The True Cost of Driving

Some smart-growth advocates argue that, even though housing costs more in cities than in suburbs, transportation costs in cities are so much lower that the total cost of housing plus transportation is lower. The problem with these claims is that they are based on average transportation costs.

As Steve Polzin, a transportation researcher from the University of South Florida, points out, low-income people spend a lot less on transportation than high-income people. He estimates the people in the top 20 percent spend five or six times as much on driving as people in the bottom 20 percent.

While wealthier people do drive more than low-income people, they don’t drive five or six times as much. Instead, much of the difference in expenditures “lies in the very meaningful differences between new car ownership and the reality that much of America isn’t driving new cars with high depreciation levels.” In other words, only a few people actually buy cars new and then replace them as soon as they’ve paid them off (which is the assumption that AAA makes in its annual cost-of-driving survey).

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People are responding to the current recession by keeping their cars longer, says Polzin. The average age of autos is up to 10.8 years, which means autos survive, on average, 21.6 years. That’s up from about 18 years when I wrote Gridlock. Polzon also notes that the number of personal cars has declined from 236 million to 230 million, though we’ll see how long that lasts when the recession ends.

In any case, Polzin is correct that people have many ways of reducing the cost of driving. People should be allowed to make their own choices of where they want to live and how they get around without the government prodding them in one direction or another. As Wendell Cox points out, census data indicate that most people still prefer to live in low-density areas, which usually means suburbs or–increasingly–smaller cities.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

33 Responses to The True Cost of Driving

  1. metrosucks says:

    Oh boy, I just already hear the howls of rage, and if you pardon the expression, the hand-waiving. Especially with this sentence:

    As Wendell Cox points out, census data indicate that most people still prefer to live in low-density areas, which usually means suburbs or–increasingly–smaller cities.

    After all, revealed preferences??? What’s that!!! Our fifty year plan says people will all move back to downtown, oil will run out in five years, and the suburbs is the exclusive domain of fat, tea-party white people who irrationally hate “big gubmint”.

  2. JimKarlock says:

    I looked at this back in October 2011 and came up with:

    On average, households making $10-$15,000 per year spend about $2765 per year owning & operating one car. They own an average of 0.9 cars and spend an average of $7.58/day, or $230/month. A monthly transit pass in Portland Oregon USA costs $92. The decision becomes spend $92/ month on slow, inconvenient, transit or an additional $138/mo to have your transportation waiting at your front door for a faster trip.

    On average, households making under $70,000 per year spend about $3121 per year on owning a car.

    On average, households making above $70,000 per year spend about $4304 per year owning & operating one car. They own an average of 2.7 cars.

    Full details are at: http://pdxtransport2.wordpress.com/2011/10/15/what-does-it-really-cost-to-own-a-car/

    Thanks
    JK

    • the highwayman says:

      An extra $138 a month can be a lot of money for some people, so what you’re more likely to see is a mixture of sharing a car and regular transit use.

      • JimKarlock says:

        the highwayman: An extra $138 a month can be a lot of money for some people, so what you’re more likely to see is a mixture of sharing a car and regular transit use.
        JK: It can also be tiny amount of money to save a couple hours a day by avoiding transit. After all it is under $5/day. Less than a lot of people pay for a cup of coffee.

        That low cost plus the advent of driverless cars will be the next big blow to transit ridership as the handicapped and underage will be able to “drive” their own cars.

        Thanks
        JK

      • Craigh says:

        An extra $138 a month can be a lot of money for some people, so what you’re more likely to see is a mixture of sharing a car and regular transit use.

        Oh, no. The independence of owning one’s own car may well be worth $138/month to most people (apparently, it already is.)

        Value is subjective. That is always ignored by the mass transit advocates.

        • Andrew says:

          I don’t know anything about these average numbers but they seem suspiciously low. I do know that over the past 13 years I have spent around $5000 per year just owning, financing, registering, and insuring one car which I replaced once (first a Camry, then a bottom of the line Sienna). I’ve also driven 20,000 miles per year, which equates roughly to 1000 gallons of gas, 3 oil changes, 1/2 a set of tires, one brake job, and 1/3 of a tune-up. If we say gas has averaged $2 per gallon, and we add in other miscellany like AAA membership, wiper blades, the periodic new battery or lit bulb or gizmo in the engine, and the like, its about $3000 per year to operate and maintain.

          My $8000 per year real life experience for owning one car is much higher than all the numbers thrown about here. Even if we were to discount buying the second car, this would only reduce the annual cost by around $2000, but the maintenance bill would definitely have gone up. And of course fuel prices have increased dramatically to run up my real operating costs another $1500 per year.

