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71 After developing the future transportation energy scenar- ios and reviewing current state DOT roles, mandates, fund- ing, and operations, interviews were conducted with senior DOT staff in a number of states around the country. The research team also interviewed several senior transportation thought leaders not attached to specific state DOTs to gain their broader perspectives. The individuals involved in the interviews are mentioned in the Author Acknowledgments section at the beginning of the report. There were two main objectives for the state DOT inter- views. The first was to gain insights into the types of chal- lenges that the transportation energy scenarios might create for state DOTs in the future and that are the focus of this chapter. The second was to solicit thoughts on potential poli- cies that states might consider in response to these challenges. These are considered further in the next chapter. For both of these questions the team supplemented findings from the interviews with additional research and analysis. In conducting the interviews, the team first prepared a brief description of the future transportation energy scenarios and distributed it to participants in advance of the discussion. During the interviews, the researchers then asked a series of broad and somewhat open-ended questions intended to stimulate thoughtful discussion not only about specific chal- lenges and potential policy responses but also about the mis- sion and role of a state DOT and whether and how it might evolve in the coming decades. Some of the questions were: â¢ How might the mission, organizational roles, and respon- sibilities of a state DOT evolve in the future? â¢ How might the core operations of the DOT change? â¢ What can be expected of future federal and state DOT rev- enue trends? â¢ How could future federal energy or climate policy affect states? â¢ What policies might DOTs consider to meet future chal- lenges, either proactively or reactively? Responses, of course, varied significantly from state to state, reflecting the distinct combination of each stateâs man- dates, priorities, organization, and geographic and economic context. However, several general themes recurred through- out many of the interviews, and participants also identified a number of specific concerns that could result from some of the plausible transportation energy futures. These are consid- ered in the next two sections. 6.1 Recurring Themes in the State DOT Interviews To provide a sense of the issues, opportunities, and con- cerns that arose throughout the interviews, Figure 6.1 shows relevant words that appeared with the greatest frequency in the teamâs interview notes, with the size of each word indicat- ing its relative frequency. (This figure should not be viewed as a scientific representation of word use frequency since the team did not record exact transcripts for each interview, but it is still illuminating.) The interview participants articulated a diverse mix of views, insights, and philosophical perspectives on the current roles and responsibilities of state DOTs, on funding needs and opportunities, on operational requirements and challenges, and on how some of these might undergo fundamental shifts in the future. Some of the most frequently voiced opinions and observations were: â¢ The future state DOT will need to be smarter, faster, and leaner. â¢ The core mission and responsibilities of state DOTs are unlikely to change radically. â¢ The typical state DOT will in all likelihood still be high- way focused, but new roles in other areas are very likely to emerge. â¢ There will need to be greater focus on meeting customer expectations through preservation of existing assets and C H A P T E R 6 Scenario Impacts on State DOTs
72 advanced operations and less of a focus on construction of new facilities and system capacity expansion. â¢ The current system of relying on gasoline and diesel taxes will need to be replaced, and a national approach to user fees would be desirable. â¢ There will be expanded interest in longer-range planning with more attention to energy issues and an increased role for the DOT in facilitating change to adapt to evolving energy costs and types. 6.2 Potential Scenario Impacts on State DOTs This section focuses on how some of the plausible trans- portation energy futures developed in Chapter 5âalone or in combinationâmight adversely affect state DOTs in the com- ing decades. A total of seven distinct concerns arose during the course of the interviews. The text that follows describes each of these potential impacts, discusses which of the plau- sible futures could contribute to or exacerbate the challenges, provides additional analysis and commentary as appropriate, and highlights one or two quotations from the interviews to provide a flavor of the thoughts and concerns expressed by DOT staff. Note that the quotations do not necessarily repre- sent consensus viewsâindeed, some may be controversialâ but rather are intended to be illustrative. Also, the interviews were confidential, and the quotes are not attributed to spe- cific DOTs or individuals. 6.2.1 Declining Fuel-Tax Revenue Declining fuel-tax revenue, perhaps the most frequently cited impact, was perceived as a looming challenge regard- less of how the future unfolds. Should petroleum remain the dominant fuel, the higher CAFE standards scheduled through 2025 will severely undercut fuel-tax revenue per mile of travel unless per-gallon rates are raised significantly. If any of the alternative fuels gain considerable market share, an increas- ing number of drivers could be paying no fuel taxes at all. Elaborating on the latter point, federal and state fuel taxes are currently collected at the wholesale level. This same col- lection regime might be extended to include certain liquid biofuels, such as cellulosic ethanol or renewable diesel, that would likely be produced in large quantities and integrated, to some degree, into the existing distribution system for gaso- line and diesel. Finding a way to easily collect transportation- related taxes for other alternative fuels, however, could be much more challenging. Both electricity and natural gas, for example, allow for at-home refueling or recharging and serve purposes other than transportation as well. Any effort to systematically collect transportation user fees based on the