A Not-So-Timely Proposal

by Don Boudreaux on June 2, 2006

in Energy, Regulation, Seen and Unseen

As a means of conserving oil, Sen. Hillary Clinton wants Uncle Sam again to mandate a maximum speed limit of 55 MPH.  Presumably she’s aware that lowering the speed limit will cause us to spend more time on the roads and less time at our destinations.

But on her website, Sen. Clinton expresses concern that Americans are strapped for time: "Today’s families are often stretched thin – working to make ends meet while also trying to carve out time to care for their young children and aging relatives."

Assuming consistency across her various policy positions, we can conclude that Sen. Clinton is confident that the value of the time that a 55 MPH speed limit will force us to waste on the roads is worth less to us than oil we’ll save by driving more slowly.

Let’s explore.  Assume that the typical car on the road today gets 25 miles per gallon on the highway and that a gallon of gasoline costs $3.00.  Further assume (rather generously) that driving more slowly will increase the typical car’s fuel efficiency from 25 mpg to 35 mpg.

On highways where the speed limit currently is 75 MPH, reducing the speed limit to 55 MPH will cause a driver to cover 20 fewer miles in one hour of driving.  To travel these 20 miles at 55 MPH will take 21.82 minutes.  That is, the distance a driver covers in one hour driving at 75 MPH requires 81.82 minutes to cover while driving at 55 MPH.

At today’s average hourly wage rate for non-supervisory workers of just over $16 — but let’s call it an even $16 — this 21.82 minutes is worth $5.82.  (That is, working at a wage rate of $16 per hour, a worker will earn $5.82 in 21.82 minutes of work.)

But how much does the driver save, fuel-cost-wise, by driving more slowly?

Driving at 75 MPH (and getting 25 mpg) costs the driver $9 of gasoline per 75-miles driven. (Remember that gasoline is priced at $3 per gallon.)  Driving at 55 MPH (and getting 35 mpg) costs the driver $6.42 of gasoline per 75-miles driven.

In short, for every 75-miles covered on a highway, reducing the speed limit from 75 MPH to 55 MPH will save a driver $2.58 in fuel cost — and this assuming that the increase in fuel efficiency of the average car caused by the lower speed limit is a whopping 10 mpg.  But the resulting greater time on the road will cost a driver earning the average non-supervisory wage $5.82 worth of his or her time per 75-miles driven.

The net cost to the average worker driving the average car will, under the above reasonable assumptions, be about $3.24 per 75-miles driven.  Not a good deal, Sen. Clinton.

……

Here’s a challenge for a clever student: assume (as is reasonable) that an enforced speed limit of 55 MPH will cause the price of gasoline at the pump to fall.  By how much would it have to fall (under the above assumptions) in order to make the $$$ saved on gasoline exceed the $$$ value of the extra time spent driving?

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  • duane

    from austin tx- san antonio I have seen flow of traffic at 90mph with a state trooper in the middle of it not pulling any one over. at 90mph on the highway I got about 17mpg. at 70mph i get 20mpg. besides the cost factor. I have one question would you drive 55mph take a chance of getting ranover to save a few bucks.

  • jim

    Wrong, wrong wrong,


    What difference does 55mph vs 75mph make in a suburban area where there are stop lights space less than a mile apart and the speed limit may only be 45mph?


    The overwhelming amount of wasted gas is done in these areas, driving to and from work, school, shopping, etc. It doesn't make a difference if the car is an SUV or a hybrid. The total waste of unneeded, excessive acceleration, only to wear out the brakes by stopping hard is the drain on MPG.


    Consider this. Driving daily to work, I am passed regularly as I slow for a light, only to "catch up" to these same people waiting at the next light. In fact, I might even pass them and never put my foot on the brake. Also consider the stop and go nature of sucessive traffic lights. What possible benefit can be derived from accelerationg towards a light that has already turned red?


    I drive a vehicle with EPA estimates of 17 and 26, yet I AVERAGE 24 mpg with in mostly suburban driving and can attain almost 30 on a long trip.


    No, I don't drive slow, but I don't see any reason to waste acceleration. My vehicle (at least according to the speedometer) is capable of 160 but. However, if there is no reason to go over 25MPH, why bother?


    On the highway, there are no lights, but traffic bunches up here and there. I contend cruise control is useless and takes you mind off driving. Concentrating on the road, conditions ahead and common sense can allow much greater than EPA estimates. Nor is it necessary to drive slow. In MI, the highway limit is 70. I have attained 30MPG and still averaged 70MPH on a long trip.


    However, the highway mileage is not the main focus. It's the daily trips to work, school, etc. I can show anyone how to attain similar results and would love to get some media attention.