        • the highwayman says:

          A house hold can also save a lot of over head expenses by not owning too many cars.

          I do drive, though I mostly get around by walking and suburban train.

        • metrosucks says:

          Value is subjective. That is always ignored by the mass transit advocates.

          In fact, it’s ignored directly below your post, by Andrew.

          I spend over $7000 a year just on gas (approx 50,000 miles a year). So what? It gives me the ability to do my job (IT purchasing & sales), and the freedom to travel on my own schedule. Andrew, it’s great that life in Philly is just how you want it, without an evil car, but if the rest of us wanted that life, we’d live in Philly too! So stop advocating policies that directly result in planners trying to Manhattanize the rest of our living space

        • JimKarlock says:

          Andrew: I don’t know anything about these average numbers but they seem suspiciously low.
          JK: Feel free to look at the referenced federal government data sources and point out any problems.

          Andrew: If we say gas has averaged $2 per gallon, and we add in other miscellany like AAA membership, wiper blades, the periodic new battery or lit bulb or gizmo in the engine, and the like, its about $3000 per year to operate and maintain.
          JK: AAA membership suggests that you are upscale, instead of typical American.

          Andrew: Even if we were to discount buying the second car, this would only reduce the annual cost by around $2000, but the maintenance bill would definitely have gone up.
          JK: If I read this correctly, you just said that your second car only cost you about $2000 per year. That’s a hint as to how many people own a car for costs MUCH lower than the transit zealots admit.

          Thanks
          JK

        • Andrew says:

          Andrew: Even if we were to discount buying the second car, this would only reduce the annual cost by around $2000, but the maintenance bill would definitely have gone up.
          JK: If I read this correctly, you just said that your second car only cost you about $2000 per year. That’s a hint as to how many people own a car for costs MUCH lower than the transit zealots admit.

          No, you didn’t read that correctly. $5000 to own, finance, insure, register breaks down to $1000 per year to insure and register and have inspected (annual and irreducible costs) and $4000 per year to own/finance over the 13 years of ownership – roughly $24,000 for the Camry and $28,000 for the Sienna all in (negotiated price, interest payments over 5 years, sales tax, dealer charges). My point was that if I had never bought the Sienna, my annual price for owning the Camry would have dropped to $2000 per year because ownership would be spread over more years, but that maintenance would have undoubtedly gone up since the car would have 240,000 miles on it. And the price of gas has run costs up $1500.

          I guess the real point is that the only way you can get average costs as low as are being reported is to own the car for over a decade until it literally falls apart, and only drive it 10,000 miles per year. However, the only way for a typical family to accomplish that is to own two cars, since that average family consumes 3.5 gallons of gas per day = driving 70 miles = 25,000 miles per year.

          The other difference is that most people spend all that money just to have two adults work two jobs – its a cost of living. For me, its a cost of leisure, since I ride a train to work while mywife stays home since we don’t need to care and feed 2-3 cars and a house beyond our means.

          This is why I keep saying that an absence of rail transit leaves
          most people paying a lifetime of tribute to Detroit, Big Oil/OPEC just to keep food on the table and a roof over their head. That is not what I think of as freedom.

          JK: AAA membership suggests that you are upscale, instead of typical American.

          I’ve been AAA since college. Its what, $60 per year for roadside assistance and free maps.

          I’m not sure what you think upscale is. I’m comfortable in my very modest little 3 bedroom cottage (1600 sq ft.), and free of debt other than a small mortgage. If I am upscale, please let my wife know where the extra money is!

          I suppose because I am not a dirt poor illeducated peon wage slave enthrall to the banks for $300K in debt I am not a typical American in your mind. But why should that be the fate of most?

        • JimKarlock says:

          Andrew: I guess the real point is that the only way you can get average costs as low as are being reported is to own the car for over a decade until it literally falls apart,
          JK: First, the average car does NOT “literally falls apart” at a decade. In fact the average car on the road today is about 10 years old.
          Second, buy an older car and drive it until it really falls apart. Car payments are about half of the AAA cost of driving.

          Andrew: and only drive it 10,000 miles per year.
          JK: That is about what the average person drives (maybe 12,000)

          Andrew: However, the only way for a typical family to accomplish that is to own two cars, since that average family consumes 3.5 gallons of gas per day = driving 70 miles = 25,000 miles per year.
          JK: Why don’t you look at some real world data. You could start with the sources listed on my blog article. You will find the data source lists much of what you are simply wrong about above.

