The Rising Cost of Cars

June 15, 2011 by · 10 Comments
Filed under: Car Stop 

The average price of a new car is now almost $30,000, and the average annual cost of a car is about $8,000. For Heartland middle class families, those are substantial items. Any family that can reduce its need for automobiles by using public transit stands to save big.

But automobiles inflict another cost we seldom think about: reduced growth in our national economy, which in turn means fewer new jobs. The May 12 Financial Times (my contender for the world’s best newspaper) reported that:

The U.S. Trade Deficit rose by $2.8bn to $48.2bn in March, in an indication of how surging oil prices are holding back the economy.

Greater imports of oil and a $6 increase in the price per barrel added $5.8bn to the deficit. That overshadowed a solid 4.6 percent rise in imports. . .

. . . net trade is not adding to US growth, because the revenues are going to import more expensive oil.

Half of all oil consumed in the US is now imported and most of it goes for fueling automobiles. The costs that imported oil inflicts on us are immense. As the Financial Times noted, one is reduced economic growth. Another is a vastly excessive defense budget. The single largest chunk out of every tax dollar, 27¢, goes for defense. At least a third of the defense budget can be traced to protecting oil sources and supply lines.

When that protection leads to war, as it did in Iraq and now in Libya, costs rise further. Of all the activities a state can engage in, war is usually the most expensive. The war in Iraq has already cost over a trillion dollars, and the total cost, including care of wounded veterans, may hit three trillion. In addition, we lost almost 5,000 dead and tens of thousands wounded, many of whom are permanently disabled. Each of those represents a productive asset lost to our economy, not to mention the human cost.

How can we get out of those costs? By spending a tiny fraction of such sums to give all Americans a comfortable, attractive way to get around other than driving. Trains provide that. Restoring the intercity passenger train system we had as recently as the 1950s (not high speed rail, just trains fast enough to make the journey time competitive with driving) and the streetcar and interurban lines we had between the wars would cost some billions, but not trillions. The money would stay here, building up our economy and creating jobs, instead of being sent to places like Saudi Arabia. Average families could save thousands, sometimes tens of thousands of dollars annually because households with higher quality transit service need fewer cars.

Who should be most excited by all these potential savings? Tea Party conservatives. The centerpiece of Tea Party politics is the need to reduce federal spending while raising economic growth rates and creating more jobs. The Tea Party middle class base needs relief from the rising cost of living, which includes the cost of both cars and gas. While most conservatives will not ride buses, they will happily ride trains.

Political logic says the Tea Party should be in the lead in calling for more and better passenger rail service, in cities and between cities, while at the same time providing a constituency for keeping the costs of new rail systems down. Care to join us for some TEA?