consumption of electricity or natural gas might there- fore require a shift from wholesale collection to end-user collection and the installation of multiple meters within a household. Another challenge is that electricity, hydrogen, and lower-tech biofuels (such as traditional biodiesel from waste grease or vegetable oils) offer the possibility of local production, either at home or at a refueling station, which could prove quite difficult for taxing authorities to track. Seeking to collect fuel taxes for many of the possible alterna- tive fuels would thus require a shift from collecting taxes from the wholesale level to either the retail level or to individual end users, and in some cases it could prove quite difficult to prevent fuel-tax evasion. The looming revenue challenge for state DOTs will be fur- ther exacerbated if the federal government continues along its current path of not increasing fuel taxes and devolving greater funding responsibility to state and local governments. To illus- trate this concern, the research team used recent reference- case projections from the EIAâs Annual Energy Out look 2013 (EIA 2013) to examine what could happen to federal fuel-tax revenue in relation to vehicle travel through 2040 assum- ing that current federal tax rates for gasoline and dieselâ 18.4 cents per gallon and 24.4 cents per gallon, respectivelyâ are left unchanged over that period. The results are shown in Figure 6.2. The dark line in the figure shows cumulative percent growth in auto and truck travel, while the dark gray line estimates percent growth in nominal fuel-tax revenue (i.e., in dollars in the years received, not accounting for reduced buying power due to inflation) based on changes in gasoline and diesel con- sumption and their relative taxation rates. (According to EIAâs projections, aggregate gasoline consumption will decline by about 25% over this period, while total diesel use will rise by about 40%.) Next, the light gray line shows growth in real revenue [i.e., the value of future fuel federal tax receipts in todayâs dollars, accounting for inflation as measured by the consumer price index (CPI)] based on EIAâs assumption that inflation grows at 2% per year. Finally, the dashed dark gray Figure 6.1. Words frequently repeated by state DOT interview participants.
73 and light gray lines indicate changes in nominal and real rev- enue in relation to total VMT. If EIA projections hold and the federal government leaves current fuel-tax rates at their current levels, real federal fuel-tax revenue could decline by more than 40% by 2040, while real revenue per VMT could decline by over 60%. Any such decline would have a severe effect on state high- way funding. Federal fuel taxes account for about 92% of HTF revenue (OHPI 2011), and the HTF in turn provides about 26% of all state highway funding on average (OHPI 2012). To compound matters, the same trends projected to undercut federal fuel-tax revenue could also affect state fuel taxes, which account for another 26% of all state highway funding. Most states levy fixed per-gallon taxes for gasoline and diesel, much like the federal government. If such states fail to increase their per-gallon rates, the overall effect on real revenue per mile of travel should be similar to that depicted in Figure 6.2. (The exact outcome would depend on the rela- tive per-gallon rates for gasoline and diesel.) For the smaller share of states that already index fuel-tax rates to increase with inflation, growth in total real revenue would instead track with the line shown for nominal revenue in the figure; that is, the act of indexing the rates to increase with inflation would result in real revenue tracking the modest decline in combined gasoline and diesel fuel consumption. Even in such cases, however, total real revenue per VMT would decline by more than 30%, reflecting the fact that current fuel-tax indices do not as a general rule account for improvements in average vehicle fuel economy. To sum up, projected improvements in conventional vehicle fuel economy along with the possible growth in alternative fuels threaten to undermine both federal and state fuel-tax revenue, which collectively accounts for around half of all state highway funds. Unless the federal government and states either institute significant rate increases for fuel taxes or develop alternate rev- enue sources, state highway funding shortfalls could become increasingly severe in the coming decades. Excerpts from the interviews: â. . . there must be a fundamental shift in our revenue structure.â â. . . we need a national solution for taxing alternative fuels.â 6.2.2 Increasing DOT Costs Interview participants observed that certain future scenar- ios could lead to an escalation in DOT costs, although this would not be a problem in all futures. Oil plays a major role in road maintenance and constructionâas an ingredient in some construction materials (e.g., asphalt), as an energy input in the production of other materials (e.g., steel and cement), and as a fuel to operate heavy machinery. Any significant rise in the cost of oil would therefore drive up the cost of road repairs along with new construction. Illustrating this potential concern, highway construction and maintenance costs surged by more than 70% between 2003 and 2006, a period marked by rapidly increasing oil prices. In an FHWA study (2007) that examined the rise in construc- tion and maintenance costs during these years, the authors identified four contributing factors, two of which related to oil. First, higher prices for gasoline and diesel led refiners to further improve the efficiency of their production processes, resulting in lower production of by-products such as asphalt. The price of asphalt thus needed to rise as well to ensure that refiners would continue to produce an adequate supply for highway needs. Second, the production of cement is a fuel-intensive process, and because of this, cement prices tend to rise with oil prices. (The two additional factors not related to oil prices were reduced supplies of scrap steel and aggregate.) Source: Calculations by authors using data from Annual Energy Outlook 2013 (EIA 2013). 80% 60% 40% 20% 0% 20% 40% 60% 2015 2020 2025 2030 2035 2040 Cu m ul a ve Gr ow th Auto and Truck VMT Nominal Revenue Nominal Revenue / VMT Real Revenue Real Revenue / VMT Figure 6.2. Forecast changes in VMT and federal fuel-tax revenue through 2040.