          Thanks
          JK

        • the highwayman says:

          Metrosucks; So stop advocating policies that directly result in planners trying to Manhattanize the rest of our living space.

          THWM; He’s not. Though you want tell other people how to live their lives.

        • Andrew says:

          Andrew: I guess the real point is that the only way you can get average costs as low as are being reported is to own the car for over a decade until it literally falls apart,
          JK: First, the average car does NOT “literally falls apart” at a decade. In fact the average car on the road today is about 10 years old.
          Second, buy an older car and drive it until it really falls apart. Car payments are about half of the AAA cost of driving.
          Andrew: I said OVER 10 year, not 10 years.

          The average age =/= the median age. Look around out there. Half the cars on the road are not pre-2001 models.

          I have previously owned older cars that literally fell apart – as in the suspension and wheels falling off when the car was pulled onto the tow truck. That car was 13 years old. The next car, which was in slightly better shape when junked was 12 years old.

          Andrew: and only drive it 10,000 miles per year.
          JK: That is about what the average person drives (maybe 12,000)
          Andrew: If the average person drives 12,000 miles and is in a family with 2 cars, they drive 24,000 miles per year, thus ….

          Andrew: However, the only way for a typical family to accomplish that is to own two cars, since that average family consumes 3.5 gallons of gas per day = driving 70 miles = 25,000 miles per year.
          JK: Why don’t you look at some real world data. You could start with the sources listed on my blog article. You will find the data source lists much of what you are simply wrong about above.
          Andrew: Real world data:

          9,000,000 barrels of gas per day * 42 gallons per barrel / 105 million families = 3.6 gallons per day per family. 3.6 gallons per day * 365 days = 1314 gallons per year. @$3.5 per gallon = $4600 per year. @20 mpg = 26,280 miles.

          I really don’t need the figures on your blog, which are highly suspect. I understand where you got them from, I just think they are clearly incomplete.

          If we just add $2300 in gas (half the above for gas), $500 in maintenance and repairs, $1000 in inspection and insurance and registration, we are already over all of your blog figures for ownership costs and we have not yet (1) purchased a vehicle, (2) financed it, (3) paid sales tax on the purchase, (4) paid any annual car taxes.

          Even if the car is owned for 12 years, lets say, at $24,000 that is another $2000 per year to purchase, the finance charges are at least $300 per year on the typical car loan over the life of the car, and the sales tax is around $100 per year or more. We should also account for parking and tolls, carwashes and cleaning, and casualty and theft losses from accidents and break-ins and motor vehicle fines. Those are undoubtedly at least $100 per year more, and probably double that. All those costs add up to $6200 per car per year. And I do not know many people who keep a car for 12 years.

          Again, from my own personal experience, over 7 years my single family car (a bottom of the line minivan) has cost $29,000 to purchase and finance, title/license, and for sales tax, $10,300 to insure and register, $16,000 to fuel, $5600 to maintain and repair, $2000 in tolls and parking, $700 in fines for speeding, $700 for AAA for my wife and I. That works out to $64,800 for 127,000 miles or 51 cents per mile, and it also works out to $9,250 per year. Yes, this number will drop slightly the longer I own the car, but not by much. Annual operate/own costs are around $6,500 per year with $3.50 gas. Diluting the acquisition costs over 12 years, for example, drops them to $2400 from $4100. But gas alone going to $3.50 per gallon takes away all of that savings. The annual costs would then be around $8900, and that assumes no catastrophic losses or major repairs (for example, my neighbors, who recently plunked down $4000 on an electrical system in their truck).

          An honest appraisal of cars would also bring opportunity cost into the discussion. It is easy enough to invest your money and earn 5-7% with little risk. If you don’t buy a car, you can earn $2000 per year that way just on ownership, to say nothing of the operate/maintain costs.

          The BLS numbers you cite are frankly dishonest. They probably don’t include non-transportation costs like insurance, taxes, and interest on loans. Any honest appraisal anyone on this board were to do of their own vehicles would show costs tremendously higher than the numbers you cite, and much closer to AAA’s numbers, which are also in conformity with the IRS and GAO’s numbers. What you are really saying, in essence, in arguing that the per mile numbers commonly cited are vastly inflated is calling out the IRS and GAO for fraud, since they audit and set the reimbursible rates for use of personal vehicles on taxes and expense reports.

          I would very much like to see other’s dissection of their own ownership costs. From the sound of things, most of you will be shocked at what you spend.

          You mentioned that you think I am upscale. If I am in anyway upscale, it is only because I am only throwing away $9000 per year on one car, instead of $18,000 on two. Only owning one car saves a tremendous amount of after tax money every year.

