Soaring Petrol Costs Are Forcing People on to Public Transport

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Quite a good article in the Herald on Sunday today. I do hope central Government takes note of the headline – at the moment they seem to think building more roading capacity is the appropriate response:

Soaring petrol costs are forcing people on to public transport in record numbers.
Bus companies report a spike in patronage since 91 unleaded fuel hit $2 a litre in February and passengers have told of having standing room only on their daily commutes.

The increase has been particularly big in Auckland but repeated in other major North Island centres.

Ritchies bus company director Andrew Ritchie said there had been a 10 per cent growth in passengers over the past year, with the trend gathering pace in recent months.

“There’s no question that it’s on the increase. We’ve never been loading as heavy. We certainly noticed it once we got to March.”

He said the “psychological trigger” of petrol prices topping $2 a litre had driven people from their cars.

His company was in talks with Auckland Council to put more buses on the Northern Express route along the Northern Busway to meet demand.

“Our growth has exceeded our estimations so we’re playing catch-up at the moment…”

If the EPA Won’t Question Roading Economics, Who Will?

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Last Friday the CBT made our representation to the Waterview Board of Inquiry , which is being run by the Environmental Protection agency.

The transcript is here, and it has a quite revealing exchange with myself and Judge Newhook.

It is revealing because clearly the Environmental Protection Agency does not see it’s role to question or check whether the economic benefits of roading projects are actually realised or not. But the question is if the EPA won’t question the economics of roading projects, who will?

The BOI as I saw it was more interested in mitigating the environmental damage the project will create and taking the economics of the project as a given. It is frustrating to think that the Board may not give any consideration to the question of “is the project worth it?”


Q. Mr Pitches can you just help me with something here?

A. Yes.

Q. How do you think, in a practical sense, we could gain reassurance from a model or a document that doesn’t yet exist?

A. The – a little bit further on I make a recommendation about how you can evaluate projects after the fact and compare that with the model, and that would suggest whether the model is consistent with the actual result.

Q. You are not suggesting that after the motorway is built there is an assessment of the thing against previous predictions?

A. Yes.

Q. And if it doesn’t stack up we rip the motorway up?

A. No, of course, by then it’s too late, but what we are suggesting is that if this project is modelled on a concept that there is a benefit of 1.2, and that’s the sole basis for this project proceeding, so what we are recommending, not just for this project, but for any motorway project, is if that is the case, it would be wise to do a post-implementation review to ascertain to ascertain if those benefits were met.

Q. But perhaps I should listen to you and then argue, but I will let you know what I’m going to ask you, and it’s this. What business is it of ours as a Board to impose a condition that there be some future economic study, ex post-facto the project, one supposes to inform future decision making. Isn’t that more a matter of National policy, isn’t that something you should be talking to the Minister of Transport about?

A. It is actually, yes.

Q. And you probably are?

A. Yes.

Q. Maybe, if you are not a lawyer, you may not be able to answer the point,

30 but I’m just wondering what business we have to direct that there be future academic or other – economic or other academic studies that might inform future decision making outside of this project. This hearing’s about this project.

A. Sure I understand that. Mr Arbury has a few comments on that.

Q. Thank you.


In response to that matter I think the concern that the Campaign for Better Transport has is that often this hasn’t happened in the past and this is an opportunity to require a post-construction audit. Obviously it’s up to the Board to decide whether that’s appropriate or not or in the scope or not.


Or indeed whether it’s within our legal jurisdiction Mr Arbury.


Yep, yep.


That’s what’s troubling me a bit.


Sure. No I certainly understand that, we’re just suggesting the possibility.


The desirability. Okay, carry on.

Government has No Plan for High Oil Prices

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During Question Time in Parliament last week, it sounded like the Government accepted that it had a problem it should be dealing with.

Gareth Hughes: Does he expect—as many commentators expect—that the next decade will see continuing oil price spikes?

Hon BILL ENGLISH: It is possible. That is why, if we are to expect continued instability in oil prices, we need a resilient economy that is able to adapt quickly both in a straight economic sense and in terms of how people live their lives

But then, total logic failure! :

Gareth Hughes: Why does New Zealand not have a strategy to reduce our current vulnerability to higher oil prices, as many other countries do?

Hon BILL ENGLISH: People are pretty sensible. When they see prices going up, they start thinking about whether they want to continue with their energy-intensive business or lifestyle. As it happens, over the years New Zealand, as I understand it, has become less energy-intensive in its production, which is a trend that will probably continue if oil prices keep going up.

If “people are pretty sensible”, then why can’t the Government be “pretty sensible” in it’s spending? As oil prices become increasingly unstable and inevitably rise over the long term, would it not be “sensible” to have some kind of risk analysis done for the $10bn being spent on increasing the capacity of the state highway network?

Gareth Hughes: How is spending $10 billion on new motorways reducing our vulnerability to higher oil prices?

Hon BILL ENGLISH: Spending on the motorways creates a more efficient traffic system whereby commuters get better value out of what they invest in their cars, bus fares, and petrol. We are keen to make sure we finish the current roading infrastructure investment because, despite the earthquake, it is important for New Zealand’s long-term productivity and standard of living.

Taken to an extreme, by this logic then if petrol hits $10 a litre then increasing state highway capacity will have even more benefit. However, as the song goes, what good is a highway with no one on it?