74 (Schrank, Eisele, and Lomax 2012, Table 9) between 1982 and 2010. Over this period, per-commuter congestion delays increased at more than twice the rate of total VMT. Looking forward and considering plausible futures for 2050 in which auto travel could increase by as much as 80% and truck travel could increase by as much as 200%, con- cerns about deteriorating congestion are well-founded. With already-severe delays during peak hours in major travel cor- ridors, however, it is worth considering just how much worse traffic could become. As it turns out, additional vehicle travel may not lead to much worse delays in the most congested corridors during peak hours. Rather, once traffic conditions are bad enough, drivers will begin to shift their trips to other times or other routes to avoid delays. This has the net effect, though, of lengthening the peak-hour period and creating traffic congestion on other links throughout the road net- work. In other words, in response to additional vehicle travel, traffic congestion can spread both spatially and temporally. This is reflected in Table 6.2, which shows two measures of the spread of congestionâthe percentage of system lane miles subject to recurring congestion delays and the daily length of the rush-hour periodâfor five major metropolitan areas, as computed by the Texas Transportation Institute (TTI, undated a, b, c, d, and e) for their annual Urban Mobility Report 2012 (Schrank, Eisele, and Lomax 2012). As shown in the Table 6.2, the percentage of the road net- work subject to congestion delays has expanded considerably for all of these metropolitan areas between 1982 and 2011. While the TTI study does not provide data on the length of the rush-hour period for earlier years, the data in the table suggest that congested travel conditions have spread far beyond the typical commuting hours. Looking forward then, for metropolitan areas already prone to severe congestion, additional automobile and truck travel could lead to the further spatial and temporal spread of con- gestion delays. For rapidly growing suburban and exurban areas in which traffic delays are still minor, congestion could become more problematic in future years based on additional vehicle travel. In contrast, congestion may never become a problem for rural areas not subject to significant growth pres- sure. Where congestion does arise or become more severe, however, the costs may be considerable. Beyond deterioration in quality of life, congestion imposes major economic costs State DOTs also operate large fleets of vehicles for a vari- ety of purposes. Should future oil prices rise more rapidly than gains in vehicle fuel economy, the cost of operating DOT fleets could increase as well. A final factor of concern is the potential for continued rapid growth in trucking. This could accelerate the pace of pavement damage, in turn demanding more frequent main- tenance activities for a given stretch of road. An excerpt from the interviews: â. . . whether or not states can do more than maintain what they have right now is a good question.â 6.2.3 Increasing Traffic Congestion The scenarios for passenger vehicle and truck travel allow for the possibility of zero or even negative growth for the 2040 to 2060 time frame. The reason for entertaining a poten- tial decline in vehicle travel is to accommodate the possibil- ity that some states, for economic or even climatic reasons, could plausibly lose population in future years. For the nation as a whole, however, and therefore for most states, both the economy and the population are expected to grow in coming decades. Even with some preliminary data suggesting shifts in mobility patterns among younger adults, growth in popula- tion and the economy are projected to result in appreciable growth in both passenger and truck VMT, albeit at less than historic rates. This could lead to much worse traffic conges- tion in the decades to come. Traffic congestion could be fur- ther exacerbated if states are unable, due to revenue shortfalls, to invest in new capacity where needed. Traffic congestion is a nonlinear phenomenon. If few cars and trucks are on the road, then additional vehicle travel can be added without producing traffic congestion. If a system is already operating near capacity, in contrast, then even mod- est increases in vehicle travel can lead to significant increases in traffic congestion (Sorensen et al. 2008). Because the road network is heavily used in many urban and suburban areas across the country, aggregate growth in auto and truck travel tends to result in an even more rapid deterioration in travel conditions. This is reflected in Table 6.1, which compares esti- mated growth in vehicle travel (ORNL 2012, Table 3.7) and annual travel delays per peak-hour automotive commuter Metric 1982 2010 Growth Annual vehicle miles of travel 1.595 trillion 2.966 trillion 86% Annual delays per peak-hour automotive commuter 13 hours 38 hours 192% Source: Travel data from ORNL (2012, Table 3.7); delay data from Schrank, Eisele, and Lomax (2012, Table 9). Table 6.1. Growth in VMT and congestion delays, 1982â2010.