        • the highwayman says:

          Andrew, also with some areas you have to buy snow tires and change over those tires twice a year.

  3. LazyReader says:

    It doesn’t take a genius to determine that wealthier people tend to buy more expensive cars, since they buck the average it only takes a few wealthy drivers to increase the average. If you statistically eliminate people who make “X” amount of money, the averages are decreased. While I doubt people own 2.7 cars, simply getting rid of one or downgrading to something smaller could save you a ton of cash.

    • JimKarlock says:

      LazyReader it only takes a few wealthy drivers to increase the average
      JK: That is why my citation is nice – it separates by income level. (Was LazyReader too lazy to check the citations?)

      LazyReader While I doubt people own 2.7 cars, simply getting rid of one or downgrading to something smaller could save you a ton of cash.
      JK: Of course that 2.7 cars figure is an average. It applies to those making over $70,000 per year, so they probably have the extra money.

      Thanks
      JK

  4. Dan says:

    Sigh. Where to begin?

    The poor drive because they live far out and transit is insufficient to their need to work 2-3 jobs. We know they need cars to survive, because working 2-3 jobs means you can’t wait for transit.

    Wendell Cox misleads when he wishes that people prefer to live far away – people must live far away to afford less-desirable housing – we know (from several of us stating this every time the misleading assertion pops up here) that survey after survey tells us that the majority of people actually prefer to have more nearby services in a walkable environment – the opposite of far-flung suburbs.

    The working poor spend a lot less money than the rich, but the key that Randal “forgets” to mention is the percentage of income spent on transport is much, much higher: However, among the working poor using their own vehicle, half spent at least 21 percent of their income on commuting. Now THAT’s freedom, yessir!

    DS

    • sprawl says:

      The poor that choose cars, do it because that is what their choice.

      That is freedom!

      • metrosucks says:

        When Danny Boy read “freedom”, I think his head exploded!

      • Dan says:

        Their “choice” is likely because there is no other “choice” so a choice between A and A is neither a choice nor Fraydum. No need to pretend otherwise.

        HTH.

        DS

        • metrosucks says:

          Yes, the planner buzz word, “choice!” (a choir of sexually ambiguous angels sing!). Choice between what most reasonable people use, an affordable car or the affordable bus, or the so much better choice, wasting billions on gold plated light rail and TOD so a few rich developers and the people living at the TOD can benefit. But wait, doesn’t Danny Boy hate the rich? Oh well, we’ll deal with the schizophrenic part of his vision later, boys & girls!

        • the highwayman says:

          We’re not for the building of gold plated systems.

        • sprawl says:

          The choice is between autos, carpooling, cab, transit, bikeing, and walking.

          The biggest hurtle is transit and the cabs systeem, are a government monopolies, that restricts and outlaws private competition.

          The poor are free to choose what works for them best for them, under the government and planners rules and restrictions.

    • JimKarlock says:

      Dan: The poor drive because they live far out and transit is insufficient to their need to work 2-3 jobs. We know they need cars to survive, because working 2-3 jobs means you can’t wait for transit.
      JK: Thanks for admitting that transit is a poor substitute for having a car.

      Dan: Wendell Cox misleads when he wishes that people prefer to live far away – people must live far away to afford less-desirable housing
      JK: Yep. Costs do matter. Too bad planners can’t grasp that concept.

      Dan: – we know . . . that survey after survey tells us that the majority of people actually prefer to have more nearby services
      JK: Of course they do. Until they find out that means they can’t have a decent sized house or back yard. And until they realize that density always seems to cost more. The reality that escapes planners is that people are different – some willingly pay for “nearby services” others would like tham, but have other priorities for spending the money. Too bad planners don’t live in the real world.

      Dan: in a walkable environment – the opposite of far-flung suburbs.
      JK: Oh, yes, another great charette question (ever notice how the planners just love those European things from a hundred years ago). The answer is that planners are too stupid to realize that people would like to be able to walk to a Walmart and a Target and a Home Depot and a JC Pennys and an Office Depot and a McDonalds and a Sherries and a Best buy and a …and a …and a …and a … all within a 5 min walk. If planners actually asked real world questions they would find out what fools they are, like the planners in Milwaulkie Oregon did last fall. http://vimeo.com/39908899

      Dan: The working poor spend a lot less money than the rich, but the key that Randal “forgets” to mention is the percentage of income spent on transport is much, much higher:
      JK: Of course you forget that a lot of so called low income people aren’t really poor. And the cost of a car is only the cost of a cup of coffee a day more than transit and that opens a vast world of travel options.

