile speed, 45 to 65 percentile speed, 45 to 65

km/hkm/h

£5/vehicle; increased £5/vehicle; increased to £8/vehicle to £8/vehicle

Area expanded in Area expanded in 20072007

No barriers/tollboothsNo barriers/tollboothsResidents: 90% Residents: 90%

discountdiscount£1/vehicle discount £1/vehicle discount

for fleets with 10+ for fleets with 10+ vehiclesvehicles

Weekly, monthly, and Weekly, monthly, and annual passes.annual passes.

£120 fine; reduced to £120 fine; reduced to £60 if paid in 2 weeks £60 if paid in 2 weeks

Free passage routeFree passage route

Cordon Pricing: London

Western

Extension

Original

Comprehensive PricingComprehensive Pricing

HistoryHistory Oregon experimentOregon experiment Puget Sound experimentPuget Sound experiment OthersOthers

Most Proposals Rely On GPSMost Proposals Rely On GPS

Must Locate Where Vehicle Is Must Locate Where Vehicle Is Operated And MileageOperated And Mileage

Odometer Based Subject to Fraud Odometer Based Subject to Fraud and Costlyand Costly

Cell Towers is Another PossibilityCell Towers is Another Possibility

TelematicsTelematics

Information

Button

GPS + Primary Cellular,

Combination Antenna

Protected

Backup Antenna

Telematics

Control Unit

EmergencyCall Button

RoadsideAssistance

Button

Other ExperimentsOther Experiments

Puget SoundPuget Sound Minnesota pay as you driveMinnesota pay as you drive Iowa studiesIowa studies

Different Pricing Considerations For Different Pricing Considerations For Light And Heavy VehiclesLight And Heavy Vehicles

The Primary Issue For Efficient The Primary Issue For Efficient Pricing For Light Vehicles Is Peak Pricing For Light Vehicles Is Peak CongestionCongestion

The Primary Issue For Efficient The Primary Issue For Efficient Pricing For Heavy Vehicles Is Road Pricing For Heavy Vehicles Is Road DamageDamage

German SystemGerman System

Charge per kilometer on major roadsCharge per kilometer on major roads GPS system with cellular GPS system with cellular

communication for mostcommunication for most Allows for other users to pay per tripAllows for other users to pay per trip Operating cost has been about 25% Operating cost has been about 25%

of revenueof revenue

Dutch ProposalDutch Proposal

All Vehicles Pay Per Kilometer Based All Vehicles Pay Per Kilometer Based On Weight, Congestion, and On Weight, Congestion, and Environmental EffectEnvironmental Effect

Convert Fixed Cost Of Driving To Convert Fixed Cost Of Driving To Reflect Actual Usage Of The System Reflect Actual Usage Of The System And Cost ImposedAnd Cost Imposed

Manage Congestion, Road Damage, Manage Congestion, Road Damage, And Environmental ConcernsAnd Environmental Concerns

Cost Estimates From Four SourcesCost Estimates From Four Sources

Large Reputable Companies Large Reputable Companies Contracted To Estimate Cost For Contracted To Estimate Cost For Comprehensive Pricing SystemComprehensive Pricing System

Cost Categories-Initial and AnnualCost Categories-Initial and Annual– On Board UnitOn Board Unit– AdministrativeAdministrative– CollectionCollection– Enforcement Enforcement – MiscellaneousMiscellaneous

Cost EstimatesCost Estimates

Cost ItemCost Item VMT FeesVMT Fees

Average Cost over providersAverage Cost over providers

Per Unit of Total Operating CostPer Unit of Total Operating Cost

$ per lane mile$ per lane mile $4,042 $4,042

$ per centerline mile$ per centerline mile $8,245 $8,245

$ per 1,000 VMT$ per 1,000 VMT $6.26 $6.26

$ per vehicle$ per vehicle $75.16 $75.16

$ per transaction$ per transaction $6.95 $6.95

% of total revenue% of total revenue 6.6%6.6%