    Why? I don't want money. I don't have anything to sell nor any secrets. What do I want? Initially the personal satisfaction of knowing the last 10 yrs of practice, experimentation, observation were not wasted.


    I fully believe that a 10% reduction in gas usage is possible, but would temper that to 5%. If I could affect a change natinally on that scale, it would have tremendous affect on every segment of our economy.


    OK, to be truthfull, I wouldn't mind the recognition that might come from it. I also enjoy speaking in front of groups and would embrace the opportunity to do so while getting a message across.


    My claim is to show anyone anywhere how to attain at least 10% with no investment what-so-ever. Whether from a podium or sitting next to someone in a car, I can affect a change for a willing participant.


    I desperately would like a challenge with some kind of media coverage. How can I make someone take me seriously?

  • speed demon

    At some point, people have to start stepping up to do the little things that will get us out of the messes we're in overseas. The root cause of most of our overseas problems being access to petroleum. Turning the whole thing into an econ101 debate is silly. More silly when the people who are worried about losing 21.82 minutes/day because Hillary made them slow down will go home and sit down to 30 minutes of FearFactor without a second thought.

  • speed demon

    Fuel has costs beyond the pump price. For starters, operations in Iraq. Higher travel speeds use fuel less efficiently than slower speeds do. Period. It's freshman level Physics. Arguments to the contrary are self-serving nonsense. The link referenced above (motorists.com) in defense of higher road speeds also believes DWI laws are an infringement on a drivers personal liberties. Which is just as crazy, self-serving nonsense. Unless you're an alcoholic and think everyone else is the real problem because they don't get out of your way.

  • Taxes might explain why a worker might choose to drive slowly but it doesn't alter the overall cost.


    The value of the worker's time is the pre-tax wage. How the money is spent (or by whom) is completely irrelevant to whether the proposal makes economic sense.

  • True_Liberal

    It's NOT "how many cars can safely occupy this stretch of highway" at a given speed, but how many cars per hour will the highway pass?


    And, how many man-hours per mile (i.e. productivity) are consumed in the process?

  • Joe

    Wow... I am surprised.


    I almost had to scroll down almost to the bottom to find the first person - Blink - who noticed that gas is paid for in after-tax dollars.


    Did you forget as well Don? or was that also a test?


    Someone implied that you can get more cars on a highway going 70mph vs 55mph. I guess that means that we could get way more cars on a highway if everyone went 90mph versus 30mph :-)


    Now there a nice little test. Given a 10 mlle stretch of 3 lane highway, how many cars can safely occupy this stretch of highway travelling at 70 mph, how about 30 mph?

  • Presumably if people had to spend longer in their cars they would want larger cars that were more comfortable.

  • Once again, what is seen, and what is unseen.

  • "Today's families are often stretched thin - working to make ends meet while also trying to carve out time to care for their young children and aging relatives."


    Has that ever not been true?


    Chris

    http://amateureconblog.blogspot.com/
    </p
    >

  • Allen

    Speed does kill. The idea that it's all part of vast revenue-generating conspiracy was rejeted even by the x-files as being too "out there". There's the whole issue of momentum. You also have less time to react. You're stopping distance is greatly diminished. And there are issues of how highways are designed. There are a slew of old cloverleafs out there which don't seperate merging traffic from through traffic. There's a difference in trying to go from 30 to 60 instead of 30 to 80. The differences in those speeds cause problems. If you don't beleive, take the morning off of work, get some coffee and camp out on a highway overpass where an HOV lane isn't seperated from the rest of traffic. Those vehicles trying to get in and out of the HOV lane when it's open and flying cause all sorts of accidents when the traffic next to it is crawler at 20mph. And the main problem is with the 85th percentile is that people aren't prudent. You can't tell me that seeing 4 or 5 cars in a row going 70mph that barely have 8 feet inbetween each other is prudent. The argument works cuz we all want to beleive we are prudent, that we are good drivers. That's just not the case.

  • blink

    Thanks to HappyJuggler for posting some informative links.


    I strongly believe that Senator Clinton’s proposal is misguided (to be mild), but the analysis is unfair to her position – it over values workers’ time. Why? Taxes. A worker earning a wage of $16 per hour will be lucky to see 2/3 of his or her wage on the marginal hour worked, which presumably is the hour that he or would spend plodding along at 55 mph. In this case, the relevant comparison is not $5.82 vs. $2.58, but something closer to $3.88 vs. $2.58. The result is unchanged, but the numbers are strikingly close – perhaps those of us earning a low wage SHOULD slow down…but voluntarily rather than by Senator Clinton’s dictate.


  • One should be suspicious of any "average" statistic, like the present "55 mph is the most efficient speed to drive, on average."