75 not include just one standard for passenger cars and another for light trucks as in earlier decades. Rather, the standards now factor in the footprint of a vehicle as well, with higher fuel economy targets for vehicles with smaller footprints and lower targets for vehicles with larger footprints. The net effect of this shift is that auto manufacturers no longer have an incen- tive to build vehicles that are smaller, on average, in order to comply with the standards, as a shift to smaller vehicles trig- gers even more-stringent fuel economy targets. Instead, auto manufacturers will need to employ such strategies as lighter- weight materials, improved aerodynamics, engine efficiency technologies, and hybrid designs to improve the fuel econ- omy for whatever mix of vehicle types and sizes they choose to produce. In short, the more-stringent federal fuel economy stan- dards scheduled through 2025 should not induce auto man- ufacturers to shift the composition of their offerings toward vehicles that are smaller on average simply for compliance reasons. On the other hand, it is possible that consumersâ perhaps due to higher fuel prices or increased concern with climate changeâcould begin to choose to purchase smaller vehicles for additional fuel savings. Thus an aggregate shift toward smaller light-duty vehicles in future years remains a plausible outcome, though one that would be driven by con- sumer demand rather than by regulation. Another issue that arose during the course of the study with important implications for safety is the possibility that autonomous vehicles could be developed and achieve broad adoption by 2050. Though a careful analysis of the pros- pects for autonomous vehicles was not included within the scope of the study, it appears that the technology, if success- ful, could lead to dramatic reductions in crash rates. Thus the emergence of greater highway safety challenges, though a possibility, must be viewed as quite uncertain. An excerpt from the interviews: âCars will be more fuel-efficient but smaller, while trucks will be bigger, heavier, and longer.â related to wasted time and fuel and less efficient goods move- ment. Schrank, Eisele, and Lomax (2012) estimated the annual costs of congestion across 498 urban areas in the United States at $122 billion for 2011; of this amount, 22%, or $27 billion, represented delay costs for trucking operations. An excerpt from the interviews: âPeople will continue to drive, and DOTs will continue to have to accommodate them.â 6.2.4 Increasing Crashes and Fatalities Another concern that arose during the state DOT inter- views was that continuing growth in auto and truck travel could also increase total vehicle crashes and fatalities, under- mining current state and federal efforts aimed at working toward zero deaths on the road network. It was not suggested that the crash or fatality rate (e.g., fatalities per million miles of vehicle travel) would rise, but rather that the total number of crashes could scale with total travel. Additionally, some participants speculated that higher fuel prices or increasing interest in climate mitigation could stimulate some drivers to purchase smaller vehicles, whereas efficiency measures in the trucking industryâwhere efficiency is measured on a ton-mile rather than a vehicle-mile basisâcould lead to larger truck configurations. This could increase the severity of any crashes between trucks and passenger vehicles, nega- tively affecting both the rate and total number of fatalities and serious injuries on the road. Some additional commentary on both of these issues is merited since there are subtle caveats that apply to each. Begin- ning with the concern relating to the potential for smaller vehicles, recent analysis indicates that it is vehicle size, rather than vehicle weight, that correlates most strongly with adverse crash outcomes (Kahane 2012). For this reason, as originally mandated in the Energy Independence and Security Act of 2007, the most recent CAFE standards (now harmonized with federal and California greenhouse gas emission standards) do Table 6.2. Expanding congestion in select cities, 1982â2011. Urban Area Percentage of System Lane Miles Subject to Peak-Hour Congestion Delays Daily Length of Congested Rush-Hour Periods 1982 2011 Growth 2011 Atlanta 33% 59% 79% 5 hours Chicago 36% 70% 94% 5.25 hours Los Angeles 38% 61% 61% 8 hours New York 41% 52% 27% 6.75 hours Washington, D.C. 44% 69% 57% 7 hours Source: TTI (undated a, b, c, d, and e).
