Toll Roads

There's No Such Thing as a Free Ride

Dynamic tolling is no more "price gouging" than any time prices go up because of a scarcity of supply.

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It might seem ironic that Virginia, which threatens merchants with punishment if they charge "unconscionable" prices during an emergency, recently hit motorists with tolls as high as $40 for a one-way trip on I-66. But the subsequent freakout over the tolls was misplaced. They did just what they were supposed to do. And that holds a lesson for the state's lawmakers.

If you missed the backstory, it's fairly simple: Recently the state's Department of Transportation adopted a new system of congestion pricing for I-66 inside the Beltway in Northern Virginia. During rush hour, all of the lanes in the primary direction of travel are tolled. What's more, the tolls are dynamic and real-time: They go up as traffic congestion increases and down when it recedes. In other words, as demand for the road rises, so does the price to use it. Econ 101.

When the tolls initially debuted, they quickly shot up to $40—a high price to pay to travel just 10 miles. A parade of outrage ensued. And state legislators who represent Northern Virginia bravely jumped in front of it, sending a letter to Transportation Secretary Aubrey Layne demanding that he "immediately suspend toll operations."

If that were all to the story, they would have a good case. But it isn't.

First, the tolls apply only to solo drivers, not car-poolers. That's because the tolls aim to reduce congestion, not to raise revenue. The goal is to keep traffic flowing rapidly and—as Layne put it in his response to lawmakers—to move "more people not just more vehicles."

Second, drivers who don't like paying the rush-hour tolls on I-66 don't have to. They can choose another route. In fact, before the implementation of the express lane system, solo drivers were required to: They were not allowed to use I-66 during rush hour at all (except for drivers of hybrids). So motorists are complaining about getting a new option because they have to pay for it. The horror.

Granted, other routes have their own downsides, such as stoplights. One motorist interviewed by The Washington Post told the paper "that she could take Route 50 but finds the traffic lights discouraging." Well, sure. But also: Welcome to a world of finite resources.

In a finite world, everything must be rationed. And the two principal ways to ration things are (a) prices or (b) lines. If you don't like standing for hours in line at Disney World, you can pay extra to use a shorter line. Don't want to pay extra? Wait longer.

But commuters in Northern Virginia such as the one the Post interviewed have the luxury of a Door No. 3: "She plans to give Metro, and a $16 round trip including parking, a try," the newspaper reported.

As word of the sky-high tolls spread, many other drivers also found alternate routes. Mirabile dictu, the average rate of travel on I-66 increased from 37 mph to 54 mph, and the tolls fell. Soon the peak toll had fallen to $14.50. Note the adjective: That's the peak toll, not the average.

The $40 toll that sparked so much outrage also was a peak toll. How many people actually paid it? A grand total of 39.

The state's approach here makes perfect sense. Prices are signals, and rising prices tell (solo) motorists: "You are hogging too much of a scarce resource. Get off the road so more people can use it." When the solo drivers comply, there's more road left for other users and traffic flows more smoothly.

Virginia clearly understands this dynamic when it comes to lane miles. So why doesn't it apply similar logic in other situations?

Whenever a hurricane, snowstorm, or similar event strikes, officials send out warnings to let merchants know the state's Post-Disaster Anti-Price Gouging Act is in effect, and they must not charge prices the state deems too high. In some cases it has forced merchants to issue refunds.

But high prices work just the same in stores as they do on the roads. They send a signal to people who are buying gasoline, bread, milk, and batteries that they should not try to hoard such staples. Not only that, high prices do an extremely efficient job of preventing hoarding. That leaves more of the scarce resources for others.

Sometimes, of course, people will have a strong reason for wanting a particular resource. If you have an important job interview and don't want to be late, it's well worth paying $20 to drive solo on I-66—or paying $10 for a gallon of gasoline to get you there. But most of us don't have such exigent circumstances most of the time. So high prices encourage us to leave more of the resource for those who truly need it.

Now that the Commonwealth of Virginia is applying that principle on the roads, perhaps it should let the state's merchants apply it as well.

This column originally appeared in the Richmond Times-Dispatch.

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  1. That’s because the tolls aim to reduce congestion, not to raise revenue.

    Is I-66 a public road? Taxes/fees for strictly raising revenue and NOT coercing behavior is libertarianism 101

    1. I say let dealing with the congestion be the cost of using it.

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    3. This is just another government scheme to bilk drivers and not spend all the money on roads.

      If this is a toll road that took over from a regular interstate, then taxpayers paid the majority costs to build the interstate and don’t get to drive on it.

      These HOT lanes and toll road scheme typically never start as projects from scratch because they could never get the billions in funding to build these roads. They typically take over existing taxpayer built roads, prevent most taxpayers from driving on them, and then charge arbitrary tolls that have nothing to do with supply and demand.

      1. Everyone gets to drive on them they just have to pay the toll.

      2. The tolls will help pay for planned widening.

        1. of the bike lanes.

        2. of lawmakers’ egos.

        3. of the Dept of Transportation’s budget

        4. of bureaucrat asses.

