We are pleased to have this opportunity to discuss with the subcommittee the important issue of motor fuel consumption and demand in the development of our nation's energy policy. Today, I will address three specific issues in the purview of the Environment and Public Works Committee that should be considered in Congress' energy policy debates:
-- The importance of easing traffic congestion in order to reduce fuel consumption;
-- The need to streamline the environmental review process to expedite congestion relief projects; and
-- The adverse impact on fuel prices and highway improvements associated with legislative proposals to mandate ethanol use in motor fuels.
Traffic Congestion and Fuel Consumption
Most Americans observe it in their daily commutes, and more objective data verify that traffic congestion has grown worse in cities across the country during the past decade. Moreover, economic and demographic forecasts suggest that this trend will continue for the foreseeable future, although most experts agree that the annual increase in highway travel demand should begin to slow relative to the dramatic jumps reported in recent years.
A few statistics will illustrate the problem succinctly. Since 1970, America's population has grown by 32%, but the number of licensed drivers has doubled that pace, growing by 64%. The number of vehicles has increased by 90%, and the miles we drive those vehicles has skyrocketed by 132%! Yet, during the same period of time, road mileage has increased by a mere 6%.
The statistics only make clear why congestion has grown. The adverse economic and social consequences are evident in the daily experience of ordinary commuters and commercial shippers and carriers across the country. Alan Pisarski, an internationally known transportation consultant and author of the definitive study on commuting (called "Commuting in America"), made the following observations at a recent congressional hearing:
-- When workers hit the road at 5:00 am and then sleep in their cars in parking lots at the office or at transit stations, the system is failing;
-- When commuter routes are congested in the reverse direction -- outbound in the morning; inbound in the evening -- the system is failing; -- When peak period spreads over so many hours that truckers cannot afford to get off the road and wait out the rush hour, the system is failing; -- When small incidents cause monumental tie-ups or a fender-bender becomes a 100 car pile-up, the system is failing.
And the system is failing in many parts of the country. The Texas Transportation Institute (TTI) estimates that in 1999 travel delay cost more than $75 billion in the 68 cities included in TTI's annual report and wasted approximately 6.6 billion gallons of fuel.
Unless Congress and the states do something dramatic to alleviate congestion, the problems associated with it, including significant additional fuel consumption, will only get worse. A recent industry study shows that by the end of this decade, with only moderate economic growth, the number of Class 8 trucks is expected to increase by over 35%, and the number of Class 3, 4, and 5 trucks will double. Why?
Lance Grenzeback, senior vice president at Cambridge Systematics, a highly respected transportation research firm, told a congressional panel recently, AWe are seeing a customer-driven shift toward customized, mass-market products and services. This has expanded the demand for highly tailored and reliable freight services. This trend is accelerating with the adoption of e-commerce and e-business.
In other words, we're moving larger numbers of smaller shipments, requiring more trucks.
Eliminating Congestion Chokepoints
What can be done to ease congestion? There are many potential solutions, depending on circumstances in a particular area. There is no doubt, however, that a program targeted at eliminating the nation's worst traffic chokepoints would produce significant fuel and time savings in addition to other social and environmental benefits.
Cambridge Systematics found that improving traffic flow at our nation's 167 worst bottlenecks (which comprise only a few hundred of the nearly four million miles of U.S. roads) would reduce gasoline and diesel consumption by 19,883,611,000 gallons over the next 20 years. These findings were contained in a study prepared in 1999 for The Highway Users, entitled Unclogging America's Arteries: Prescriptions for Healthier Highways.
A follow-up study we commissioned -- Saving Time, Saving Money -- estimates the value of these fuel savings at $28 billion over the next 20 years, but again that number only considers improvements to the worst bottlenecks . . . system-wide road investments would increase those fuel-saving benefits manifold!
The fuel saving benefits associated with bottleneck relief are just the tip of the iceberg. In addition, Unclogging found that fixing the 167 traffic bottlenecks nationwide will, over the 20-year life of the improvements:
-- Prevent almost 290,000 crashes, including nearly 1,150 fatalities and 141,000 injuries;
-- Nearly halve pollution at the bottlenecks, reducing carbon monoxide by 45 percent and smog-causing volatile organic compounds by 44 percent;
-- Slash emissions of carbon dioxide, a greenhouse gas, by 71 percent at those sites; and
-- Reduce truck delivery and motorist delays by an average of 19 minutes per trip -- nearly 40 minutes a day for commuters who must negotiate a bottleneck in both morning and evening rush hours.
