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Impacts of Gasoline Price on T R

VIEWS: 15 PAGES: 34

									The Impacts of Gasoline Price
 on Traffic and Toll Revenue
           Prepared by:




           Prepared for:




          August 2008
                                                                             4925 Greenville Avenue, Suite 1300
                                                                                     Dallas, Texas 75206-4085
                                                                                                (214) 890-4460
                                                                                             (214) 890-7521 fax
                                                                                        www.wilbursmith.com

August 6, 2008

Mr. Jorge Figueredo
Executive Director
North Texas Tollway Authority
5900 W. Plano Parkway, Suite 100
Plano, TX 75093

Re:    Impacts of Gasoline Price on Traffic and Revenue

Dear Mr. Figueredo:

Wilbur Smith Associates (WSA) is pleased to submit the document “The Impacts of Gasoline Price on
Traffic and Toll Revenue.” This report reflects all current efforts of WSA to measure the potential
effects that changes in gasoline price may have on the NTTA System.

Our project team, including Justin Winn, Phani Jammalamadaka, Worapong Hirunyanitiwattana,
Yagnesh Jarmarwala, Naveen Mokkapati, and Baez Consulting, gratefully acknowledge the assistance
and cooperation received from the NTTA, as well as others contacted during the course of the study.
WSA sincerely appreciates the opportunity to have participated in this important project.

Please do not hesitate to contact me with any questions or clarifications.

Sincerely,

WILBUR SMITH ASSOCIATES




Michael W. Copeland, AICP
Senior Project Manager




                                        Employee-Owned Company
                                                                             The Impacts of Gasoline Price
                                                                               on Traffic and Toll Revenue




                                                               EXECUTIVE SUMMARY
Due to recent increases in gasoline prices, Wilbur Smith Associates (WSA) was requested by the
North Texas Tollway Authority (NTTA) to determine the potential impacts those price increases
may have on the traffic and toll revenue of the North Texas Tollway Authority System
(NTTAS). The NTTAS includes the Dallas North Tollway (DNT), the President George Bush
Turnpike (PGBT), the Addison Airport Toll Tunnel (AATT), and the Mountain Creek Lake Toll
Bridge (MCLB). It also includes SH 121 and the Lewisville Lake Toll Bridge which are
currently under construction.

Transportation is a derived demand. People need to travel in order to be able to go to work, shop,
or take part in other activities, and their destinations are separated by geographical distances.
Each of these trips has costs associated with it, including gasoline costs, time costs, etc., and
travelers seek to minimize these costs while still participating in their desired activities.
Congestion, safety issues, reliability, comfort and other factors have induced a large number of
travelers to use toll roads, but increases in gasoline prices have a potential to affect the number of
travelers using toll facilities.

Transactions on the NTTA System seem to be relatively inelastic to gasoline price increases.
However, sharp increases in gasoline price in May and June 2008 did produce some small
noticeable impacts on NTTA system transactions. Transactions on the PGBT in May and June
2008 were 1.4 and 2.3 percent lower than May and June 2007, respectively. Transactions on the
DNT (excluding the Phase 3 Extension) were 0.1 percent higher in both May and June 2008.

Although gasoline prices are at an all-time high, projections indicate that gasoline prices
(adjusted for inflation) will most likely drop to 2005 levels in the next few years, and will remain
relatively flat over the long term. This indicates that any negative effect on NTTA system
transactions due to rising gasoline prices is expected to dissipate over the next few years.
Additionally, the popularity of fuel-efficient vehicles continues to rise, and this may also help
ease the financial burden of gasoline on drivers.

The findings of this research indicate that no changes are necessary to WSA’s previously
submitted long-term investment grade traffic and revenue estimates for the NTTA System,
PGBT-EE, Southwest Parkway, or SH 161. These estimates are still considered valid and
suitable for project financing, and there has been no significant deviation from the original

August 2008                                                                                       Page 1
                                                                         The Impacts of Gasoline Price
                                                                           on Traffic and Toll Revenue




assumptions. However, in the short-term (until 2011), it is expected that the NTTA System
annual toll revenue may see a drop of 3.7 percent, 2.1 percent and 0.8 percent in 2009, 2010 and
2011 respectively compared to the annual revenue estimates included in the NTTA System
investment grade study dated October 2007. These revisions are based mainly on recent
transaction trends, changes to the opening date assumptions and changes to the expected
conversion schedule of NTTAS facilities to exclusive electronic/video toll collection.




August 2008                                                                                   Page 2
                                                                              The Impacts of Gasoline Price
                                                                                on Traffic and Toll Revenue




                                                                            INTRODUCTION
Due to recent increases in gasoline prices, Wilbur Smith Associates (WSA) was requested by the
North Texas Tollway Authority (NTTA) to determine the potential impacts those price increases
may have on the traffic and toll revenue of the North Texas Tollway Authority System
(NTTAS). The NTTAS includes the Dallas North Tollway (DNT), the President George Bush
Turnpike (PGBT), the Addison Airport Toll Tunnel (AATT), and the Mountain Creek Lake Toll
Bridge (MCLB). It also includes SH 121 and the Lewisville Lake Toll Bridge which are
currently under construction.

Transportation is a derived demand. People need to travel in order to be able to go to work, shop,
or take part in other activities, and their destinations are separated by geographical distances.
Each of these trips has costs associated with it, including gasoline costs, time costs, etc., and
travelers seek to minimize these costs while still participating in their desired activities. When
the gasoline cost is relatively small component of overall cost of making a trip, people are more
likely to travel longer distances in order to take part in activities, compared to the case when
gasoline cost is the major component. Historically, gasoline costs have been a smaller portion of
vehicle operating cost which has allowed Americans to travel to work, shop, and take part in
recreational activities at locations separated by long distances. Congestion, safety issues, comfort
and other factors have induced a large number of travelers to use toll roads, but increases in
gasoline prices have a potential to affect the number of travelers on toll facilities. This paper
estimates the potential impact of gasoline prices on toll road travelers in the Dallas-Fort Worth
Metropolitan area.

This paper is presented in four sections. In the first section, an analysis of historic gasoline prices
and their future outlook is presented, including gasoline price projections and the rise of
alternative gasoline and hybrid vehicles. The second section of the paper illustrates the impact of
rising gasoline prices on drivers. To mitigate the effect of increases in gasoline prices, some
drivers may start using more gasoline efficient vehicles, begin using transit or carpooling, and/or
drive less often and for shorter distances. This section also includes a brief literature review of
the effect of similar price changes in the past on driver behavior in terms of changes in total
Vehicle Miles Traveled (VMT) and gasoline demand. The third section of the paper discusses
the impact of gasoline prices on the NTTA System. To quantify the impact, a brief survey of
local economy was conducted followed by an analysis of the impact on NTTA transactions. The
fourth section summarizes the results and key findings of the research.


August 2008                                                                                        Page 3
                                                                                                                                                                                                                                                                 The Impacts of Gasoline Price
                                                                                                                                                                                                                                                                   on Traffic and Toll Revenue




                                                                                                                                                                                                                                                                  SECTION                                                    1
                                                                                            GASOLINE PRICE HISTORY AND OUTLOOK
One of the key components of the total cost of driving is the cost of gasoline. As such, rises in
automobile gasoline prices could potentially have a significant impact on driver behavior. In this
section, the historic trends in gasoline prices are presented along with future projections and
expectations.

HISTORIC GASOLINE PRICE TRENDS
U.S. gasoline prices remained relatively stable between the years of 1980 and 2005, but have
begun increasing steadily in recent years1, as shown in Figure 1. Historically, growth in gasoline
price has not tracked with inflation like most other consumable market items. Figure 2 illustrates
the recent trends in gasoline price in Texas, where it has been consistently priced at over two
dollars per gallon since early 2005, and average prices are approaching four dollars per gallon2.