76 economic and environmental costsâthat greater consensus around the need to take effective action to reduce greenhouse gas emissions could emerge. Should this occur, state DOTs could be asked to play an integral role in climate mitigation efforts. According to the EPA (2013), the transportation sec- tor accounts for about 28% of greenhouse gas emissions in the United States. Any effort to achieve meaningful carbon reduction will therefore need to encompass transportation. Greater pressure on state DOTs to mitigate climate change, should it arise, would be more intense in futures where the transportation sector has remained relatively carbon intensive. Examples include continued reliance on petroleum in com- bination with lower-than-anticipated fuel economy improve- ments, a shift to alternative fuels and feedstocks offering negligible carbon benefits, and rapid increases in passenger vehicle and truck travel. Additionally, a continuing absence of more aggressive federal policy to reduce greenhouse gas emissions (such as a national cap-and-trade program) could motivate concerned voters to press for more action at the state level. An excerpt from the interviews: â. . . it is entirely appropriate for state agencies to promote and enable a shift away from gasoline . . .â 6.2.7 Rising Demand for Alternative Travel Modes Significant growth in demand for transit and other non- automotive modes is one of the plausible futures outlined in Chapter 5, but it can also be viewed as having a potential impact on state DOTs. While there is slack capacity in many transit systems today, very few systems could accommodate much higher levels of ridership, especially during peak com- mute hours. Additionally, many transit agencies are already facing considerable operating deficits and would therefore find it difficult to greatly expand service levels on an ongoing and sustainable basis. Assuming that other factorsâincreasing fuel costs, rising income disparities, denser land-use patterns, and more concerted steps to reduce GHG emissions, for exampleâ combine to stimulate a significant shift to transit, biking, and walking, state DOTs may be asked to play a growing role in sup- porting this shift. Though these non-automotive modes have traditionally fallen within the purview of local governments, a major expansion of transit capacity and other alternatives to the automobile would almost certainly benefit from, and might require, more active planning and funding support at the state level. An excerpt from the interviews: â. . . there is new interest in different modes in what has been a very highway-centric state.â 6.2.5 Difficulty Meeting Air Quality Standards As public health scientists have learned more about the harmful effects of various air pollutants, the EPA has issued gradually more-stringent ambient air quality standards under the Clean Air Act. Lead and ozone standards, for example, were most recently updated in 2008, nitrogen dioxide and sulfur dioxide standards were updated in 2010, carbon mon- oxide standards were updated in 2011, and particulate matter standards were updated in 2012 (EPA 2012). This is already making it more challenging for many states to achieve attain- ment for certain criteria pollutants such as ozone and fine par- ticulate matter, and the EPA could issue even more-stringent standards in the future. Some of the plausible futures outlined in this report could compound the challenges faced by states as they seek to improve air quality. Potentially contributing factors include continued reliance on petroleum for trans- portation fuels, a shift to certain alternative fuels (e.g., coal- generated electricity and some biofuels) that do not perform well for certain pollutants, and overall growth in passenger and truck travel. Diesel-fueled trucks are especially problem- atic with respect to particulate matter, and thus many goods- movement projects now appropriately include elements to help mitigate local air quality issues. An excerpt from the interviews: â. . . states will play more of a role in providing for efficient goods movement and trade corridors.â 6.2.6 Increasing Pressure to Reduce Greenhouse Gas Emissions Many states have already taken actions to reduce carbon emissions and promote the emergence of lower-carbon alter- native fuels. [For a helpful enumeration of state laws and incen- tives relating to alternative fuels and vehicle technologies, see the EERE Alternative Fuels Data Center website (EERE 2013).] While most state actions have involved relatively uncontro- versial policy mechanisms such as subsidies (e.g., rebates for electric vehicle purchases) or voluntary programs (e.g., coor- dinating stakeholder efforts to promote hydrogen fuel), a few states have also established more rigorous approaches such as regulatory mandates (e.g., renewable fuel standards or zero-emission vehicle mandates) and carbon cap-and-trade programs. Proposals to mitigate climate change remain con- troversial throughout many regions in the country, however. Taken as a whole, the collective efforts of states to date, while certainly promising, can be characterized as rather modest in comparison to the potential scale of the challenge. Looking forward, it is plausibleâperhaps due to shifting political attitudes or to a continuing increase in the frequency and severity of extreme weather events and their associated
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