Gareth Hughes: For Kiwis who are struggling at the pump at the moment, how will the $10 billion the Government is spending on motorways help Kiwis who start walking or cycling and who flock to the buses and trains, as large numbers did in 2008 during the last oil shock?

Hon BILL ENGLISH: It will help in two ways. It means that when they catch the bus it will actually spend more of its time travelling than sitting at the traffic lights. Buses are the most common form of public transport, and they need efficient roads to be effective. They cannot be run on railway tracks. It is the same with cars.

The backbone of our public transport network is rail. It has higher capacity, more attractive and forms the “rapid transit network” of Auckland.  Buses may be common, but on a passenger-kilometre basis rail represents almost half of transport trips in Auckland.  Given a choice between catching a train or catching a bus between any two points, most would choose the train every time.

Gareth Hughes: Will the Minister finally support an inquiry into how New Zealand can best protect its economy from high oil prices?

Hon BILL ENGLISH: Probably not. When we talk about strategies to deal with high oil prices, we see that the fact is that the best strategy is for people to see the price signals and change their behaviour accordingly. The Greens understand that strategy because it is the theory and practice behind the emissions trading system, which is precisely about sending a price signal to people, although in that case it is about carbon usage.

The ETS tax on petrol is 3 cents a litre.  How should people respond to this price signal?  For many there aren’t any alternatives. The Government is not responding to the price signal and is failing to invest in alternatives to roading, so what is the point of the ETS?

Waterview – What Is The Risk?

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The Campaign For Better Transport appeared before the Board of Inquiry for the Waterview motorway project.  A copy of our representation is here, but key sections are:

The CBT remains opposed to the project in its current form, as we consider it does not contribute to a more sustainable transport future for Auckland.

We also consider that many of the project’s supposed benefits have not been proven by NZTA’s evidence. Therefore, under section 5 of the RMA the ‘balancing act’ – outlined succinctly in paragraph 103 of NZTA’s legal submissions – has not been sufficiently met.

Furthermore, none of the supposed benefits have been evaluated in the context of rising fuel prices. Consideration of project risk is completely absent from NZTA’s evidence.

The current escalating petrol prices are a real risk to the economic viability of the project in our opinion:

The rebuttal evidence of Mr Tommy Parker, on behalf of NZTA, notes that the project’s ‘cost-benefit ratio’ (BCR) varies, according to the transport model used and whether or not wider economic benefits are included or not (paragraphs 36-40). Under the ART2 model the project enjoyed a BCR of 2.1: that is, the $2 billion invested in the project was estimated to generate $4.2 billion of economic benefits (mainly in the form of travel time savings) over the lifespan of the project.

However, in April 2010 the (supposedly new and updated) ART3 model was used to analyse the benefits of the project, and its BCR reduced to 1.2. That is, for the $2 billion spent on the project, the economic return was now only calculated to be $2.4 billion. It is unclear what happened to the other $1.4 billion in benefits, whether they ever existed or not. Nowhere in NZTA’s evidence, to the CBT’s knowledge, is this issue fully examined…

While the NZTA may have come up with an arbitrary BCR value to aid guidance of project options, it has conducted no risk assessment, which would be standard practice in the commercial world when considering a $2bn investment.

Since we made our submission in October of last year, petrol prices have risen from $1.82 per litre to $2.16 today. Based on the experience of 2008, this will lead to reduced private vehicle trips and increased pressure on the public transportation system.

Given that there is a statistical base for modelling the effect of petrol price increases, we find it negligent of NZTA not to produce risk scenarios for petrol prices of $2.50, $3.00 or even $5.00 a litre. There must surely be a price level where the project is no longer economically justified, and we put it to the Board that consent for the project should only be granted once this price level is known.

We conclude:

The CBT considers there are fundamental questions about the project’s justification that remain unanswered. However, we seek to narrow the matters outlined in our submission down to three particular matters:

- That NZTA should be required to conduct a risk analysis for the project with regard to the price of fuel, and determine the price level where the project no longer becomes economically viable. This will help inform the Board to make an assessment on the likelihood of that price level being reached.

- Should approval be granted, that NZTA should be required to construct (potentially in conjunction with Auckland Transport) a cycleway between SH20 and SH16, above the tunnel section of the project.

- Should approval be granted, that two additional transport related conditions be applied to the consent. These are as follows:

  • That NZTA be required to undertake an “audit” of the project’s benefits at various dates post-construction to help inform the economic justification of future transport projects.
  • That NZTA be required to work with Auckland Transport to find constructive ways of improving bus, cycling and walking infrastructure along main arterial routes that will experience reductions in traffic numbers as a result of the project, to ensure the project generates ‘modal choice’ and to ensure the traffic reduction benefits are ‘locked in’.

Cars at the End of an Era

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Friends of the Earth is launching what promises to be an “unpopular book” on Friday 11th March, 7:30pm at the Leys Institute Lecture Room, St Mary’s Bay Rd.

Cars at the End of an Era : Transport Issues in the New Zealand Greenhouse is a new book by John Robinson.

Could we bear to rediscover more socialised forms of transport? History, oil prices, climate change and the technical limitations of alternative vehicles to the fossil-fuel car are, according to John Robinson, moving us towards an uptake of public transport not known for eighty years. The backbone of the system will be improved rail and coastal shipping.

But the horror of losing the car! Can it be survived? Will we be able to even breed without it?

Join us in a drink to launch an unloved argument whose time has come!

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