                              $4.50


                              $4.00


                              $3.50


                              $3.00
     Monthly Gasoline Price




                              $2.50


                              $2.00


                              $1.50


                              $1.00


                              $0.50


                              $0.00
                                      Jan-78
                                               Jan-79
                                                        Jan-80
                                                                 Jan-81
                                                                          Jan-82
                                                                                   Jan-83
                                                                                            Jan-84
                                                                                                     Jan-85
                                                                                                              Jan-86
                                                                                                                       Jan-87
                                                                                                                                Jan-88
                                                                                                                                         Jan-89
                                                                                                                                                  Jan-90
                                                                                                                                                           Jan-91
                                                                                                                                                                    Jan-92
                                                                                                                                                                             Jan-93
                                                                                                                                                                                      Jan-94
                                                                                                                                                                                               Jan-95
                                                                                                                                                                                                        Jan-96
                                                                                                                                                                                                                 Jan-97
                                                                                                                                                                                                                          Jan-98
                                                                                                                                                                                                                                   Jan-99
                                                                                                                                                                                                                                            Jan-00
                                                                                                                                                                                                                                                     Jan-01
                                                                                                                                                                                                                                                              Jan-02
                                                                                                                                                                                                                                                                       Jan-03
                                                                                                                                                                                                                                                                                Jan-04
                                                                                                                                                                                                                                                                                         Jan-05
                                                                                                                                                                                                                                                                                                  Jan-06
                                                                                                                                                                                                                                                                                                           Jan-07
                                                                                                                                                                                                                                                                                                                    Jan-08




                                                                                               Figure 1. Historic U.S. Gasoline Prices

August 2008                                                                                                                                                                                                                                                                                                                  Page 4
                                                                                                                                                                                   The Impacts of Gasoline Price
                                                                                                                                                                                     on Traffic and Toll Revenue




                                       $4.50

                                       $4.00
   Average Gasoline Price per Gallon




                                       $3.50

                                       $3.00

                                       $2.50

                                       $2.00

                                       $1.50

                                       $1.00

                                       $0.50

                                       $0.00
                                               1/1/2001

                                                          7/1/2001

                                                                     1/1/2002

                                                                                7/1/2002

                                                                                           1/1/2003

                                                                                                      7/1/2003

                                                                                                                 1/1/2004

                                                                                                                            7/1/2004

                                                                                                                                       1/1/2005

                                                                                                                                                  7/1/2005

                                                                                                                                                             1/1/2006

                                                                                                                                                                        7/1/2006

                                                                                                                                                                                     1/1/2007

                                                                                                                                                                                                7/1/2007

                                                                                                                                                                                                           1/1/2008
                                                                     Figure 2. Recent Gasoline Price Trends in Texas


OIL DEMAND AND VEHICLE-MILES TRAVELED
The price of oil and the price of gasoline are closely related3, and as global demand for oil
increases, it can increase the cost of both. Highly industrialized countries continue to be largest
consumers of oil, but growth in those countries’ demand has stagnated somewhat. Figure 3
shows the recent trends in oil demand for the United States, the Organization for Economic
Cooperation and Development (which includes the United States), China, Asia, and non-OECD
countries4. As shown in the figure, growth in demand in developing countries, particularly
China, is increasing rapidly. This increase in global demand is contributing to rising oil prices.

There are several reasons for the increased demand, including population and economic growth.
In the United States, the median age, and thus the number of people that are of legal driving age,
increases every year, which increases the total number of Vehicle Miles Traveled (VMT).
Figure 4 shows the historical and projected growth in VMT and population in the United States,
and indicates that the VMT in the U.S. is expected to grow at a greater rate than the population5.
These increases in VMT will lead directly to increases in demand for gasoline. Despite increases
in demand, the number of oil refineries has remained relatively constant due to environmental
concerns. Another factor that has led to increase in demand for gasoline is strong economic
performance by countries such as India, China, Russia, Brazil and a few other developing
nations. Consistently high growth rates in these nations have increased the prices of all

August 2008                                                                                                                                                                                                           Page 5
                                                                                                                                                                          The Impacts of Gasoline Price
                                                                                                                                                                            on Traffic and Toll Revenue




commodities, including gasoline. In 2007, there were 9 cars per 100 eligible drivers in India,
while China had 7 cars per 100 eligible drivers6. One-third of the population of India (which is
approximately equal to the entire population of the United States) consists of middle class
citizens that will be able to afford cars in the near future.

                                                   90


                                                   80


                                                   70
                         Million Barrels Per Day




                                                   60
                                                                                                                                                                                          2003
                                                   50                                                                                                                                     2004
                                                                                                                                                                                          2005
                                                   40                                                                                                                                     2006
                                                                                                                                                                                          2007
                                                   30


                                                   20


                                                   10


                                                    0
                                                         United States        Total OECD        China      Other Asia                                Total Non-    Total World
                                                                                                                                                      OECD          Demand


                                                                          Figure 3. 2003-2007 Global Oil Demand

                                       5,000                                                                                            400

                                       4,500
                                                                                                                                        350

                                       4,000
                                                                                                                                        300
                                                                                                           U.S. Population (millions)




                                       3,500
        Highway VMT (billions)




                                                                                                                                        250
                                       3,000

                                       2,500                                                                                            200

                                       2,000
                                                                                                                                        150

                                       1,500
                                                                                                                                        100
                                       1,000

                                                                                                                                         50
                                                   500

                                                    0                                                                                    0
                                                         2000   2005   2010    2015   2020   2025   2030                                      2000   2005   2010   2015     2020   2025    2030




                                                                       Figure 4. Projected U.S. VMT and Population

August 2008                                                                                                                                                                                       Page 6
                                                                                       The Impacts of Gasoline Price
                                                                                         on Traffic and Toll Revenue




ALTERNATIVE FUELS AND NON-TRADITIONAL VEHICLES
Despite the expected increase in VMT and global travel demand, the rapid rise in popularity of
alternative fuel and hybrid vehicles has a potential to significantly affect both global and local
gasoline prices. Rising gasoline prices have made alternative fuels a popular investment. Figure
5 illustrates the growth in alternative fuel vehicles from 2004 to 20067. The upward trend will
likely continue as gasoline remains at high prices. Hybrid vehicles are also becoming
increasingly popular, and new models continue to be released. As shown in Figure 6, hybrids are
available for all of the most commonly purchased vehicle types, including automobiles, pick-ups,
and SUVs8.

                               700,000


                               600,000


                               500,000
              Total Vehicles




                               400,000


                               300,000


                               200,000


                               100,000


                                    0
                                                 2004                2005             2006


                               Figure 5. Total Alternative Fuel Vehicles in the U.S., 2004-2006


                                                             Other
                                         SUVs                0.4%
                                         26.0%
                                                                                         Automobiles
                                                                                            41.7%



          Vans/Minivans
              1.0%

                                          Pickup Trucks
                                              31.0%

                                Figure 6: Alternative Fuel/Hybrid Vehicles Available by Type


August 2008                                                                                                 Page 7
                                                                                                                                                                                               The Impacts of Gasoline Price
                                                                                                                                                                                                 on Traffic and Toll Revenue




GASOLINE PRICE FORECASTS
Figure 7 shows the probable, high and low forecasts for gasoline price in 2006 dollars prepared
by Energy Information Administration (EIA) in June 20089. As can be seen, it is most likely that
the gasoline price (in 2006 dollars) will decrease from the current highs and return to 2005 price
levels by about 2012. Beyond 2012, price growth is expected to remain relatively consistent with
inflationary growth in the long-term until 2030.


                                               $4.00
                                                                            High                               Low                          Probable
   Average Gasoline Price (2006$ per gallon)




                                               $3.50



                                               $3.00


                                               $2.50


                                               $2.00



                                               $1.50


                                               $1.00
                                                       2005
                                                              2006
                                                                     2007
                                                                            2008
                                                                                   2009
                                                                                          2010
                                                                                                 2011
                                                                                                        2012
                                                                                                               2013
                                                                                                                      2014
                                                                                                                             2015
                                                                                                                                    2016
                                                                                                                                           2017
                                                                                                                                                  2018
                                                                                                                                                         2019
                                                                                                                                                                2020
                                                                                                                                                                       2021
                                                                                                                                                                              2022
                                                                                                                                                                                     2023
                                                                                                                                                                                            2024
                                                                                                                                                                                                   2025
                                                                                                                                                                                                          2026
                                                                                                                                                                                                                 2027
                                                                                                                                                                                                                        2028
                                                                                                                                                                                                                               2029
                                                                                                                                                                                                                                      2030
                                                                                          Figure 7. Gasoline Price Projections

The findings of the “Energy Special Report” released by Lehman Brothers (dated April 3, 2008)
suggest price drops in the near future, as indicated by the EIA forecasts described above. The
following is an excerpt from the report10:

“All in all, signals on the downstream, upstream, and on the demand side point to a period of oil
price weakness approaching. Accompanying these long-term trends are indications that “new
fundamentals”, while lending near-term strength to prices, are largely unsustainable in the
medium to long term. Indeed, the ephemeral new fundamentals could readily reverse and turn
into an accelerating selloff should the right macro indicators emerge or investors revive their
faith in their efficacy.

Of course, oil markets remain only partially transparent and subject to imperfect and lagged
information on supply, demand and inventory changes. Project delays, unforeseen supply
disruptions or murky indicators emanating from East of Suez can frustrate the timing of any

August 2008                                                                                                                                                                                                                            Page 8
                                                                                                                             The Impacts of Gasoline Price
                                                                                                                               on Traffic and Toll Revenue




turning point. But the overarching trends, we believe, point to a sustained three-year respite in
oil prices, possibly continuing further through the early part of next decade. Those projecting an
indefinitely rising linear path either of oil demand or of prices should heed the main historical
lessons of this industry: it is violently cyclical. The question is not whether there will be a turning
point, but when it will occur. It could well come faster than many analysts believe.”

