Issue Backgrounder

By Dennis Polhill
Synopsis — High Occupancy Toll (HOT) lanes use electronic toll collection technology to collect tolls at full speed. Surplus HOV lane capacity can be utilized, traffic congestion can be reduced and revenues are generated to offset transportation costs. Transportation constituencies all over the U.S. are finding common ground in supporting this free-market application.

S.B. 99-88 —Senate Bill 1999-88 is similar to a 1998 CDOT sponsored bill. The HOT lane provision was deleted from the 1998 bill because of the assertion that only the rich would benefit. The 1999 bill authorizes and directs CDOT to convert an existing HOV lane project to HOT lanes.

Congestion assessment —The cost of traffic congestion greatly exceeds the cost of eliminating it. Time wasted in traffic jams is a major loss to the Denver metro economy. At the same time it should be pointed out that fewer than 10% of highways are ever congested; and congested roads are not congested most of the time. It would be theoretically possible to move 10 times as many vehicles through the existing highway infrastructure, if someone would just tell people when they could use it.

Problem definition —The traffic congestion problem is that too many people are trying to use the same system at the same time.

Solution theory —Because the problem is related to scarcity of resources, a system to allocate, prioritize or ration the resources must be invented. Fortunately, Adam Smith and other great thinkers have done the hard work of inventing capitalism. Contemporary policy advocates share the benefit of over 200 years of real world experience with Smiths ideas. Allocation of scarce resources is done most efficiently by empowering individual consumers to exercise choice through pricing systems.

Private sector experience —All Americans experience the power of markets every day. The same product often costs more when demand is high: like long distance telephone service. Rates are highest during business hours and are lowest when most people are sleeping. Other examples are airline tickets, hotel rooms, roses (more expensive around Valentines Day), and movie tickets.

User fees —Historically the most efficient user fee to finance transportation has been the gasoline tax. Everyone paid the gas tax and everyone used the roads. The more people used, the more they paid. But technology has improved and it is now possible to assign user fees directly to those using the system at the time they are using it.

Technological advances —In 1991 the Oklahoma Turnpike implemented electronic toll collection (ETC). E-470 uses the same technology. A transponder (an audio cassette size radio frequency transmitter) fixed on the windshield is read at full travel speed and tolls are charged to the users account. Both Oklahoma and E-470 are fixed toll facilities, where all users always pay the same toll. California took the technology to the next level in 1995 by applying it to just 2 of 6 lanes in each direction on the 91 Freeway in Orange County. These are called High Occupancy Toll (HOT) lanes. The remaining 4 lanes continue to be “free” lanes. Tolls in the HOT lanes vary to insure that traffic flow is never congested. Thus, drivers can choose as their individual needs dictate.

Choice —The “choice” point cannot be overstated. Everyone has some emergencies in their life that justify paying extra for a higher level of service: a medical emergencies, meeting an airplane, getting to a daughters soccer game, or avoiding a late fee. Nearly half of those who use the California 91 Freeway HOT lanes use them only once per week.

“Lexus Lanes” — The California Polytechnic Institute recently released a 4 year study of the California 91 Freeway HOT lanes. It found that the demographics of those who use the 91 Freeway HOT lanes are nearly identical to those who use the “free” lanes. Clearly the pejorative “Lexus Lane” term is false and is designed by HOT lane opponents to mislead.

Taxpayer benefits —Because users are paying tolls, a revenue stream is available to offset some construction costs. Thus, less money is needed from general taxation for roads.

Benefits to nonusers of HOT lanes — Because some vehicles are removed from the adjacent “free” lanes, traffic congestion also decreases in the “free” lanes. The CalPoly study found that 52% of those people who never used the California 91 Freeway HOT lanes favored them. Trip times in the “free” lanes are typically about 10 minutes faster.

Environmental benefits —The California Air Resources Board determined that air pollution emissions are 250% higher under congested conditions than during free-flowing traffic. So when traffic congestion exists, not only are people frustrated by not getting where they need to go, but they cause additional air pollution by not getting there. Clearly, HOT lanes reduce air pollution by reducing traffic congestion. Because HOT lanes also reduce traffic congestion in “free” lanes, they also help reduce air pollution emissions in the “free” lanes. Led by the Environmental Defense Fund and the Oregon Environmental Council, environmental groups all over the country have come to endorse HOT lanes. Many others, like the Sierra Club and the EPA, endorse the broader and related concept of congestion pricing.

High Occupancy Vehicles (HOV) —The theory of HOVs is that vehicles with more than one person receive preference (in the form of dedicated special purpose HOV lanes) as an incentive to carpool. When the HOV lanes are full and free-flowing, they move more people than a general purpose lane. In November the state of New Jersey fueled a growing nationwide controversy by opening some HOV lanes to general traffic because they were not full with HOVs.

In spite of the availability of dedicated HOV lanes, car pooling is on the decline.

But even where HOVs work, they can be a victim of their own success. When HOV lanes become congested with HOVs, the typical operational response is to restrict HOV lane use to vehicles with 3 rather than 2 passengers per vehicle. This decision always results in moving fewer people quickly with some HOV lane capacity wasted. HOT lane technology provides the capability to use surplus capacity with no injury to HOVs.

HOVs in the California 91 Freeway HOT lanes were initially charged no toll, but are now paying a 50% toll. Eventually the HOT lane operator will cease subsidizing HOVs and all will pay tolls equally. To the extent that HOVs merit subsidy, it can be provided via other methods.

–Dennis Polhill, Senior Fellow in Transportation Policy, Independence Institute