      Dan: However, among the working poor using their own vehicle, half spent at least 21 percent of their income on commuting. Now THAT’s freedom, yessir!
      JK: And the other half? Why did you pick only half? Are you hiding something, like, maybe the average under $10,000 income person spends only 12% of their income an cars (see original reference) and if they gave up their car, their income would drop to the point that transit would cost more in percent terms. Planners try to cover up the fact that cars increase job opportunities and thus increase incomes.

      Planners also cover up the fact that cars cost society less than transit because they cost less per passenger-mile, are faster and save energy. As I have often said planners are wrong about most of their major claims – they are fools.

      Thanks
      JK

  5. metrosucks says:

    Who do ya believe? Who do ya believe, I ask? Do you believe the millions of people in the Seattle, and almost every other metro area, who largely live in suburbs, some close to downtown and some far away, or do you believe planning’s fair haired boy, Danny? I know! I’ll ignore my own eyes and census data, and just believe Danny Boy, who is so Much Smarter than me. After all, he’s almost got a Master’s Degree! I can’t claim that.

    The poor drive because they live far out and transit is insufficient to their need to work 2-3 jobs. We know they need cars to survive, because working 2-3 jobs means you can’t wait for transit.

    Solution? No doubt, it involves spending billions on mixed-used TOD, light rail, and high speed rail.

    Wendell Cox misleads when he wishes that people prefer to live far away – people must live far away to afford less-desirable housing –

    And the planner lies again! How do we know when he’s lying? Usually, his lips are moving. Wendell Cox did not say that people prefer to live far away; he said people prefer to live in low density, which is, regardless of the hand-waiving, absolutely true. Even our own Planner Boy lives in low-density, relatively unwalkable suburbia. And I do love how he conflates “far away” with “less desirable”. You see, in Danny Boy’s world, anything that’s not under a mile from downtown and the light rail is immediately worthless.

    we know (from several of us stating this every time the misleading assertion pops up here) that survey after survey tells us that the majority of people actually prefer to have more nearby services in a walkable environment – the opposite of far-flung suburbs.

    We know no such thing; what we do know is that the surveys you refer to deliberately state the polling questions in a deceptive manner to imply that people prefer smart growth. Which they don’t. Many people in the suburbs do walk to local stores, or take the bus. Many also drive. Planners are bothered by the fact that people choose (there’s that hated word for planners!) to hop in their private, comfortable car and drive a mile to the local, suburban Fred Meyer, where a full selection of affordable goods can be had.

    Ironically, it is downtown Seattle where full-service grocery stores are farther apart than in suburban Renton.

  6. Andrew says:

    The average age of autos is up to 10.8 years, which means autos survive, on average, 21.6 years.

    Nope. Numeric fallacy.

    The average age of my dad, my brother, and my sons is 27. That doesn’t mean the average man in our family lives to be 54.

    Polzon also notes that the number of personal cars has declined from 236 million to 230 million,

    At annual sales rates, that is closer to an average life of 14 years, which I suspect comports much more closely to most people’s experience.

    though we’ll see how long that lasts when the recession ends.

    The recession ended in 2009. The economy has been growing for three years and its size has never been larger as measured by GDP.

    What alternate universe are you living in?

    • Sandy Teal says:

      Andrew – you must work for Microsoft, because your advice that the recession ended in 2009 is entirely technically correct yet it is completely worthless as a practical matter. 🙂

    • JimKarlock says:

      Hey Andrew,
      That 10+ year number is from actual survey data, not some BS calculation.

      Thanks
      JK

      • Andrew says:

        JK:

        I’m not disputing cars are 10 years old on average. I am saying that doubling that to obtain an average life of a car is a numeric fallacy.

        The lifespan of cars obtained by doubling the average age is skewed by numerous “classic” cars up to 100 years old, the inclusion of pick-ups used for work to be included and their ability to beextremely long lasting, and by the recent dip in buying a few years ago during the recession – i.e an ever growing overhang of geriatrics and a dearth of youngsters that has not been fully corrected. Its also skewed by numerous older cars which are mostly just sitting around unusued but have not yet been scrapped. I’m sure we all know people with some clunker in their driveway or barn that they just don’t have the heart to part with yet.

  7. MJ says:

    I’m glad Polzin made this distinction. The purveyors of the H+T index, and other pseudo-science, have been blind to the implications of this finding. I also find it pretty absurd that, despite the fact that they allow for different vehicle models, the AAA driving cost folks don’t consider anything other than current model year vehicles, which exaggerates depreciation costs for the majority of owners.

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