GASOLINE PRICE VS INCOME
Figure 8 shows the historic and projected average gasoline price in 2006 dollars and the historic
and projected mean household income in 2004 dollars from 1970 to 203011. As illustrated in the
figure, in the long-term, the growth in the mean household income is expected to exceed the
growth in gasoline price. As a result, the gasoline price as a percentage of the mean average
wage is expected to decrease in the long-term, as shown in Figure 9. This means that although
gasoline prices may not decrease significantly, their affordability to average Americans will
likely increase.

As gasoline prices rise, travelers are becoming increasingly aware of the costs associated with
driving. Gasoline prices, whether low or high, have an impact on travel behavior. The following
section discusses the impact of gasoline prices on drivers and their travel decisions.



                                  $140,000                                                                                                   $3.00




                                                                                                                                                     Average Gasoline Price (2006$ per gallon)
                                  $120,000
                                                                                                                                             $2.50
  Mean Household Income (2004$)




                                  $100,000
                                                                                                                                             $2.00

                                   $80,000

                                                                                                                                             $1.50

                                   $60,000

                                                                                                                                             $1.00
                                   $40,000                                      Mean Household Income
                                                                                Average Gasoline Price
                                                                                                                                             $0.50
                                   $20,000


                                       $0                                                                                                    $0.00
                                             1970


                                                    1975


                                                           1980


                                                                  1985


                                                                         1990


                                                                                   1995


                                                                                          2000


                                                                                                 2005


                                                                                                        2010


                                                                                                               2015


                                                                                                                      2020


                                                                                                                               2025


                                                                                                                                      2030




                                                Figure 8. Historic and Projected Mean Household Income



August 2008                                                                                                                                          Page 9
                                                                                                                                The Impacts of Gasoline Price
                                                                                                                                  on Traffic and Toll Revenue




                                                    10%
  Average Gasoline Price (% of Mean Average Wage)




                                                    9%

                                                    8%

                                                    7%

                                                    6%

                                                    5%

                                                    4%

                                                    3%

                                                    2%

                                                    1%

                                                    0%
                                                          1970


                                                                 1975


                                                                        1980


                                                                               1985


                                                                                      1990


                                                                                             1995


                                                                                                    2000


                                                                                                           2005


                                                                                                                  2010


                                                                                                                         2015


                                                                                                                                   2020


                                                                                                                                           2025


                                                                                                                                                   2030
                                                          Figure 9. Gasoline Price as a Percentage of Mean Average Wage




August 2008                                                                                                                                         Page 10
                                                                          The Impacts of Gasoline Price
                                                                            on Traffic and Toll Revenue




                                                                          SECTION             2
                         IMPACTS OF GASOLINE PRICE ON DRIVERS
As gasoline prices have increased, drivers have become increasingly aware of the full cost of
driving. Rising gasoline prices could potentially affect travel behavior.

CHANGES IN TRAVEL BEHAVIOR
Travelers can change their behavior in a variety of ways to accommodate higher gasoline prices.
Typically, work trips and school trips cannot be eliminated by travelers. To accommodate the
rising costs of these trips, they may change their household budgets to lessen the impact of
gasoline price increases. According to the latest Kelley Blue Book Marketing Research study12,
the number of new-car shoppers adjusting their spending habits due to increasing gasoline prices
has reached a record high. The April 2008 survey results revealed that 65 percent of shoppers are
spending less on non-essential retail items as a result of high gasoline prices, compared to 42
percent in October 2007. Additionally, 53 percent indicated they eat out less often, 48 percent
purchase fewer media entertainment items, 15 percent carpool or find alternative means of
transportation and 10 percent have delayed purchasing a new home. Furthermore, the portion of
shoppers who say they will not change their spending habits due to gasoline prices has decreased
from 43 percent in October 2007 to 22 percent in April 2008.

Travelers are usually not able to change the location of their home and/or workplace in a short
time. Table 1 shows the trip purpose characteristics along the NTTA System, SH 121 and SH
161 corridors. Because more than 80 percent of the trips undertaken by NTTA toll facility users
are work or school related, they might not have the flexibility to make changes in their travel
behavior. However, they do have the option of using more gasoline efficient vehicles, using
transit, or carpooling, if available.




August 2008                                                                                   Page 11
                                                                                                      The Impacts of Gasoline Price
                                                                                                        on Traffic and Toll Revenue




                                                                           Table 1
                                                                   Trip Purpose by Corridor
                                Trip Purpose                     NTTA System          SH 121               SH 161
                                Business Related                    79.0%             77.0%                85.5%
                                School                               1.5%              7.0%                 3.5%
                                Shopping                             6.2%              9.0%                 3.2%
                                Recreation/Social                   13.3%              7.0%                 7.8%
                                Source: NTTA and TxDOT Origin-Destination Surveys




IMPACTS ON AUTOMOBILE SALES
The increased popularity of more fuel-efficient vehicles has the potential to change the total
amount of gasoline needed for travel, which could lead to a change in market share of different
categories of vehicles sold. Historically, vehicle sales have consistently increased in the United
States. However, since 2004 this trend has changed. The U.S. has experienced an increasing drop
in vehicle sales since 2004 correlated to rises in gasoline prices13, as shown in Figure 10.



                                200%

                                190%

                                180%                           U.S. Vehicle Sales
                                170%                           Gasoline Prices
   Percentage of 2004 Average




                                160%

                                150%

                                140%
                                130%

                                120%

                                110%

                                100%

                                  90%

                                  80%
                                                 2004                2005           2006       2007             2008

                                                           Figure 10. U.S. Vehicle Sales: 2004-2008




August 2008                                                                                                               Page 12
                                                                                                   The Impacts of Gasoline Price
                                                                                                     on Traffic and Toll Revenue




VEHICLE SALES IN DFW AREA
Sales of new vehicles in North Texas (33 counties including the Dallas-Fort Worth Area)
decreased by 4.2 percent for the months of January through May 2008 when compared to the
same period in 2007. Sales of small cars have increased by 20 percent, and sales of medium
sized cars have increased by 9 percent in the same period. Alternatively, total truck sales have
decreased by 12 percent. Sales of small trucks decreased by 10 percent, smaller pickup sales
decreased by 8 percent, large SUV sales decreased by 24 percent, medium size SUV sales
decreased by 13 percent and minivan sales decreased by 20 percent. Overall, total car sales
increased by 4 percent while truck sales (including SUVs) decreased by 12 percent. This led to
an overall decrease of 4.2 percent in vehicle sales in North Texas. These changes in vehicle sales
are also indicative of shifts from SUVs and trucks to more fuel efficient cars.

IMPACTS ON TRANSIT USAGE AND ALTERNATIVE MODES IN THE DFW AREA
Figures 11 and 12 show the monthly transit ridership trends for the Dallas Area Rapid Transit
(DART) and the Fort Worth Transportation Authority (The T) in comparison to trends in the
gasoline price. The figures indicate that increases in gasoline prices are closely associated with
increases in transit ridership.



                                     7                                                                        $4.50

                                                                                                              $4.00
                                     6
                                                                                                              $3.50
      Monthly Ridership (millions)




                                                                                                                      Gasoline Price (per gallon)
                                     5
                                                                                                              $3.00

                                     4                                                                        $2.50

                                     3                                                                        $2.00

                                                                                                              $1.50
                                     2                                                 DART Ridership
                                                                                       Gasoline Price         $1.00
                                     1
                                                                                                              $0.50
                                         Source: Dallas Area Rapid Transit

                                     0                                                                        $0.00
                                         Oct-00
                                         Jan-01

                                          Jul-01
                                         Oct-01
                                         Jan-02

                                          Jul-02
                                         Oct-02
                                         Jan-03

                                          Jul-03
                                         Oct-03
                                         Jan-04

                                          Jul-04
                                         Oct-04
                                         Jan-05

                                          Jul-05
                                         Oct-05
                                         Jan-06

                                          Jul-06
                                         Oct-06
                                         Jan-07

                                          Jul-07
                                         Oct-07
                                         Jan-08
                                         Apr-01




                                         Apr-02




                                         Apr-03




                                         Apr-04




                                         Apr-05




                                         Apr-06




                                         Apr-07




                                         Apr-08




                                                     Figure 11. Monthly DART Ridership: 2000-2008




August 2008                                                                                                                                    Page 13
                                                                                                         The Impacts of Gasoline Price
                                                                                                           on Traffic and Toll Revenue




                                       900                                                                          $4.50

                                       800                                                                          $4.00
       Monthly Ridership (thousands)




