Yup. The inheritors of wealth and other rich people get to ride fast on nearly-empty roads, and the rest of the population has to be crammed onto fewer, slower roads, causing a positive feedback loop.
Works just as intended, provided you're one of the ones who can afford it.
Snark aside, "supply and demand" fails to fairly set price when the demand is inelastic -- e.g. when people need to drive home in the snow after work, and there are limited other options. As for the toll road being built "for that purpose," remember when the government was supposed to build roads for all it citizens, not just those who could afford it?
> Snark aside, "supply and demand" fails to fairly set price when the demand is inelastic
I wish more people could peek under this hood rather than simply posthoc rationalize every price increase with "demand-supply" theory. For the concept to work, you need to have many things in "control". Therefore, I simply ask everyone who uses that argument to justify me that price that they rationalize. In other words, you can use the "demand-supply" argument for any price $60, or $100. How is $30 the actual price that demand-supply has set?
The price is set artificially. During congested periods it is set high to reduce demand for the regulated access based on the presumption that people will pay for faster transit.
So supply and demand is not setting the price, the operator is. But the operator is setting the price based on the idea that demand for the fixed supply (space in the regulated lanes) will vary based on the price charged for access. It's at least true at the limits, everyone will be willing to use the lanes if they cost $0 and (practically) no one if they cost $1000000.
The 'economic' behavior for the toll operator is to set a price that meets the various obligations set out for it while maximizing revenue.
Following the free-market analogy (for better or for worse), there needs to be an options market, where drivers can lock-in a price for the year, say $5 for that ($2 to $30) route. That way commuters can make better planning decisions. Then during periods when drivers don't exercise their right to take the express lane toll, Transurban (or the option-holders) can sell off their unused passes on-site.
As it stands now all of the volatility in transit times is externalized to the commuter.
The point of the supply/demand curve is that there is a price at which revenue is optimized.
In this case $30 is the price they've determined they will make the most money. Charge more and too many customers will drop out to justify the increase. Charge less and you're leaving money on the table.
> In 2007, VDOT finalized a long-term partnership agreement with Capital Beltway Express, LLC – a consortium led by Transurban that would design, build, operate, finance and maintain the $2 billion HOT lanes project. Transurban and its partners provided a substantial upfront equity commitment to help fund construction and financed the rest of the project through private activity bonds and a TIFIA loan. The partnership enabled Virginia to leverage private capital to translate every one state tax dollar into four dollars of transportation improvements.
>Construction, managed by Fluor-Lane, began in 2008 and the new lanes opened for business in 2012.
>In 2014, Transurban invested an additional $280 million of equity to put the project on solid financial footing following impacts of the global financial crisis. The private sector has assumed the long-term financial risk for the project, including full responsibility to pay back all project debt.
It's a ridiculous notion -- the government has the ability to raise capital far more cheaply than private capital markets, and revenue from toll-roads is one of the most reliable revenue streams that exist. It's not zero-risk, but pretty close.
It's just a scheme to move debt to somebody else's books, and make more money for various parties. It also provides fertile ground to re-direct anger from government operational incompetence or underinvestment, like plowing in such a way that you create miles of gridlock instead of doing things like pre-treating the road surface to avoid plowing during peak travel times.
That's just privatization of the government's sphere. It was still done on public lands, under the state's direction and in the state's interest. It was a deliberate choice to have someone else build it -- and allow price-gouging -- than to build it themselves.
I don't think privatized prisons charging $14/minute for phone calls is a good thing either, even if the "market" (prisoners needing to call their lawyers, and having no other options, etc.) allows it.
>If the aim of the government was to always find the price at which they could make the most money possible, we'd live in a very different place.
Exactly! And I cringe every time I hear people talk about how "if government was run more like a business" and how government would/should then make profits and ...
BS alternate side parking tickets in the "winter" when there isn't any snow nor any forecast for snow is bad enough where I live. It's just a BS alternative revenue source and crap like it would only happen more and become more asinine. "Just following orders and doing my job..."
In this case it also happens to be the point at which the road is fully utilized.
The purpose of the express lane is that you don't want congestion. So you keep raising the price until enough people bug out that it's not congested while still maximizing the number of cars going through and paying you the toll.
Your mention of "nearly-empty roads" clearly demonstrates that you neither read the article nor understand supply and demand.
FTA:
> Tolls can range from as low as $0.20 per mile during less busy times, and up to approximately $1.00 per mile in some sections during rush hour. However, rates may rise significantly above the typical range for periods of time in the event of unusually heavy congestion or a specific event like a traffic accident or lane(s) closure.
It gets expensive exactly because the road is congested.
I lived in that area for 10 years and one of the biggest problems was knowing how slow a route was before you commit to it. Any signaling in advance will make it a little better for the next people and potentially clear out sooner. There are plenty of ways around - not many good ways around normally - but based on that ~10 mile trip taking 30 minutes, suddenly those "not good" ways will become "ok" based on the times alone.
The demand for road space is only inelastic for people who drive themselves. For everyone else, choosing to share a ride with more people and accept a route with more stops is a good way to consume less road space. Express lanes make that trade-off possible.
But that's a perfect-information decision. Going to work and discovering at the end of the day that going home costs 30x as much isn't something people account for - we're losing market inefficiency because pricing information isn't available until after people make their decision.
Right. Traffic is unpredictable, and the only way to adjust for it is if far fewer people bring their cars with them in the morning so they have choices on the way back. Traffic is a choice we've made as a society, and we need to create more ways for people to opt out of it. Capping tolls just forces everyone to deal with traffic.
The solution would be for Transurban (or another party) needs to sell options to allow drivers to lock-in fares ahead of time, and if they decide not to use them, allow them to sell off the options to drivers on the spot the same-day. Of course managing this options market would be a headache.
As opposed the the situation without any express lanes, where everybody is crammed into slower roads, made even worse because none of that traffic is diverting to express lanes? Everybody is worse off, but hey, at least it's fair.
Works just as intended, provided you're one of the ones who can afford it.
Snark aside, "supply and demand" fails to fairly set price when the demand is inelastic -- e.g. when people need to drive home in the snow after work, and there are limited other options. As for the toll road being built "for that purpose," remember when the government was supposed to build roads for all it citizens, not just those who could afford it?