    4. It’s like auctioning off the temporary use of the road. There is a precedent for auctioning off public assets.

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  2. What next? Food and ammo taxes to encourage desirable public health outcomes?

    1. Are taxes dynamic and/or real time? This is more comparable to Uber surge pricing, which people also bitched about.

      1. Uber is free market. Toll roads are not.

        1. Toll roads are not free market? I thought putting up tolls on private roadways was a libertarian solution. *shrug*

          1. Indeed. This scheme is operated by the state, though, where things work a little differently.
            I agree with the dynamic pricing in principle, but as long as it continues to be a state enterprise, it’s just polishing a turd. I guess it’s better than unpolished turds.

  3. Is he toll pricing transparent? Do you know what you are going to be charged before you get on the road?

    Oh, and these things are two way streets. Customer dissatisfaction with novel pricing schemes is a signal to the operator, especially when the operator is a monopoly.

    1. There are signs at the entrances with prices. I believe your prices are fixed once you pass the first sensor.

      1. Can you see the signs while you still have a reasonable option to choose a different route? ’cause last time I was in Virginia (a couple of years ago) I was boxed into a turn-off for a toll-road before there were even signs that one was coming up.

        1. I haven’t seen the placement for I-66. Yes for I-95.

  4. “”So high prices encourage us to leave more of the resource for those who truly need it.””

    High prices leave more for those who can afford, not necessarily those who need. Just sayin.

    1. Still not as bad as dealing with a shortage of supply.

    2. Everybody needs, to some degree. Having people compete via money, time or some other resource is the only way to tell who really needs something the most.

    3. False. And lazy.

      Money is one of the many resources that an individual may decide to spend. Time is another. If I value the time it takes me more than the $40 I have, then I take the toll. if I value the $40 more, then I take the other route.

      And some people value $40 higher than others. SOMETIMES that has to do with having lots and lots of “$40,” other times it has to do with their spending habits. I had a friend who made six figures and still turned the hot water off when he soaped up his hair b/c he didn’t want to spend the $ on the hot water, even though he could afford it. This is no different from people spending money on luxury items they value, like eating veterinarian, going out to eat, alcohol, the latest smart phone, etc.

      1. eating veterinarian…. is she hot?

        http://www.youtube.com/watch?v=gRMEbOzVhT4

        1. She is almost certainly a luxury item.

  5. Hinkle, this is not a good example of free market supply and demand.

    First of all, its a government road. I would bet that taxpayers paid to buy easements, lay the first route of I-66, and paid to “upgrade it” to a toll road.

    Second, if I-66 is like the HOT lanes in Georgia which used to be carpool lanes and before that were regular interstates, you have to get a government issued pass to even do carpool. You cannot just carpool up and reap the benefits. You literally need government permission.

    Finally, what do the prices reflect exactly? The cost to maintain the toll road? The prices set by the toll agency are arbitrary and typically exceed what would be needed for costs to run the toll road. Those government coffers need mo’ money.

    1. Look for reasons. Why government would agree to ‘steal’ taxpayer funded interstates and make them toll roads that require permission and a transponder to drive on? Does it ease congestion on packed roads like carpooling does? Not likely.

    2. Carpooling only requires a flex transponder. No permission required to get one. You can even use out of state transponders if they are compatible.

      1. Here in California it just requires having two (or more) people in the car, or riding a motorcycle. Georgia and Virginia sound weird.

        1. The system needs a way to distinguish a HOV from a HOT. If you drive without a transponder you get a bill for the toll plus a fine.

          1. How. You’re making this sound like some sort of automatic process, which implies it’s not enforced by traffic officers. So if you *don’t* have a transponder, how are they sending you a bill and a fine?

            And how is this preferable to just having a toll booth that waves through car-poolers?

            1. The system is automated. No tollbooths. There are sensors along the route that read the transponder and the license plate. If you don’t have a transponder they use the plate to send the bill.

              1. So I want to be clear.

                If I, an out-of-state driver, accidentally wind-up in a turning late for one of these “automated toll roads”, and manage to miss the one sign that would have warned me because traffic is super dense, and I’m trying ot make sense of the GPS, I’m not even going to have the courtesy of someone telling me it’s a toll road and giving me the choice of digging for cash or making a hug emess of traffic by cutting across six lanes to dirt-road it back to the real highway.

                All I’m going to get is a bill in three weeks at my opposite-coast address.

                Yeah, that sounds like a great system you have there.

                1. Yeah, it sounds like utter bullshit. It’s just the government taking more money from people who, unlike with Uber’s surge pricing (or the “predatory pricing” during emergencies, aren’t given sufficient advanced notice to avoid it if they want to do so.

                  Unless signs are at least a half mile away in advance of the entrance ramp, this reeks of bullshit.

                  1. I-66 may too new for Google Streetview. For I-95:
                    1 mile warning
                    half mile warning with prices
                    entrance with prices

                2. At least for I-95, the toll road entrance is a diverging lane with clear signs. You have to change lanes to enter.

                3. That’s right. You will be fucked in the ass by this toll scheme. You should pay more attention while driving or use a GPS solution that allows you to exclude toll roads from the computed route. The locals own the road, you do not.