    For any average, usually very few people lie right on the average. Sometimes none. This is why medians and so forth are often more useful.


    In this case, I don't know anyone whose car is actually most efficient at 55mph. Mine is most efficient at 70mph (yes, I've tested it). A friend of mine claims his gets more efficient up to 90mph.


    All this law would do is expose most people with modern vehicles to arbitrary punishment.

  • True_Liberal

    According to

    http://www.scrappleface.com/?p=2266
    <br
    >
    she's flipflopped again. I love it!


  • Andrew Duffin

    Don, your analysis is good but you argue from different premises than Sen. Clinton so it's inevitable you'll arrive at different conclusions.


    You are assuming that the driver is engaged on some productive business and therefore his time is in some way worth something useful to him.


    The sainted Hilary assumes that all driving is BAD because the perp should be using public transport or otherwise engaged in some activity of value to the all-encompassing and all-controlling state, therefore any reduction in gas usage, at any cost, is worth while.


    We have the same problem here in the UK - all traffic management is undertaken from the viewpoint that car-driving is A Bad Thing, therefore the primary design goal of lights, signs, lane markings etc, is to slow, disrupt and obstruct. I have to say that they don't do too badly at it either.

  • ben

    Don, isn't your whole analysis unnecessary, for the reason that even if it did show a benefit to the speed cap such a cap would still not be justified? If consumers pay a market rate for gas that is suitably adjusted to internalize externalities (which I understand current gasoline taxes more than cover) then consumers, facing the full cost of driving, can be expected to locate the efficient speed taking into account the value of their time.

  • >Unless you're not on the same road as the 75mph drivers,


    I think you meant to say unless you *are* on the same road as those driving 75 mph.


    In any case, I agree. I am scared to death of driving 75 mph on any but a pretty empty road, and am also too scared to drive less than 65mph when many others are driving 75mph, unless I can get a happy spot in the slow lane and traffic is light.


    However, most cities and areas that have highways also have bypass roads. If you are happy to go only 55, you can take almost any non-highway route into town. My husband and I take Route 66 into town, the bypass to I-40, where we drive 55-65mph and then in town about 45mph. We don't do it for gas milage, but we do it because neither of us likes to drive 75mph on the highway.


  • Roy Stogner

    "...forcing those cars to break or swerve around you at 20mph relative velocity is courting death."


    Naturally I meant to say "brake". Freudian slip?

  • Mickey Klein

    Clinton misses the point that anyone under financial stress from gasoline costs can already drive at 55 miles per hour and spend less. The only burden she will be relieving is the profit motive of those who choose to pay for higher speeds.

  • Roy Stogner

    with a 75mph speed limit, I can still drive 55mph *if it makes sense for me*


    Unless you're not on the same road as the 75mph drivers, it doesn't make sense for you. Driving on a freeway with a bunch of cars doing 75mph is dangerous enough as it is; forcing those cars to break or swerve around you at 20mph relative velocity is courting death.

  • Is there a speed limit? The guy behind me never seems to think so.


  • happyjuggler0
  • happyjuggler0

    Okay, I can't get links to work. http://www.motorists.com/mi/85th.html</p>

  • happyjuggler0

    Well how about that? I googled for 85th percentile safe and got a bunch of links. This is one of them.


    I highly recommend reading it for those who believe that 55mph is a safe highway speed limit. It seems there is more to safety than physics. Humans matter too.

  • MjrMjr

    cameron said "Driving 55 is also safer (another cost savings)"


    This is absolutely false. It's a myth perpetuated by insurance companies and police departments who benefit monetarily from speed limits set by complicit politicians who ignore the recommendations of the engineers who actually designed and built the roads. It's been proven time and time again that the safest speed to drive is the speed equal to the 85th percentile. I don't have a source handy, but google up "85th percentile safe" or something similar and you can see the reams of evidence.


    Interstate highway speed limits have nothing to do with safety and everything to do with revenue generation.

  • True_Liberal

    Government has never counted the cost of Joe Everymans' time as worth a plug nickel; I submit the time spent waiting in line at any government office, or filling out a stack of forms, figuring your taxes, etc.

    Why should they start now?

  • Swimmy

    Those pointing out that there are non-fuel considerations to a lower speed limit are missing the point. Clinton has noted that "The 55-mile speed limit really does lower gas usage." Boudreaux was simply saying that this is irrelevant.


    Perhaps the nicest thing about blogs is that they're handy for calling people out on very specific issues. It's frustrating that people expect these mini-arguments to address every aspect of whatever question.