The overall economic value of these beneficial by-products of congestion relief is astonishing. According to Saving Time, Saving Money, businesses, commuters, and other motorists nationwide would enjoy more than $336 billion in economic improvements as a direct result of fixing these bottlenecks. The average commuter traveling through one of the bottlenecks twice each workday could expect to save $345 each year in time and fuel alone if the improvements were made. Copies of both of these important studies can be accessed at our web-site at www.highways.org.
It is important to note that alleviating congestion at a traffic chokepoint does not necessarily require additional road capacity at the particular site. Preliminary analysis of a proposed new highway connecting Rockville, Maryland with Fairfax, Virginia, for instance, indicates that the new route would carry 120,000 vehicles per day. That project would significantly reduce traffic volumes at the interchange of I-270 and the Capital Beltway, the fifth worst bottleneck in the country, because many commuters would no longer have to use the Beltway to travel from their home in one Washington suburb to their work in another.
Other means of reducing congestion at a bottleneck may include new information technologies to help commuters choose other routes during heavy congestion, corridor access for bus or rail transit, flexible work hours at major employment centers nearby, and of course, additional lanes at the bottleneck.
While a balanced approach incorporating all of these options may work best in many cases, it is also important to note that investments in transportation alternatives to the exclusion of additional highway capacity are unlikely to be successful. While noting that transit improvements, better highway operations, adjusted work hours, telecommuting and other efficiency options are vital components of an overall solution,
TTI's Dr. Timothy Lomax testified recently that these same options "do not seem to offer the promise of large increases in person carrying capacity for the current system."
Dr. Anthony Downs, senior fellow at the Brookings Institute, observed in the same congressional hearing that transit carried 3.5 percent of work trips in 1995, compared to 90.7 percent in private vehicles. "Even if the total percentage of persons commuting by public transit tripled," Downs said, "that would reduce the percentage using private vehicles by only 11.6 percent. Any reduction in congestion achieved through increased transit usage would be more than overcome by sheer population growth."
While we would strongly encourage Congress to develop a program targeted at eliminating bottlenecks in order to reduce congestion and conserve fuel, we recognize that some will deride such a program as folly because additional highway capacity will only lead to more travel and renewed congestion. Independent studies have differed widely on the question of whether and to what extent travel is "induced" by the addition of road capacity.
Without entering that debate here, I would only repeat an observation made by Mr. Pisarski, the transportation consultant whose congressional testimony I cited previously:
Most trips we make have economic transactions at their ends, and if not, they have social interactions of great value to those making the trips. Given that, "induced travel," which seems to be so reviled today, seems like a very attractive concept to me. We should celebrate it, not condemn it.
Finally, I would note that eliminating traffic bottlenecks to reduce fuel consumption is a win-win approach to energy policy. It is a policy aimed at accommodating the public's need and desire for greater mobility while, simultaneously, reducing the amount of fuel needed to meet the demand for transportation. Many other energy conservation proposals, including the proposed increase in Corporate Average Fuel Economy standards, are aimed at changing rather than accommodating consumer choices, an approach in which the odds are heavily weighted against success.
Streamlining the Environmental Review Process
Should Congress embrace the idea of funding a program targeted at eliminating traffic bottlenecks, its success will depend in large measure on streamlining the process for reviewing the environmental impact of major road projects. Today, it takes approximately 12 years for major highway construction projects to wend their way through the stages of planning, design, environmental review, and right-of-way acquisition. And that's before a single spade of dirt can be turned! Typically, one to five years of that time is spent completing the necessary environmental reviews, often to the detriment of the environment, public safety, and mobility.
Examples abound of proposed projects delayed by a cumbersome and costly review process that 60 percent of Americans in a recent nationwide poll said takes too long. Here in Washington, for instance, officials have long known that the 38-year-old Woodrow Wilson Bridge, bearing almost 200,000 vehicles a day on Interstate-95 crossing the Potomac River between Maryland and Virginia, must be replaced because of structural problems and inadequate capacity. Yet, it took 11 years from the time the first bridge improvement study was initiated until construction finally began in October 2000. Even as construction has finally begun, litigation against the project continues. Under the current timetable, the first span of a new bridge will open to traffic in autumn of 2004, approximately the same time when engineers have projected the old bridge will have to be closed to truck traffic because of structural weaknesses.
Similarly, a bridge over the Ohio River to connect the Indiana and Kentucky portions of I-265 around Louisville has been in the planning and review process for 15 years. The ongoing environmental review, public hearings, and litigation make it likely that construction on the bridge won't begin until 2003 at the earliest. Meantime, Louisville motorists waste time sitting in traffic or "taking the long way" to get around town, business development is slowed because of this critical missing link in the area's transportation network, and local taxpayers foot the bill for even more environmental studies and litigation.
