Deteriorating highways are adding to auto maintenance costs in the U.S.
On his way home recently, Oklahoma City mapmaker Alex Sherman felt the telltale jolt of his car hitting a pothole. The hole in the road didn’t surprise him, but the $560 price tag to replace his tire and alloy wheel did.
Potholes, he said, are “one constant we’ve got around here.”
As highways and streets age and deteriorate, drivers like Mr. Sherman are shelling out more on auto repairs.
A variety of studies point to rising maintenance costs that they attribute in large part to poor road conditions. The American Society of Civil Engineers, for example, pegged the price at $324 per driver in 2013, the most recent year available, up from $275 in 2005. TRIP, a transportation research group, has determined that the average American driver spent $516 in 2013 on repairs, depreciation, additional fuel and new tires, up from $355 in 2010.
While “there’s been some improvement in overall bridge condition, overall pavement conditions are getting worse,” said Rocky Moretti, research director at TRIP, which receives funding from highway construction and manufacturing sources.
Much of the country’s road infrastructure dates from the 1950s and 1960s and is starting to show its age. Spending, however, hasn’t kept up with maintenance needs. That is partly because the price of construction materials rose rapidly in the early 2000s, outpacing government spending and making it more difficult to fill backlogs, according to the Congressional Budget Office.
The recession from 2007 to 2009 also led to a sharp drop in transportation spending at the state and local level that has yet to be made up.
Using an infrastructure-specific inflation measure, the CBO estimates that in real terms highway spending by federal, state and local governments —which totaled $165 billion in 2014—has fallen by 19% from its peak in 2002. The American Association of State Highway and Transportation Officials says it would cost $740 billion to meet current demand.
Much of the cost is being transferred to individuals and businesses in the form of added vehicle repairs. “The consequence is that we’re all paying more to maintain our cars,” said Genevieve Giuliano, a transportation policy expert at the University of Southern California.
In Congress, lawmakers have passed a series of short-term funding measuring, the latest this week, as they look for a way to direct more money to the federal Highway Trust Fund. The fund’s main revenue source, the gas tax, is no longer sufficient to cover its obligations. The federal government provides slightly more than a quarter of all highway funding, much of it from the highway fund.
Lawmakers will need to find an additional $11 billion for 2016, rising to $15 billion by 2020, to keep the fund solvent, according to CBO projections.
Recent driving trends suggest the costs to motorists are only going to increase. After stalling during the last recession, the number of miles Americans drove climbed 1.7% last year. Vehicle-miles driven are up 3.4% so far this year over last, according to the Transportation Department.
Trucking companies also say they have seen road conditions hurt the bottom line. Duane Long, chairman of a small North Carolina-based trucking company called Longistics, said recently he had just received word that he would have to replace 27 tires costing $500 each due in part to road conditions.
“That’s over 10 grand, and we’re a small company. And that was just today,” he said. The costs can add up and have lasting economic consequences.
“The crumbling and decline of infrastructure does erode productivity,” said Susan Lund, an economic at the McKinsey Global Institute. “Over time, that really starts to build up.”
A 2013 McKinsey study recommended that the U.S. boost overall infrastructure spending from the current 2.6% of gross domestic product to 3.6%, an increase of between $150 and $180 billion a year. The short-term impact would add $270 billion and $320 billion to annual economic growth by 2020, the study found.
Those kinds of investments have been on the minds of Federal Reserve officials as well. Speaking to a Senate panel last month, Fed Chairwoman Janet Yellen cited increased capital investment “both public and private,” as a way to boost productivity and incomes.
By: David Harrison, Wall Street Journal