  • Andrew K

    This is fascinating, if not a little silly, analysis. But nobody has touched on the fact that if Hillary gets elected, most people’s incomes (broadly defined) will drop as a result of increased taxation and/or economic downturn, thereby making their time less valuable and allowing them to slow down and drive 55 (Sammy Hagar excepted). Some people will slow down even further.


    This will be especially true of the rich, whose time is presumably worth “more” than the rest of us.


    Sidenote: This guy must be really rich and/or important-

    (from azcentral.com)


    A Goodyear man was arrested by police after speed enforcement cameras on the Loop 101 freeway in Scottsdale caught him driving his vehicle at up to 147 mph.



  • Bob Smith

    >Driving 55 is also safer (another cost savings)


    This is a mirage; highway safety has improved since the 55 mph limit was repealed.


    >from what i understand helps decres damage to the road (another cost savings)


    Since we're talking about cars here, I should point out that cars don't damage roads, heavy trucks do.


    >also less stressful (another cost savings).


    Speak for yourself. I find wasting time driving 55 more stressful.

  • cameron

    Driving 55 is also safer (another cost savings), from what i understand helps decres damage to the road (another cost savings), also less stressful (another cost savings).


    To much focus on just the gas savings makes you not see the other benefits.


    Sure more time on the road sucks, but so do pot holes and death.

  • Forbes

    "HRC as usual is dripping with contempt for the judgment of the common man, who in her view would be too stupid to...[choose/decide for themself what's in their own best self-interest]...if not compelled to do so by the state."


    There! I fixed bbartlog's quote into the all purpose version.

  • static analysis fallacy, Don.


    If you increase the cost of driving, people will drive less, so you have to take that into account in your calculations.


    Of course, you can still oppose this law on libertarian grounds, but then why not attack existing speed limit laws on the same grounds? That is, if reducing the speed limit to 55 is bad, in what way is the existing speed limit of 75 good? Shouldn't people be able to drive as fast as they please at all times? After all, they should be able to trade money for time (by buying gas and very fast cars).


    The answer to this question, is of course "No", and the reason is that there are other factors that should be considered here besides the consumption of time and gasoline. Which is to say, you've made a very narrow-minded analysis here.


  • happyjuggler0

    Your calculation misses the significant increase in gridlock that will result from everyone spending a theoretical 27% longer amount of time. To the extent that cars can't clear the highway fast enough to make room for new ones, traffic will slow to a standstill.


    I suspect Consumer Reports also missed this one, or glossed over it anyway. We may actually wind up burning more gas due to excess idling. If we are in temperatures that require heat or air conditioning then that will wind up being a further waste of gasoline due to gridlock.


    In short I challenge the initial hypothesis that an observed 55 mph speed limit on all highways will reduce gasoline usage.

  • Drethelin

    I think this ignores the rather important fact that NO ONE WOULD FOLLOW THIS LAW. It is relatively rare to see people driving 55 in the myriad areas where that is the posted speed limit. What makes them think that instituting such a law will make people follow it?

  • Well according to your assumptions, You're looking at needing to save at least $4.89 per 75 miles driven to make the law worth it.


    So, we're looking at 4.89=9-(75/35)*P where P is the price of gasoline. So:


    4.89=9-2.14*P

    0=9-4.89-2.14*P


    0=4.11-2.14*P


    -4.11=-2.14*P


    1.92=P


    Gas would have to fall to $1.92 (with a little rounding) per gallon to make the 55mph speed limit an indifferent deal for the average non-supervisory worker under your assumptions. To answer the question as it was phrased, the price of gasoline would need to fall $1.08 per gallon in order to make the average non-supervisory worker come out even (for it to be a good deal it would have to fall marginally more).

  • RexP

    Good excercise, but let me make the easy observation.


    Anyone can drive 55 if they want to save a few bucks. No law needed.

  • How about a law that people who earn less have to drive more slowly? Since their time is worth less to them, this would be a way to cut down on fuel consumption while maintaining a healthy respect for the individual's time. This could even be correlated with the individual's choice in vehicle. If he or she has a more fuel efficient car, then he or she may drive faster. It makes sense, in a liberal kind of way.

    I predict a huge increase in wages for people who drive for a lving, though.

  • bbartlog

    Your gas savings are indeed a little too generous (consumer reports seems to suggest that driving 55 rather than 75 will allow you to use 25% less gas, not 30+%). So on that basis the plan is even stupider. But your argument is a weak one (as you probably know) because it relies on averages; the implication is that if gas were twice as expensive, this would be a good idea. But in reality the great gains in personal welfare come about because with a 75mph speed limit, I can still drive 55mph *if it makes sense for me*, while those who feel their time is worth more can make a different choice. HRC as usual is dripping with contempt for the judgment of the common man, who in her view would be too stupid to trade off time for gas mileage if not compelled to do so by the state.

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