20 May 2008
People still need their cars
The Government has recently done a big U-turn on its climate change policy by exempting petrol from its emissions trading scheme for another two years. As petrol prices go up, people still seem to be travelling by car as much as ever. This is causing more and more congestion on our roads, pressure on our transport infrastructure and increasing our emissions. The Prime Minister Helen Clark remarked last week that big oil price rises, which have seen petrol reach $2 a litre, appeared to be achieving the schemes’ goal of discouraging private car use. The only thing is – she’s wrong.
The rising cost of petrol is not following the conventional forces of supply and demand – as prices goes up demand should reduce? However, when we look on our nation’s roads we see that is not happening. Why is that so?
The extent to which demand is related to price is elasticity – if there is not much change in demand with increasing price it is inelastic - if there is a close relation between price and demand its elastic. This is the theory – what does the current data tell us?
The Ministry of Economic Development maintain information on fuel use and prices although going back to 2004. Overall, in the last 4 years there has been an increase in the price from March 2004 to December 2007 of 39%, and yet there has been no significant decrease in usage in petrol over that time. In fact there has been a slight increase.
Of course we can expect that consumption increases with increasing economic activity –and by adjusting the fuel consumption for the growth in GDP since March 2004 there was only a tiny 3.5% drop in fuel consumption. It also interesting to note the cyclical nature of fuel consumption – there is less used in the winter months than the summer months.
Either way, and contrary to the Prime Minister’s claims this information from the Ministry demonstrates that increasing fuel prices only have a small impact on consumption and people are still using their cars. To understand why, let’s look at the Auckland situation.
It is not hard to see that many people do not have an alternative to using their cars. In the recent survey conducted by the NZ Business Council for Sustainable Development residents who said they did not have a public transport alternative were 45% in Auckland City and North Shore city, 56 % in Waitakere, 48% in Manukau, and a massive 81 % in Rodney.
In a survey of IPENZ members when asked the main reasons for not biking to work, 29 % said it was too far or too hilly, 24% said that they were concerned about safety, and 15 % don’t own a bike – and presumably don’t want to.
There are many other reasons people need to use their car - they car pool with other family members or friends, they make other stop offs on the way to and from work for childcare, shopping etc – and in some cases the journey requires them to use more than one form of public transport – bus and train, 2 buses etc. Some alternatives just take up too much time or cost too much. "
As to the future it is recognised by government officials and regional councils that traffic will continue to increase in line with increasing economic growth, and that demand management techniques will be able to moderate this demand to some extent.
However it is clear that petrol prices will only play a small part in changing people’s behaviour – they still need their cars.
Tim Davin
Policy Director, IPENZ, Engineers New Zealand.
Mobile: 027 204 9536
DDI: 04 474 8933
Prepared by Julie Buchanan, Communications Manager, IPENZ, Engineers NZ, DDI: 04 473 2028
