At Freakonomics, a Q&A with Christopher Steiner, author of $20 a Gallon.
Haven’t read the book, but my present question has only to deal with an issue raised in the Freakonomics Q&A: the energy economics of school buses. Freakonomics asks how higher fuel prices would affect the way children get to school. Steiner replies:
How you live largely depends on where you live. For people who live in walkable communities, life at $8-per-gallon gas will be far easier. Their kids will just hoof it.
What most kids won’t be doing, though, is riding a school bus every morning. Just last year, when gas was $4, school districts across the country made huge cuts to busing programs. Maryland’s Montgomery County, outside Washington, buses 96,000 children to school every day, burning 3.3 million gallons of diesel fuel a year. When the price of gas goes up a penny, the county is out another $33,000. So the price of that program would increase nearly $20 million in a world of $8 gas. School board officials last year authorized Montgomery [County]’s superintendent to increase the maximum walking distances for high school students, which were set at two miles. Generally, students who live within the limits are expected to find their own way to school.
In a future of $8 gas, those limits will go up across the country. In fact, it’s possible that places such as Montgomery County would cut busing almost completely. Capistrano School District in California’s Orange County dumped 44 of its 62 bus routes when gasoline spiked, saving the district $3.5 million.
We led me to wonder about how the Montgomery County change affected the overall fuel consumption and fuel expenses for residents in the County. Say the maximum walking distance increased from 1 mile to 2 miles. I suspect that many of the affected students taken off of the bus system switched to private automobiles. So instead of a 30-student bus trip, assume some new walkers, some carpoolers, and so single-vehicle trippers, and probably an additional 10 to 15 vehicle trips twice a day for each bus eliminated.
Obviously the change will reduce the fuel use and total costs of the school district and increase the fuel use and costs of the student’s families. My untested hypothesis is that the increase in fuel use and fuel costs of families will exceed the savings in fuel and fuel costs to the school district — i.e., the policy change reduces overall economic surplus — and my question is, “Why can’t families and school systems capture the potential gains from trade available by covering the additional school bus fuel costs?”
[MAKE YOUR PLANS NOW: Steiner offers career advice a later in the Q&A: “When gasoline reaches $8 per gallon, energy-related startups will form the new craze. That’s where the hot jobs will be. IPO’s, wild sums of venture money, 23-year-old C.E.O.s — all of it will be resurrected from that movie called 1999.”]