                                       700                                                                          $3.50




                                                                                                                            Gasoline Price (per gallon)
                                       600                                                                          $3.00

                                       500                                                                          $2.50

                                       400                                                                          $2.00

                                       300                                                                          $1.50
                                                                            Total Ridership
                                       200                                                                          $1.00
                                                                            Gasoline Price
                                       100                                                                          $0.50
                                             Source: Fort Worth Transportation Authority
                                        0                                                                           $0.00
                                             May-05
                                             Jun-05
                                              Jul-05


                                             Oct-05
                                             Nov-05
                                             Dec-05
                                             Jan-06
                                             Feb-06
                                             Mar-06

                                             May-06
                                             Jun-06
                                              Jul-06


                                             Oct-06
                                             Nov-06
                                             Dec-06
                                             Jan-07
                                             Feb-07
                                             Mar-07

                                             May-07
                                             Jun-07
                                              Jul-07


                                             Oct-07
                                             Nov-07
                                             Dec-07
                                             Jan-08
                                             Feb-08
                                             Mar-08

                                             May-08
                                             Jun-08
                                             Sep-05




                                             Sep-06




                                             Sep-07
                                             Aug-05




                                             Apr-06



                                             Aug-06




                                             Apr-07



                                             Aug-07




                                             Apr-08
                                                     Figure 12. Monthly Ridership on The T: 2005-2008


However, it is important to note that according to the 2000 census, the percentage of work trips
in the DFW area that are made using transit is about 1.6 percent, compared to 2.2 percent in the
1990 census. Table 2 compares the distribution of the work trips among different modes in the
DFW area with the distribution seen in New York and Chicago. As can be seen, the percentage
of transit trips is much lower in DFW than in New York and Chicago. This is directly related to
the low population density in the DFW area as compared to New York and Chicago. Table 3
compares the population densities of these three cities and their respective states, based on the
2000 census.

According to projections, it is expected that the share of the transit trips in relation to the total
trips in the DFW region is expected to remain less than 2 percent through 2030 (according to
Mobility 2030: the Metropolitan Transportation Plan for the Dallas-Fort Worth Area, adopted
by the Regional Transportation Council (RTC) in January 2007).


                                                                             Table 2
                                                                    Mode Choice for Work Trips
  Metropolitan                                            Drive Alone         Carpool            Transit         Work at Home
  Area                                                   1990     2000     1990      2000     1990     2000      1990     2000
  Dallas-Fort Worth                                     78.6%    78.8%    13.9%     14.0%     2.2%     1.6%      2.3%     3.0%
  New York                                              55.4%    56.3%    10.4%      9.4%    23.9%    23.9%      2.4%     3.0%
  Chicago                                               67.6%    70.5%    12.0%     11.0%    13.1%    11.2%      2.1%     2.9%
 Source: Federal Highway Administration



August 2008                                                                                                                                         Page 14
                                                                                                                               The Impacts of Gasoline Price
                                                                                                                                 on Traffic and Toll Revenue




                                                                       Table 3
                                     Population Density (persons/sq. mile)
                                 Location                                                      Density
                                 City of Dallas                                                 3,470
                                 New York City                                                 26,403
                                 City of Chicago                                               12,750
                                 Texas                                                            80
                                 New York State                                                  402
                                 Illinois                                                        223
                                 Source: US Census, 2000



Figure 13 shows a comparison of work trips in 1990 and 2000 for Denton, Collin, Tarrant, and
Dallas Counties. As shown in the figure, the percentage of Collin County employees traveling to
Dallas County for their job decreased significantly over that ten-year period, while the
percentage both working and living in Collin County increased. In 1990, 64 percent of work
trips beginning in Collin County ended in Dallas County, and by 2000 that percentage had
dropped to 47 percent. A similar relationship exists between Dallas County and Denton County,
where Dallas-bound trips dropped from 76 percent to 42 percent over the ten-year period. These
shifts are indicative of large shifts in employment growth, particularly in Collin County and
Denton County.


                                                      DENTON
                                     12% 5%                                                         0%   3%          COLLIN
                                7%
                                                            1990
                                                                                                               33%      1990

                                                                                                                            2% 1%
                                              76%
                                                                     7% 6%                    64%




                                                                              42%
                                            2000          45%                                                         47%           50%
                                                                                                         2000



                         0%                                                  0%     2%
                                        TARRANT                                                 DALLAS
                                                                                  5%
                              17%      0%

                                            1990                                                    1990


                   83%                      1%
                                                                                       93%          1% 5% 5%

                                                    20%
                                                                1%

                         2000
                                                                                       2000
                                      78%
                                                                                                           89%




               Figure 13. 1990 and 2000 Work Trip Destinations by County

August 2008                                                                                                                                        Page 15
                                                                             The Impacts of Gasoline Price
                                                                               on Traffic and Toll Revenue




PRICE ELASTICITY OF GASOLINE
Several studies have evaluated the relationships between gasoline price and travel behavior.
Goodwin et al.14 evaluated gasoline price effects on VMT. Reviewing empirical studies since
1990 from around the world, they found that a 10 percent increase in the real price of gasoline
will produce a 1 percent reduction (VMT elasticity of -0.10) in vehicle miles traveled and a 2.5
percent (fuel consumption elasticity of -0.25) reduction in gasoline consumption, as well as a 1.5
percent increase (vehicle efficiency improvement elasticity of 0.15) in fuel efficiency of vehicles
and a less than 1 percent decrease (vehicle ownership change elasticity of -0.10) in net vehicle
ownership. The authors speculated that gasoline consumption falls more than volume of traffic
because price increases trigger a more efficient use of gasoline through technical improvements
to vehicles and more fuel-conserving driving styles.

Small and Van Dender15 estimated the short-term price elasticity of gasoline as the sum of (i) the
short-term elasticity of VMT with respect to the gasoline cost of driving a mile and (ii) the short-
term elasticity of gasoline intensity with respect to the price of gasoline. Based on the sample
means of their parameters, the short-term VMT elasticity computed to -0.0452 and the short-term
gasoline intensity elasticity to -0.0440. The sum of these values, -0.0892, was their estimate of
the overall short-term price elasticity of gasoline.

Using 1997-2001 data, Small and Van Dender calculated a short-term VMT elasticity of -0.0311
and a short-term gasoline intensity elasticity of -0.0447, for an overall short-term price elasticity
of -0.0758. Both short-term price elasticities: the -0.0892 value calculated from the sample
means and the -0.0758 value calculated for (adjusted) 1997-2001 conditions — are roughly twice
the short-term price elasticity of -0.04 that are observed for March 2001 through March 2006 by
Hughes and Christopher16. Small and Van Dender reported fairly robust long-term price
elasticities. Their long-term values are -0.4268 for the sample means and -0.3715 for the 1997-
2001 values.

Puller and Greening disaggregated gasoline demand to demand for vehicle miles traveled and
demand for miles per gallon, and found an elasticity of -0.69 for a household’s VMT and -0.22
for gasoline economy (miles per gallon). They attributed these results to households making
large adjustments in the form of decreasing overall driving, but in the process reducing their
demand for efficient driving by foregoing high efficiency miles such as vacations17.

In a study done to see the impact of a 2005 spike in gasoline prices in Austin, researchers at the
University of Texas carried out a survey to gauge changes in travel behavior as a result of a spike
in gasoline prices18. The results suggested that travelers respond in a variety of ways to gasoline
price spikes, and are most likely to respond by reducing their overall driving. Studies of
correlation suggested that much of this reduction may be achieved through increased use of other
modes or trip chaining (combining multiple trips into one) as opposed to merely decreasing out-
of-home activities. Adjustments in style of driving also appear to be a viable strategy of coping
with high gasoline prices, as significant percentages reported increased attention to vehicle
maintenance (presumably to ensure peak gasoline efficiency), driving slower, and driving at
steadier speeds.

August 2008                                                                                      Page 16
                                                                                              The Impacts of Gasoline Price
                                                                                                on Traffic and Toll Revenue




In summary, short-term elasticity (less than one year) of traffic volume with respect to gasoline
price increase is likely close to -0.10 and long-term (approximately five years) is likely close to -
0.30. Gasoline consumption elasticity with respect to gasoline price increase is -0.25 in the short-
term and -0.60 in the long-term. Gasoline consumption falls due to technical improvements to
vehicles, more fuel conserving driving styles, and shifts to more fuel-efficient vehicles. Gasoline
usage efficiency can be expected to have an elasticity of 0.15 in the short-term and 0.40 in the
long-term. Vehicle ownership elasticity is -0.10 in the short-term and -0.25 in the long-term.

In addition to looking at the travel elasticity values, it is informative to review changes in VMT
due to the increase in gasoline prices in the recent past.

