Shrinking oil supplies and economic uncertainty have plunged the passenger transportation industry into a state of flux, but amid upheaval lies opportunity, as advances in fuel efficiency and urban design alter the way we live, work and travel.
UC Irvine economics professor Jan Brueckner will address these topics as part of the 2008-09 Social Science Dinner Club series Wednesday, June 17, at the University Club.
Here, as a prelude, Brueckner answers questions about the impact of rising oil prices, the future of commuter rail in California, the crumbling American auto industry, and airline fees:
Q: As oil reserves dwindle, what major changes do you foresee in the way people live?
A: With less oil available, oil prices – and therefore gasoline prices – will rise, and I expect that people will shift to smaller, more fuel-efficient cars and probably move closer to work. The latter effect will limit urban sprawl to some degree. People living closer to their jobs will ease traffic congestion, but it’s not clear whether mixed-use development [combining residential and commercial structures] would help much in this regard. A more effective path would be employment decentralization, in which the jobs are closer to residential areas.
Q: Do you think California will ever have a high-speed rail system comparable to that of Europe and Japan?
A: It is possible, but the great uncertainty is the level of ridership. For such a system to be successful, it would need to attract a lot of passengers. While there’s no reason to think this won’t occur, one can’t be sure that Californians would give up their airplane seats and cars to ride on the train. In November, voters approved a $10 billion bond measure [Proposition 1A] to build high-speed rail between Southern California and the Bay Area, but it’s clear the state cannot sell such bonds in the current fiscal situation.
Q: How do you explain the steady decline of the American auto industry?
A: In my view, the main problem has been the production of mediocre, unappealing cars. Labor costs have been higher for U.S. companies than for the competition, so companies have to skimp on quality to sell a car for the same price as Toyota. There also is a culture of mediocrity contributing to the production of bad cars. For true recovery to occur, automakers must change their corporate cultures and strive to make an excellent product, even when the bankruptcy process helps reduce their labor costs.
Q: Travelers often complain about airlines’ cost-cutting measures, but you believe these changes benefit consumers. Why?
A: People care most about airfare, and they’d rather not pay higher fares to cover the cost of services they may not use, such as checked baggage, or don’t like, such as airline food. It’s better to charge separately for these services so passengers who want them can pay directly.