Assessment of Fuel Economy Technologies for Medium and Heavy ...

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assuming that a similar decrease in fuel intensity of 10 to 20 percent is also achieved, for a net effect in the range of 20 to 40 percent). The analysis is simplified by selecting an elasticity for both rail and truck demand used in relevant U.S. studies. The truck price elasticity of -0.97 used by FHWA and rail cross-elasticity of 0.52 from AAR were selected. Findings: The fuel tax necessary to achieve 20 - 40 percent lower fuel consumption in the average long-haul truck is $0.18 - $0.36 per mile. Because the cost of fuel per mile is currently $0.634 28 at an average fuel economy of 5.59 mpg, the data imply a fuel price of $3.54 gallon ($0.634 per mile * 5.59 miles per gallon). Using the same conversion, the increase in the per-mile fuel tax translates to an increase in the per-gallon fuel tax of $1.01 - $1.98, for the 20 and 40 percent scenarios respectively. This will reduce truck fuel consumption by 5,100 - 10,100 million gallons (20 - 40 percent from current fuel consumption levels of 25,500 million gallons). This corresponds to a decrease in truck traffic from current annual VMT of 71,400 to 67,000 or 43,000 for the 20 and 40 percent reduction cases, respectively. Based on the cross-price elasticity of 0.52, rail ton-miles will increase from 1,852 billion ton-miles to 1,953 - 2,053 billion ton miles in the 20 - 40 percent cases. This increase in rail traffic will increase rail fuel consumption by 230 - 460 million gallons. This will reduce the impact of the truck fuel tax increase from 5,100 - 10,100 to 4,870 - 9,640 million gallons, reducing the effectiveness of the reduction by approximately 5 percent in both cases. Potential for Government Promotion: An increase in the Federal diesel motor fuel tax would be easy to administer as the mechanism already exists for levying and collecting this tax. However, the increase required to achieve significant fuel efficiency benefits – estimated to be in the range of $1 to $2 per gallon – is much higher than would be acceptable in the current policy environment (where, in fact, even small increases of five to 10 cents per gallon may be considered intolerable). It also significantly exceeds the likely fuel price increase under a national cap-and-trade program. Analysis by the Energy Information Administration (EIA) of cap and trade legislation under the previous Congress showed that a $50 per tonne allowance price – at the upper range of what would be expected in 2030 – corresponds to a gasoline price increase of about 45 cents per gallon in 2030. 29 A lower allowance price of $30 per tonne (27 cents per gallon) is consistent with the range in the draft American Clean Energy and Security Act of 2009. Using the same assumptions as the above analysis, this price would result in a decrease in commercial vehicle fuel consumption of only about 5 percent. (ii) Congestion Pricing Key Question: What impact would congestion pricing have on fuel consumption Background: Congestion pricing could take different forms, such as area-wide network pricing on freeways and possibly arterials, ―cordon‖ or area pricing in central business districts, or 28 American Transportation Research Institute, An Analysis of the Operational Costs of Trucking, December 2008. 29 U.S. Department of Energy, Energy Information Administration, ―Energy Market and Economic Impacts of S. 2191, the Lieberman-Warner Climate Security Act of 2007,‖ 2008. http://www.eia.doe.gov/oiaf/service_rpts.htm - 18 -
truck-specific congestion pricing such as the varying time-of-day gate fees implemented at the Ports of Los Angeles and Long Beach. Congestion pricing could affect truck fuel consumption by: Shifting trips to less-congested off-peak hours; Reducing congestion for trucks continuing to operate during peak periods; Reducing overall goods movement and related truck traffic due to higher costs; and Shifting logistics patterns – e.g., leading industries to establish consolidation centers on the edges of urban areas to reduce truck activity within the congested area. Area-wide congestion pricing is applicable to freeways and major arterials where there is significant congestion. Cordon pricing strategies are only applicable in major urban areas with significant congestion. The limited geographic applicability of these two scenarios limits the fuel reduction potential. Area-wide congestion pricing has greater potential since it is estimated that nearly 30 percent of urban VMT occurs at level of service E or F. Cordon pricing of metropolitan area central business districts, however, is estimated to affect only 3 percent of total VMT nationwide. Furthermore, evidence suggests that there will be little, if any, overall impact on total truck traffic (as the added costs are likely to be marginal, or the option of moving to the off-peak period acceptable), but rather that the benefits will occur from trucks operating under improved flow conditions, and therefore using less fuel due to idling or stop-and-go operations. This will have a larger impact on smaller urban trucks since larger long distance trucks operate mostly on uncongested highways. It should be noted that while reducing congestion should improve fuel economy up to a point (e.g., increasing average speeds from 10 to 20 or 20 to 30 mph), truck fuel consumption rates also tend to increase at higher speeds (over 45-55 mph), and therefore, increasing speeds from mid-range congestion (30-40 mph) to free-flow highway speeds may have a negative fuel economy impact. Congestion is likely to affect urban service and delivery movements more than long-haul freight, and therefore it is the fuel consumption characteristics of smaller trucks that are most important. If congestion pricing is implemented only on a limited basis (e.g., only freeways), diversion of traffic to other nontolled facilities is likely to be a significant concern because of the impacts on neighborhood and local traffic. Increases in VMT on alternate routes could offset the fuel savings achieved from reductions in VMT and congestion on the facility itself. Therefore, congestion pricing will be most effective at reducing fuel consumption if it is implemented universally (on all major roads in an area). While reducing congestion can save fuel, there is an implicit limit on these savings, bounded by the total fuel wasted in existing congestion. In this analysis, a sketch-level estimate is made of the total fuel ―wasted‖ by trucks, and therefore the potential upper bound benefits of congestion relief strategies. This analysis only considers the fuel savings from improved traffic operations, and not any reduction in fuel use due to an overall decrease in demand. Findings: Most studies of the impact of congestion pricing have focused on all traffic, rather than distinguishing impacts on personal vs. commercial vehicle traffic. A study for the U.S. - 19 -
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