CHANGES IN TOTAL VMT IN THE U.S.
VMT in the U.S. has increased every year since the early 1980s19. However, due to the recent
surge in gasoline prices, the VMT for the first four months in the year20 has decreased from the
levels seen in 2005, 2006 and 2007, as shown in Figure 14. Future VMT will be a function of
multiple factors, one of which is vehicle operating costs. If the vehicle operating costs return to
the same levels as they were before 2004, VMT will likely continue to increase in the future. A
further rise in automobile operating costs has the potential to decrease VMT.

Vehicle operating costs have increased in 2007 and 2008, and most of this increase has been
because of gasoline costs. Other components of the total vehicle operating cost (maintenance,
tires, etc.) have remained relatively flat over that same period. According to Energy Information
Administration (EIA) forecasts shown in Section 1, gasoline prices are anticipated to decrease
after 2008 (in 2006 dollars). If those forecasts prove accurate, increase in VMT should logically
follow the same trend as in the past (pre-2005).


                                          5.35

                                          5.30

                                          5.25
           Average Daily VMT (billions)




                                          5.20

                                          5.15

                                          5.10

                                          5.05

                                          5.00

                                          4.95

                                          4.90
                                                  2004        2005        2006       2007         2008


                                          Figure 14. Average Daily VMT – Urban Highways (January-April)

August 2008                                                                                                       Page 17
                                                                                                           The Impacts of Gasoline Price
                                                                                                             on Traffic and Toll Revenue




                                                                                                           SECTION             3
                                                                   EFFECTS ON THE NTTA SYSTEM
Recent gasoline prices and any subsequent changes in drivers’ travel behavior could potentially
impact the traffic and revenue on the NTTA System. To measure these effects, a review of the
local economy and outlook was conducted. Additionally, recent transaction trends on the NTTA
System were evaluated to determine what effects have been observed thus far.

REGIONAL POPULATION
Table 4 shows the historical population trends for the ten counties in the forecast area, the state
of Texas and the United States. The total population in the North Central Texas Council of
Governments (NCTCOG) forecast area has increased at an average annual rate of 2.6 percent
from 1970 to 2000, equivalent to 2.7 million additional residents. This population growth trend
exceeded the state and national growth trends between 1970 and 2000 which were 2.1 percent
and 1.1 percent per year, respectively.

                                                                     Table 4
                                                        Population Trends and Projections

                                                                                                                Annual Percent Growth
           County                      1970              1980          1990           2000          2030
                                                                                                                 1970-2000   2000-2030
Collin                                66,920            144,576        264,036        491,675     1,166,645        6.9%        2.9%
Dallas                               1,327,696        1,556,419      1,852,810      2,218,899     2,817,191        1.7%        0.8%
Denton                                75,633            143,126        273,525        432,976     1,085,343        6.0%        3.1%
Ellis                                 46,638             59,743         85,167        111,360       448,588        2.9%        4.8%
Johnson                               45,769             67,649         97,165        127,793       444,151        3.5%        4.2%
Kaufman                               32,392             39,015         52,220         71,313       277,745        2.7%        4.6%
Parker                                33,888             44,609         64,785         88,495       328,418        3.3%        4.5%
Rockwall                               7,046             14,528         25,604         43,080       144,976        6.2%        4.1%
Tarrant                               715,587           860,880       1,170,103      1,446,219     2,291,723       2.4%        1.5%
Wise                                  19,687             26,575        34,679         48,793        102,449        3.1%        2.5%
NCTCOG Forecast Area                 2,371,256         2,957,120      3,920,094      5,080,603     9,107,229       2.6%        2.0%
State of Texas                      11,256,480        14,337,820     16,986,510     20,851,820    31,830,579       2.1%        1.4%
United States                      203,982,310       227,225,620    248,709,873    281,421,906   362,880,000       1.1%        0.9%
Source: NCTCOG, Texas State Data Center, U.S. Census Bureau.




August 2008                                                                                                                    Page 18
                                                                                            The Impacts of Gasoline Price
                                                                                              on Traffic and Toll Revenue




Included in Table 4 is the future population estimate for 2030 developed by NCTCOG. The
population in the NCTCOG forecast area is expected to increase from 5.1 million in 2000 to 9.1
million by 2030, corresponding to an average annual growth rate of 2.0 percent. This annual
growth rate for the NCTCOG forecast area is anticipated to be higher than the annual growth rate
for both the state and the nation.

REGIONAL EMPLOYMENT
The countywide historical employment trends in the NCTCOG forecast area are shown in Table
5. Between 1990 and 2000, employment in the NCTCOG forecast area increased at an average
annual rate of 3.9 percent, which was higher than the employment growth rate of both the state
and nation. Table 5 also shows the NCTCOG employment estimates for 2030. Between 2000 and
2030, 2.3 million additional jobs are expected to be added in the NCTCOG forecast area, at an
average annual growth rate of 1.8 percent. Employment in Texas and in the nation is expected to
grow at an average annual rate of 2.0 percent and 1.5 percent, respectively, from 2000 to 2030.

                                                         Table 5
                                             Employment Trends and Projections
                                                                                 Annual Percent      Annual Percent
           County                     1990              2000         2030           Growth              Growth
                                                                                  (1990-2000)         (2000-2030)
Collin                               97,000           204,057       517,264          7.7%                  3.1%
Dallas                             1,309,000         1,745,109     2,529,371         2.9%                  1.2%
Denton                               67,000           152,818       413,453          8.6%                  3.4%
Ellis                                28,000            49,071       162,769          5.8%                  4.1%
Johnson                             33,000            45,071        142,544          3.2%                  3.9%
Kaufman                              20,000            31,027        82,078          4.5%                  3.3%
Parker                               19,000           29,816         94,703          4.6%                  3.9%
Rockwall                             10,000            17,025        48,466          5.5%                  3.5%
Tarrant                             565,000           864,360      1,388,247         4.3%                  1.6%
Wise                                 9,000            15,100         37,823          5.3%                  3.1%
NCTCOG Forecast Area               2,157,000         3,153,454     5,416,718         3.9%                  1.8%
State of Texas                     6,983,170         9,289,286    16,743,000         2.9%                  2.0%
United States                     108,657,200       129,877,063   202,431,000        1.8%                  1.5%
Source: NCTCOG, Texas State Data Center, U.S. Census Bureau.




Figure 15 shows the recent unemployment rates in both the U.S.21 and the DFW area. The rates
indicate that even though national and DFW unemployment rates have increased in the recent
past, the DFW area is performing better than the rest of the U.S. during the current economic
downturn.




August 2008                                                                                                     Page 19
                                                                                                                                                                    The Impacts of Gasoline Price
                                                                                                                                                                      on Traffic and Toll Revenue




                               6.0%


                               5.0%
   Monthly Unemployment Rate




                               4.0%


                               3.0%

                                                         U.S.
                               2.0%
                                                         DFW

                               1.0%


                               0.0%

                                                                                                                                Nov-07
                                      Jan-07




                                                                                   Jun-07

                                                                                            Jul-07




                                                                                                                                                  Jan-08




                                                                                                                                                                                                Jun-08
                                               Feb-07

                                                        Mar-07

                                                                 Apr-07

                                                                          May-07




                                                                                                     Aug-07

                                                                                                              Sep-07

                                                                                                                       Oct-07



                                                                                                                                         Dec-07



                                                                                                                                                           Feb-08

                                                                                                                                                                     Mar-08

                                                                                                                                                                              Apr-08

                                                                                                                                                                                       May-08
                                                                 Figure 15. Recent Unemployment Rates


TRENDS IN BUILDING PERMITS
The housing industry accounts for a large percentage of investment spending. Building permits
are leading economic indicators as they help predict what the economy will be like in the future.
Sustained declines in building permits slow the economy and can be indicative of a potential
recession. Likewise, increases in this leading indicator can potentially indicate or trigger
economic growth. Building permit activity provides insight into housing and overall economic
activity in the upcoming months.

Building permits are also useful for updating previous demographics to recent and near-term
future levels. New homes being built indicate population growth in the area. The trends in
residential building permits21 are presented in Table 6. In all cases, single-family building
permits and housing starts have generally continued to grow from year to year with some
exceptions. Notably, building permits in the Dallas-Fort Worth region dropped significantly in
2007 due to the recent downturn in the housing market. Data for the first quarter of 2008
indicates that this trend is continuing. The issuance of multi-family building permits has
exhibited the greatest degree of variability from year to year.