The fact is any transportation project faces a federal bureaucratic and legal obstacle course. There are at least 65 federal laws, regulations, or executive orders that directly address the environmental effect of building roads. At least six cabinet departments and three independent or executive agencies have responsibility for administering those various provisions. Due to the proliferation of reporting requirements and the layers of bureaucratic review, the environment itself often takes a back seat to the cumbersome process designed to protect it.
In TEA-21, Congress made a serious attempt to deal with this problem by directing the U.S. Department of Transportation (DOT) to work with the Environmental Protection Agency and federal resource agencies to streamline the review process. Based on House and Senate oversight hearings held last year, it seems fair to say that the product of DOT's work to date has not met the expectations of those members of Congress who drafted the statutory provision. We still do not have a review process that ensures environmental concerns will be raised early and that an appropriate time frame for action can be set and enforced.
Given the significant time and expense involved in the current environmental review process, we urge Congress to renew its effort at reform. Specifically, we encourage you to consider giving states the opportunity to play a greater role in interacting with federal resource agencies and developing the necessary environmental assessments or impact statements. In addition, we believe Congress should designate transportation officials as the final arbiter of the "transportation purpose and need" of a proposed project and give those officials authority to set appropriate deadlines for comment by federal resource agencies. We believe these reforms would expedite the review process while fully protecting the environmental resources that may be affected by a proposed project.
It is worth noting that the economic benefits attributable to improvements at all 167 of the nation's worst bottlenecks would be increased by $30.2 billion if the time for completing the projects could be reduced by as little as three years, according to Saving Time, Saving Money. Since most of those improvements would require the preparation of an environmental impact statement, a successful program to expedite the environmental review could, in fact, reduce the typical review time from the current five years down to two years or possibly less. In so doing, Congress would not only have improved mobility and reduced fuel consumption but also reduced tailpipe emissions from idling cars and made highway travel significantly safer.
Ethanol's Impact on Highway Improvements
Mr. Chairman, if Congress focuses on eliminating bottlenecks to reduce congestion and save fuel, and even if the environmental review process is streamlined in order to expedite transportation improvements, those projects will still cost money. No one knows better than the members of this committee that the federal funding for such improvements comes solely from taxes paid by motorists and deposited in the Highway Trust Fund.
Today, gasoline is taxed at 18.4 cents per gallon and diesel at 24.4 cents. Gasoline blended with ethanol, however, is taxed at a lower rate, resulting in a revenue loss to the trust fund and a corresponding decrease in federal funds distributed to the states for highway improvements.
Last year, this committee considered and approved legislation, S. 2962, that would have phased out the use of methyl tertiary butyl ether (MTBE) in gasoline, simultaneously establishing a nationwide renewable/alternative fuels program, essentially mandating a large, new market for ethanol-blended gasoline. Given the dramatic adverse effect that such legislation would have on funds available for road safety and congestion relief projects, The Highway Users wrote to all Senators expressing our strong opposition to the bill.
We understand that similar legislation may be introduced in this Congress, so I am taking this opportunity to reiterate a couple of points from our analysis of last year's bill. In addition to the revenue loss resulting from the lower tax rate on ethanol, a portion of the tax that is imposed on ethanol-blended fuel is deposited in the General Fund rather than the Highway Trust Fund. Last year, the General Fund diversion combined with the tax subsidy cost the trust fund $1.224 billion in lost revenues. If S. 2962 had been enacted, the mandated ethanol market would have substantially increased the sale of ethanol-blended fuel. By 2007, when the current ethanol tax subsidy expires, we estimate the trust fund's total subsidy to ethanol would have been $2.465 billion annually.
With the highway funding guarantees of TEA-21, lost tax revenues attributable to ethanol-blended fuel will inevitably reduce the amount of highway funds distributed annually to the states. The loss of highway funding means less money will be available for projects to reduce congestion and conserve fuel.
I want to commend you, Mr. Chairman, for taking the lead last year in addressing part of this problem. In a colloquy with other members of the committee, you suggested that the portion of the ethanol tax that is currently deposited in the General Fund should be transferred to the Highway Trust Fund, and other members agreed to support such an effort. We strongly encourage you to pursue this course at the appropriate time, and we look forward to working with you to accomplish that goal. I would note, however, that even if all the tax currently imposed on ethanol-blended fuel is deposited in the Highway Trust Fund, the trust fund will still be losing as much as $2 billion per year if Congress mandates a national market for ethanol while maintaining the trust fund subsidy.
Mr. Chairman, these issues are of great importance to taxpaying motorists across the country. I appreciate this opportunity to testify, and I will be happy to answer any questions that you or other members of the subcommittee may have.