US Energy and Transportation policy fail? The average American spends about 2 to 2.5 hours per day in a car. This is about 15% of their waking hours. For sure some work can get done in the car, but lets hope not too much, considering the safety of this. The point is, that this is very inefficient use of time and is a drag on American productivity. But beyond this, are there other costs to the productivity and economic growth?
Let’s take a look at the energy costs of the love of Americans – the automobile. Gasoline is relatively cheap compared to the rest of the world in the US (around $3.5 per gallon) – click here for the full chart by country. It is mostly half price compared to other countries, mostly due to the tax levied in order to fund transportation infrastructure projects. But does this make sense? Data seems to suggest yes. Americans spend around 3% of their income on this cheap gas. It’s not so cheap when looking at the other countries with the high cost of gasoline, in terms of their incomes – click here – it’s nearly half the US rate. So the US consumer pays 1/2 the price for gasoline, but still costs them double in terms of the percent of their income. Don’t forget as well, the average American car sits parked 95% of the time. Very poor efficiency.
One may make the argument that it is different in America due to the distances for any such grand plan for better infrastructure (such as high-speed rail and other mass transit systems). But the reality is that the urbanization of America, like in the rest of the world, is accelerating. Besides, nearly 40% of all Americans live near a coast line. Another issue is the architecture of the cities – they are not conducive to mass transit systems. Perhaps now that America is on the start of another housing boom, now is the time to rethink how America builds its cities. As a plus, the jobs created with the build out and maintenance of such systems and new city architectures, even subtracting out loss of jobs in the current transportation systems, it would still be an enormous boost in growth, not just productivity gains.
If America would innovate with its energy/transportation policies and infrastructure projects, it could go a long way to spur growth and jobs. As China builds, America sits, makes war and squabbles. But of course this would require a culture of working together and smart thinking. Unfortunately there is an entrench interest of the current players in these sectors to not change. Their influence is simply too strong in the US government to change. It is the cost of money corrupting politics. It will require leadership to change all this … sadly I am not hopeful, as this is missing today.
P.S. Americans spent 2.5 hours in their car today? This morning, I walked down to the port to have my latté (watching the boats and birds – reading the paper on my iPhone to get ready for the trading day), did a little shopping next door for some fresh melon to eat for lunch and then wrote this blog. Quite leisurely. In the mean time my highly productive American friends just got to work all stressed out ready to start their work day. Oh crum … I forgot to start my car last weekend to make sure it still works – I may need it next month. Old habits die hard … 😉
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