August 2008                                                                                                                                                                                         Page 20
                                                                                                                      The Impacts of Gasoline Price
                                                                                                                        on Traffic and Toll Revenue




                                                                             Table 6
                                                 Historical Trends in Single and Multi-Family Building Permits
                               Dallas                        Fort Worth-Arlington                  Texas                           United States
     Year         Single       Multi                     Single     Multi                Single    Multi                 Single       Multi
                                                Total                          Total                         Total                                Total
                  Family       Family                    Family    Family               Family    Family                Family       Family
     1980         11,513       10,440           21,953    6,572     5,542      12,114    67,870    60,445   128,315     730,067      484,738 1,214,805
     1981          9,396       10,676           20,072    4,849     4,766      9,615     66,161   70,310    136,471     581,913      425,682 1,007,595
     1982         12,383       25,509           37,892    7,102    10,565      17,667    78,714   123,956   202,670     562,359      458,973 1,021,332
     1983         21,920       52,385           74,305   12,612    26,080      38,692   103,252   175,965   279,217     922,751      708,867 1,631,618
     1984         20,652       31,116           51,768   11,953    19,919      31,872    84,565   110,867   195,432     930,174      760,399 1,690,573
     1985         20,289       28,141           48,430   11,447    14,392      25,839    67,964    73,229   141,193     931782       761,200 1,692,982
     1986         17,658       17,411           35,069    9,249     4,059      13,308    59,143   37,620     96,763    1,088,281     693,290 1,781,571
     1987         12,695        2,624           15,319    6,481      790        7,271    43,975     6,506   50,481     1,036,924     511,796 1,548,720
     1988          9,136        1,515           10,651    5,049      220        5,269    35,908     4,598   40,506     1,005,872     463,338 1,469,210
     1989          9,144         548             9,692    4,987      109       5,096     36,658     4,656    41,314     945,629      409,424 1,355,053
     1990          9,993        4,901           14,894    4,746      328       5,074     38,233     8,962    47,195     809,474      320,128 1,129,602
     1991         11,224        3,162           14,386    4,324      906        5,230    46,209   10,298     56,507     784,150      199,138     983,288
     1992         14,769        1,848           16,617    5,357       24       5,381     59,543     9,514    69,057     949,197      187,573 1,136,770
     1993         15,827        4,386           20,213    6,051      401       6,452     69,964    15,545    85,509    1,025,816     220,282 1,246,098
     1994         15,881       10,152           26,033    6,526     1,461       7,987    70,452   32,237    102,689    1,080,591     305,148 1,385,739
     1995         15,651       11,475           27,126    6,492     3,042       9,534    70,421   34,684    105,105    1,009,842     338,268 1,348,110
     1996         18,072       10,612           28,684    7,460     2,675      10,135    83,132   35,720    118,852    1,083,063     359,830 1,442,893
     1997         19,434       14,045           33,479    7,127     3,683      10,810    82,228   43,794    126,022    1,074,746     384,003 1,458,749
     1998         22,645       17,138           39,783    9,374     5,385      14,759    99,912   56,918    156,830    1,198,695     428,211 1,626,906
     1999         22,974       12,716           35,690    9,605     2,393      11,998   101,928   44,716    146,644    1,258,527     421,150 1,679,677
     2000         25,726        6,362           32,088   10,455     2,210      12,665   108,782   32,620    141,402    1,212,076     400,234 1,612,310
     2001         25,689        9,789           35,478   12,169     2,201      14,370   111,915   38,427    150,342    1,235,550     401,126 1,636,676
     2002         24,978        9,552           34,530   13,391     3,765      17,156   122,913   42,409    165,322    1,350,718     420,904 1,771,622
     2003         27,418        8,960           36,378   13,814     3,316      17,130   137,493   43,081    180,574    1,473,036     428,856 1,901,892
     2004         32,101        5,621           37,722   16,067     2,664      18,731   151,384   39,796    191,180    1,616,600     456,737 2,073,337
     2005         31,696        7,164           38,860   17,877     3,272      21,149   166,203   44,431    210,634    1,676,334     471,770 2,148,104
     2006         28,513        8,853           37,366   15,212     4,050      19,262   163,032   53,894    216,926    1,381,853     460,695 1,842,548
     2007         19,511       11,815           31,326   10,317     3,639      13,956   120,366    58,542   178,908     985,621      418,755 1,404,376
    ACGR 1         2.0%         0.5%             1.3%     1.7%      -1.5%       0.5%      2.1%     -0.1%      1.2%        1.1%        -0.5%        0.5%
    ACGR 2         0.0%        -1.7%            -0.7%     3.8%      -0.1%       2.6%      3.9%      2.9%      3.6%       -0.9%         0.9%       -0.4%
1
    Annual Compounded Growth Rate (1980-2007)
2
  Annual Compounded Growth Rate (1997-2007)
Source: Real Estate Center at Texas A&M University




RESIDENTIAL HOUSING ACTIVITY
The number of homes that are sold and the amount of time that those homes are on the market
indicate the strength of the economy. Sustained growth in the number of homes sold in
combination with declining inventories indicates a strong housing market. Trends in residential
housing activity, including the number of homes sold, the median price, and the average monthly
inventories are presented for the Dallas Multiple Listing Service (MLS) area, Fort Worth MLS,
and the State of Texas in Table 7.

In 1990, homes stayed on the market for an average of 14.1 and 15.9 months in the Dallas MLS
and Fort Worth MLS, respectively. By 2007, the average number of months of resale inventory
had dropped to only 6.2 months. Similar numbers were seen for the State of Texas with an
average of 11.6 months inventory in 1990 dropping to 5.6 months in 2007. Data for the first half
of 2008 indicates that this trend continuing with an average of 6.2 months.

From 1990 to 2007 the number of homes sold in the Dallas MLS and Fort Worth MLS increased
at an average annual rate of 7.2 percent and 7.5 percent, respectively, while the median price of
homes sold increased at an average annual rate of 3.8 percent and 3.9 percent respectively. In


August 2008                                                                                                                                    Page 21
                                                                                                                    The Impacts of Gasoline Price
                                                                                                                      on Traffic and Toll Revenue




Texas, the number of homes sold increased at an average annual rate of 6.1 percent and the
median price increased at an average annual rate of 4.7 percent. However, due to the recent
downturn in the housing market, home sales in the Dallas area dropped in 2007 for the first time
since 1991.

                                                                Table 7
                                  Residential Housing Activity Home Sale and Market Inventory Trends
                   Dallas Multiple Listing Service Area             Fort Worth Multiple Listing Service                   State of Texas
                                    Average                                      Average                                    Average
     Year        Number of                                         Number of                                 Number of
                                     Months        Median Price                   Months      Median Price                   Months        Median Price
                 Homes Sold                  1                     Homes Sold             1                  Homes Sold              1
                                   Inventory                                    Inventory                                  Inventory
      1990          17,528             14.1             $86,100      3,381         15.9        $61,500        100,047         11.6          $68,100
      1991          16,858             13.8             $86,000      3,086         14.4        $63,700         99,619         10.5          $71,200
      1992          19,742             11.3             $88,800      3,317         13.6        $65,300        107,107          9.6          $75,200
      1993          21,406             9.2              $91,800      3,721         11.3        $68,300        116,604          8.5          $78,200
      1994          22,999             7.8              $92,700      3,428          -          $65,800        122,134          7.0          $80,000
      1995          24,968             7.8               $94,900     3,915         7.5          $64,800       121,823          7.6          $81,600
      1996          30,128             6.3              $101,500     4,261          -          $66,100        138,123          7.3          $86,400
      1997          33,884             5.3              $107,400     4,962         6.1         $70,000        146,395          6.8          $90,600
      1998          40,051             4.1              $116,100     5,386         4.7         $75,200        170,638          5.2           $96,200
      1999          43,199             4.0              $121,400     6,125         4.6          $78,000       184,056          4.6          $100,900
      2000          45,446             3.8              $134,300     6,380         4.4          $84,000       188,738          4.5          $112,100
      2001          46,992             4.6              $141,500     6,781         4.8          $90,600       196,401          5.1          $119,400
      2002          47,199             5.5              $144,900     7,337         5.2          $95,200       201,528          5.4          $124,500
      2003          49,278             6.5              $148,500     7,757         6.2          $98,300       216,101          6.1          $127,700
      2004          54,514             6.3              $149,600     8,907         6.3         $101,600       240,870          5.9          $130,000
      2005          59,980             5.8              $154,800     10,441        6.4         $113,300       266,761          5.4          $136,800
      2006          61,996             5.7              $158,200     11,977        6.2         $117,700       288,575          5.0          $143,100
      2007          57,599             6.2              $161,300     11,528        6.2         $118,400       273,428          5.6          $147,500
             2
    ACGR             7.2%              ***                3.8%        7.5%         ***           3.9%           6.1%          ***             4.7%
1
    Average number of months homes are on the market.
2
  Annual Compounded Growth Rate
Source: Real Estate Center at Texas A&M University




IMPACTS ON NTTAS TRANSACTIONS
Figure 16 shows the average daily transaction trends on the NTTA System by quarter from 2004
onwards. As seen in the figure, transactions on the NTTA System have historically been inelastic
with regards to gasoline price increases. However, sharp increases in gasoline price in May and
June 2008 did produce some small noticeable impacts on NTTA system transactions.