                  1. The locals own the road, you do not.

                    Why do “the locals” own interstates? They sure didn’t pay for them.

            2. The cameras photograph your plates when you enter the HOT lanes, which is only permitted at certain junctures.

              The cameras are preferable to adding state employees to a booth, which also slows down traffic.

              They system can distinguish between HOT and HOV. You slide the position on the transponder if you are HOVing.

              I’m not in love with toll roads, but the automated system is the least of the problems associated with them.

              1. Gonna have to disagree. At least with a person I *know* I’m getting a bill. In this case they’re going to bill me and I’m going to have to google what the fuck I’m getting billed for.

                1. That’s not limited to Virginia. It used to be illegal for states to charge tolls on interstates but that was relaxed years ago. If it’s actually paying for road upkeep, then I don’t have a problem with it (as long as gas taxes are eliminated or reduced by a similar amount). Congestion pricing is another thing altogether.

                  1. It isn’t though, it’s going to line the pockets of the private toll companies who set up these schemes on public roads and then get 90% of the profit. The rest goes to miscellany like road upkeep.

                  2. “If it’s actually paying for road upkeep, then I don’t have a problem with it (as long as gas taxes are eliminated or reduced by a similar amount).”

                    They never are though. The bastards just keep layering it on. Of course I live in Illinois so maybe the rest of you have a different experience with your state government.

  6. I heard there was some whinging about surge pricing by Uber and other ride-sharing services in the immediate aftermath of the Port Authority bombing in NYC. But aside from the economics, I wonder if any of the complainers gave any thought to the fact that they were expecting Uber drivers to head IN to an area that might be dangerous (since at that point nobody was completely sure of the scope of the problem).

    If somebody is willing take a risk to their safety to give me a ride, I’m not going to begrudge them a few extra bucks.

  7. You could make a case that anything a government-guaranteed monopoly charges is “price gouging.”

    1. It is. Which is why people hate taxes and why government tries to hide taxes, fees, and “prices” so taxpayers don’t get so mad.

  8. I already paid for I-66 with my taxes. Why must I be shaken down repeatedly?

    1. Take I-66 and SR-267 (both Toll Road and Greenway) for the full enjoyment of 3 different tolls.

    2. If it were 100% paid for by taxes then it wouldn’t be a toll road. Just because you paid taxes doesn’t mean you paid for everything, Without the toll your taxes likely would be higher.

      1. If it were 100% paid for by taxes then it wouldn’t be a toll road. Just because you paid taxes doesn’t mean you paid for everything,

        No, but it’s pretty likely that a large percentage of people using the road paid nothing.

        So, how about: “If you paid more than $5000 in taxes to the state, there are no tolls for you ever. Otherwise, you need to pay congestion pricing.”

  9. They were not allowed to use I-66 during rush hour at all (except for drivers of hybrids).
    Early hybrid owners. You had to have a special license plate that the state stopped issuing around 2006.
    There are also complaints because the restriction window was expanded from 2.5 hours to 4 hours. At least that isn’t as bad as the I-95 HOV to HOT conversion which expanded hours to 24/7.

    1. I believe they also dropped the Dulles Airport HOV exemption.

  10. Occupied Northern Virginia is a terrible place. Do not go there.

    1. We have the start of a wall along the Rappahannock.

  11. I love it. Wish we had more of it.

  12. Pricing in a free market (and there is nothing free market about toll roads) is not a method of rationing.

  13. I’m trying to imagine how dynamic pricing would work in the sex-industry. If you want the highway all to yourself, you have to spend enough to get a trophy wife.

  14. I remember when we took for granted that the government would build roads, because road construction requires eminent domain takings and are a necessary way to let people move from one parcel of real estate to another. Maybe all roads should be free, just as all calls to the cops are free.

  15. It might seem ironic that Virginia, which threatens merchants with punishment if they charge “unconscionable” prices during an emergency, recently hit motorists with tolls as high as $40 for a one-way trip on I-66. But the subsequent freakout over the tolls was misplaced. They did just what they were supposed to do.

    So, a solo driver paying tens of thousands of dollars in taxes a year to the state has to pay an additional $40 for each trip, while a low income family paying no taxes and tens of thousands of dollars in free government services can breeze through for free? And that’s supposed to be an example of rational, market-based pricing?

    That’s because the tolls aim to reduce congestion, not to raise revenue.

    And this is exactly the problem. If the road were self-financed with tolls by a private corporation, this would be OK. But the road is paid for by taxpayer dollars, so these road tolls amount simply to a financial redistribution scheme driven by various absurd political goals and lobbyists.

    Reasoning about government fees as if they were prices in a free market is absurd. Hinkle is reasoning like a central economic planner while pretending to advocate for market mechanisms. It’s the same bullshit we’re getting from Democrats.

  16. Double charging is theft, regardless of the motivation.

  17. And by the way, just exactly what is it about congestion pricing that is libertarian?

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