Table 8 shows the comparative transaction growth on the facilities of the NTTA System for the
first half of the year and for May and June independently. For the period from January to June
2008, transactions grew on the DNT by 9.5 percent over the same period in 2007, but a large
portion of that transaction growth was due to opening of the Phase 3 Extension in September
2007. Excluding the Phase 3, transactions have grown on the DNT at an average rate of 3.0
percent. Similarly, transactions on the PGBT have grown at an average of 1.8 percent between
2007 and 2008.



August 2008                                                                                                                                   Page 22
                                                                                                                                                                                                                     The Impacts of Gasoline Price
                                                                                                                                                                                                                       on Traffic and Toll Revenue




                                                120                                                                                                                                                                                            $4.00


                                                                                                                                                                                                                                               $3.50
                                                100
      Total Quarterly Transactions (millions)




                                                                                                                                                                                                                                                       Average Gasoline Price (per gallon)
                                                                                                                                                                                                                                               $3.00

                                                80
                                                                                                                                                                                                                                               $2.50


                                                60                                                                                                                                                                                             $2.00


                                                                                                                                                                                                                                               $1.50
                                                40

                                                                                                         Transactions                                                  Average Gasoline Price                                                  $1.00

                                                20
                                                                                                                                                                                                                                               $0.50


                                                 0                                                                                                                                                                                             $0.00
                                                      2004 Q1


                                                                2004 Q2


                                                                          2004 Q3


                                                                                     2004 Q4


                                                                                               2005 Q1


                                                                                                           2005 Q2


                                                                                                                     2005 Q3


                                                                                                                               2005 Q4


                                                                                                                                         2006 Q1


                                                                                                                                                   2006 Q2


                                                                                                                                                             2006 Q3


                                                                                                                                                                         2006 Q4


                                                                                                                                                                                   2007 Q1


                                                                                                                                                                                             2007 Q2


                                                                                                                                                                                                       2007 Q3


                                                                                                                                                                                                                 2007 Q4


                                                                                                                                                                                                                           2008 Q1


                                                                                                                                                                                                                                     2008 Q2
                                                                                    Figure 16. NTTA System Transaction Growth

                                                                                                                                         Table 8
                                                                                    Comparitive Transaction Growth on the NTTA System
                                                                                                     January through June Total Transations
           Facility                                                                                          2006       Growth         2007                                                               Growth                         2008
           DNT                                                                                            95,810,751     -0.8%      95,014,634                                                             9.5%                      104,074,607
           DNT (excluding Phase 3)                                                                       88,593,134      -0.8%      87,919,270                                                             3.0%                       90,596,207
           PGBT                                                                                           87,973,692      2.7%      90,314,840                                                             1.8%                       91,932,380
           NTTA System                                                                                   186,392,785      0.9%     188,052,924                                                             5.6%                      198,557,948
                                                                                                                    May Transactions
           Facility                                                                                         2006       Growth         2007                                                                Growth                        2008
           DNT                                                                                           16,580,707     1.2%       16,786,198                                                              6.7%                      17,915,846
           DNT (excluding Phase 3)                                                                       15,314,044     1.4%       15,533,548                                                              0.1%                      15,547,456
           PGBT                                                                                          15,539,943     3.4%       16,062,007                                                              -1.4%                     15,838,820
           NTTA System                                                                                   32,541,605     2.4%       33,332,456                                                              2.6%                      34,206,625
                                                                                                                  June Transactions
           Facility                                                                                         2006                         Growth                            2007                           Growth                        2008
           DNT                                                                                           16,169,651                       -0.7%                         16,056,701                         6.9%                      17,159,328
           DNT (excluding Phase 3)                                                                       14,919,467                       -0.3%                         14,869,039                         0.1%                      14,882,342
           PGBT                                                                                          15,084,333                        3.3%                         15,588,212                         -2.3%                     15,235,459
           NTTA System                                                                                   31,651,007                       1.4%                          32,106,537                         2.2%                      32,828,575



August 2008                                                                                                                                                                                                                                                         Page 23
                                                                          The Impacts of Gasoline Price
                                                                            on Traffic and Toll Revenue




Although the total growth in transactions on the NTTAS is positive, transaction growth in May
and June was noticeably less than that seen earlier this year. In May 2008, transactions on the
DNT (excluding the Phase 3 Extension) were only 0.1 percent higher than May 2007. On the
PGBT, transactions were 1.4 percent less than those seen in May 2007. In June 2008,
transactions on the DNT (excluding the Phase 3 Extension) were 0.1 percent higher than June
2007, and on the PGBT, transactions were 2.3 percent lower than June 2007.

In mid-July gasoline prices began dropping steadily for the first time this year. Figure 17 shows
the Dallas-area average daily gasoline price for May through July 2008. Gasoline prices in late
July were fifteen cents lower than their mid-July peak and appear to be on a downward trend. If
gasoline prices continue to fall, transaction growth on the NTTA System would likely increase.




                          Figure 17. Recent Gasoline Price Growth


Tables 9 and 10 show that the screenline shares of mainlane plaza 2 on DNT and mainlane plaza
7 on the PGBT have not changed significantly from Nov 2005 to July 2008, indicating that the
recent gasoline price increases have not caused significant diversions away from the DNT and
PGBT mainlanes to competing arterial routes. This indicates that reductions in transaction
growth on the NTTA System are not due to shifts to alternate routes but are rather due to overall
drops in trips in the area. This also shows that recent economic downturns and rising gasoline
prices are not affecting the NTTA System disproportionally from the rest of the area.




August 2008                                                                                   Page 24
                                                                     The Impacts of Gasoline Price
                                                                       on Traffic and Toll Revenue




                                         Table 9
                           Screenline Counts in Line with MLP 2
                                                     2005         2007        2008
         Count Location
                                                     Share        Share       Share
         Main Lane Plaza 2                           44.2%        46.8%       45.0%
         NB Josey Rd. South of Keller Springs Rd.     4.8%         5.1%        5.0%
         SB Josey Rd. South of Keller Springs Rd.     4.8%         4.8%        5.1%
         NB Marsh Ln. South of Carriage Ln.           5.6%         5.1%        5.2%
         SB Marsh Ln. South of Carriage Ln.           5.5%         5.3%        5.3%
         NB Midway Rd. North of Midcourt Rd.          5.3%         5.3%        5.4%
         SB Midway Rd. North of Midcourt Rd.          5.5%         5.1%        5.3%
         NB Preston Rd. North of Arapaho Rd.          8.2%         7.4%        7.7%
         SB Preston Rd. North of Arapano Rd.          7.9%         7.9%        8.6%
         NB Hillcrest North of Arpaho Rd.             4.1%         3.7%        3.8%
         SB Hillcrest North of Arpaho Rd.             4.2%         3.6%        3.5%


                                         Table 10
                           Screenline Counts in Line with MLP7
                                                     2005            2008
              Count Location
                                                     Share           Share
              Main Lane Plaza 7                      43.3%           43.6%
              EB Legacy West of Coit Rd.              6.0%            5.4%
              WB Legacy West of Coit Rd.              5.6%            5.8%
              EB Parker Rd. West of Coit Rd.          5.0%            5.1%
              WB Parker Rd. West of Coit Rd.          4.8%            5.3%
              EB Park Blvd. West of Coit Rd.          5.7%            5.8%
              WB Park Blvd. West of Coit Rd.          5.4%            5.6%
              EB Plano Pkwy. West of Coit Rd.         4.0%            3.8%
              WB Plano Pkwy. West of Coit Rd.         4.0%            3.9%
              EB Campbell West of Coit Rd.            4.5%            4.3%
              WB Campbell West of Coit Rd.            4.6%            4.4%
              EB Arapaho Rd. West of Coit Rd.         3.6%            3.6%
              WB Arapaho Rd. West of Coit Rd.         3.5%            3.4%




August 2008                                                                              Page 25
                                                                           The Impacts of Gasoline Price
                                                                             on Traffic and Toll Revenue




Typically, the weekday off-peak and the weekend travel would be comprised of a majority of
shopping and recreation/social trips. Increases in gasoline prices could have a greater negative
impact on these kinds of trips than on the business related or school trips, which typically
comprises the majority of weekday peak period trips. Analysis of the off-peak weekday and the
weekend transactions on the NTTA System shows us that there has not been a significant
disproportional transaction impact of the recent surge in gasoline prices on these kinds of
discretionary trips on the NTTA System.

Based on the above observations and the expected long-term trends in the gasoline prices, no
changes are necessary to WSA’s previously submitted long-term investment grade traffic and
revenue estimates for the NTTA System, PGBT-EE, Southwest Parkway, or SH 161. These
estimates are still considered valid and suitable for project financing, and there has been no
significant deviation from the original assumptions. However, in the short-term (until 2011), it is
expected that the NTTA System annual toll revenue may see a drop of 3.7 percent, 2.1 percent
and 0.8 percent in 2009, 2010 and 2011 respectively compared to the annual revenue estimates
included in the NTTA System investment grade study dated October 2007. These revisions are
based mainly on the recent transaction trends, changes to the opening date assumptions and
changes to the expected conversion of NTTAS facilities to exclusive electronic/video toll
collection.




August 2008                                                                                    Page 26
                                                                            The Impacts of Gasoline Price
                                                                              on Traffic and Toll Revenue




                                                                            SECTION             4
                                                           SUMMARY OF FINDINGS
Several topics have been addressed in this report, some of which could potentially have a
significant impact on the NTTA System. This section summarizes the key findings of the
research and how they may affect the NTTA.

RECENT NTTA TRANSACTIONS TRENDS
Transactions on the NTTA System seem to be relatively inelastic to gasoline price increases.
However, sharp increases in gasoline price in May and June 2008 did produce some small
noticeable impacts on NTTA system transactions. Transactions on the PGBT in May and June
2008 were 1.4 and 2.3 percent lower than May and June 2007, respectively. Transactions on the
DNT (excluding the Phase 3 Extension) were 0.1 percent higher in both May and June 2008.

LONG TERM FORECAST OF GASOLINE PRICES
Although gasoline prices are at an all-time high, projections indicate that gasoline prices
(adjusted for inflation) will most likely drop to 2005 levels in the next few years, and will remain
relatively flat over the long term. This indicates that any negative effect on NTTA system
transactions due to rising gasoline prices is expected to dissipate over the next few years.
Additionally, the popularity of fuel-efficient vehicles continues to rise, and this may also help
ease the financial burden of gasoline on drivers.

TRANSIT GROWTH
Recent trends indicate an upward swing in area transit usage. However, it is important to note
that transit trips account for less than two percent of all trips made in the Dallas-Fort Worth
metropolitan area. Also, the relative density of the transit system versus the roadway system,
coupled with low population densities, decreases the likelihood that a significant number of
automobile patrons will switch to transit in the short term. Shifts to transit are not expected to
noticeably impact NTTA system transactions. Even with the significant transit investment
projected in the Mobility 2030 Plan, total vehicle trip reduction due to shifts to transit would
likely be marginal.

August 2008                                                                                     Page 27
                                                                             The Impacts of Gasoline Price
                                                                               on Traffic and Toll Revenue




NATIONWIDE TRENDS
Total VMT in the U.S. has been declining recently, likely due to increasing gasoline prices and
economic downturns. However, on NTTA facilities, over 80 percent of all trips are non-leisure
and are not expected to be significantly reduced due to changes in travel patterns. May 2008
unemployment for the U.S. was at 5.3 percent, but it was only 4.4 percent in the Dallas/Fort-
Worth Area, indicating that the economy in this region remains relatively healthy compared to
other parts of the country.

ECONOMIC DEVELOPMENT
The Dallas-Fort Worth region continues to experience high population and employment growth.
The city of McKinney and Tarrant County were named by the Census Bureau as among the
fastest growing cities and counties in the USA between 2006 and 2007. This high growth is
generating a higher demand than expected when compared with the Mobility 2030 Plan
databases. Additionally, long term changes in land use might impact the feasibility of toll
projects located in the fringe of the DFW planning area.

VALIDITY OF PREVIOUS WSA TRAFFIC AND REVENUE PROJECTIONS
The findings of this research indicate that no changes are necessary to WSA’s previously
submitted long-term investment grade traffic and revenue estimates for the NTTA System,
PGBT-EE, Southwest Parkway, or SH 161. These estimates are still considered valid and
suitable for project financing, and there has been no significant deviation from the original
assumptions. However, in the short-term (until 2011), it is expected that the NTTA System
annual toll revenue may see a drop of 3.7 percent, 2.1 percent and 0.8 percent in 2009, 2010 and
2011 respectively compared to the annual revenue estimates included in the NTTA System
investment grade study dated October 2007. These revisions are based mainly on the recent
transaction trends, changes to the opening date assumptions and changes to the expected
conversion of NTTAS facilities to exclusive electronic/video toll collection.

******************************
DISCLAIMER
This research was conducted over a very short period of time, and projecting the long-term
effects of fuel price increases is challenging given the inherent uncertainties and volatility of the
energy market. It is recommended that a more comprehensive long-term (12-18 month)
monitoring effort be promulgated in order to determine the changes in travel patterns and driver
behaviors that the DFW region is seeing. It should also be noted that these changes could be
attributable to any number of effort and events, not just fuel price increases. These could include
increased availability of competing capacity (transit, HOV, freeway), increased regional success
towards implementing alternatives (TDM, etc.) and shifts in population and employment growth.

ACKNOWLEDGEMENTS
WSA received valuable assistance from Baez Consulting, LLC in the research and production of
this report.

August 2008                                                                                      Page 28
                                                                         The Impacts of Gasoline Price
                                                                           on Traffic and Toll Revenue




REFERENCES:
1
    U.S. Bureau of Labor and Statistics. <www.bls.gov> Accessed July 24, 2008.
2
 U.S. Energy Information Administration.
<www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html> Accessed
July 15, 2008.
3
 Balke, N.S., S.P.A. Brown and M.K. Yucel. Crude Oil and Gasoline Prices: An Asymmetric
Relationship? Federal Reserve Bank of Dallas Economic Review. First Quarter 1998.
4
    U.S. Energy Information Administration. <www.eia.doe.gov> Accessed July 21, 2008.
5
 Research and Innovative Technology Administration, Federal Highway Administration.
<www.rita.dot.gov> Accessed July 1, 2008.
6
  AC Neilson. Americans Lead the World in Car Ownership, China and India Fast Catching Up
In Absolute Number of Cars Owned. <http://www.my.nielsen.com/news/20070529.shtml>
Accessed July 17, 2008
7
 U.S. Energy Information Administration, Office of Coal, Nuclear, Electric and Alternate Fuels.
<http://www.eia.doe.gov/cneaf > Accessed July 21, 2008.
8
 U.S. Energy Information Administration. Alternatives to Traditional Transportation Fuels
2006. <http://www.eia.doe.gov/cneaf/alternate/page/atftables/atf14-20_05.html> Accessed July
22, 2008.
9
 U.S. Energy Information Administration. Annual Energy Outlook.
<http://www.eia.doe.gov/oiaf/aeo/index.html> Accessed July 23, 2008
10
  Lehman Brothers. Energy Special Report: Stronger Signals of Weaker Oil Prices. April 3,
2008.
11
     Woods & Poole Complete Economic and Demographic Data Source, 2007.
12
     Kelley Blue Book Marketing Study. <http://www.kbb.com> Accessed July 21, 2008.
13
 National Automobile Dealers Association Data. Economic Impact of America's New-Car and
New-Truck Dealers. <http://www.nada.org/Publications/NADADATA> Accessed July 18, 2008
14
 Goodwin, P. B., J. Dargay and M. Hanly. Elasticities of Road Traffic and Fuel Consumption
With Respect to Price and Income: A Review. Transport Reviews, Vol. 24, 2004, pp. 275-292.
15
  Kenneth Small, Kurt Van Dender; Fuel Efficiency and Motor Vehicle Travel: The Declining
Rebound Effect, 2006.


August 2008                                                                                  Page 29
                                                                         The Impacts of Gasoline Price
                                                                           on Traffic and Toll Revenue




16
  Jonathan Hughes and Christopher Knittel; Short-Run Gasoline Demand Elasticity: Evidence of
Structural Change in the U.S. Market for Gasoline, 2006.
17
 Puller, S. L. and L. A. Greening. Household Adjustment to Gasoline Price Change: An
Analysis Using Nine Years of U.S. Survey Data. Energy Economics, Vol. 21, 1999, pp. 37-52.
18
     Matthew Bomberg, Kara M. Kockelman. Traveler Response to the 2005 Gas Price Spike.
19
  Bureau of Transportation Statistics. Transportation Statistics Annual Report.
<http://www.bts.gov/publications/transportation_statistics_annual_report/2001/html/appendix_c.
html> Accessed on July 18, 2008
20
  U.S. Department of Transportation. Office of Highway Policy Information. Traffic Volume
Trends. <http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.htm> Accessed July 18, 2008.
21
     Texas A&M Real Estate Center. <http://recenter.tamu.edu/> Accessed July 24, 2008.




August 2008                                                                                  Page 30

								
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