Economic question raising the speed limit?

Question

As you may or may not now, Jimmy Carter is the reason to blame for why we drive the measly 55mph on the highway. This is because it is the most fuel efficient speed.

In his era gas prices like 2day were expensive, and there were many supply side shocks, tales of lines forming around gas stations, and policies implementing cars to only get gas on certain days (1 was lucky if he got Mon Wed Fri and Sun)

After that brief history of y the speed limit is so slow, lets go back to y the highways were built in the first place. It was in competition with the Autobahn as America was seeing how fast goods and services were being transported to n throe when there are no intersections making you stop.

My ? is if one were to implement such a policy of autobahn on highway i-95 and every1 in America could learn to drive these higher speeds, would the increased efficiency of movement offset the loss of MPG? This would increase USA dependance on oil, but how much productivity could be gained?

Answer 1

It's not going to matter what the speed limit is when you're sitting in traffic, which is where a majority of Americans spend their drive time.  

Besides, if you increase the speed limit to 75, you're still going to have people that will (or can) only drive 55mph. So you're going to be mixing those cars in with ones going 80mph, and you'll have a more dangerous situation, and nothing is going to ruin any efficiency like a highway accident.

If you're willing to spend 50% more on your gas bill, why not use that money and move somewhere closer to work?

Answer 2

And the herd would be thinned by all those galoots who were so impatient that they couldn't live with even higher limits crashed and died. So the demand would be lower, am I right?

Answer 3

I know this doesn't really answer your question directly, but wouldn't it be better to beat the Germans at their own game and develop more fuel efficient and faster methods of transport?

This would both save costs, and reduce the dependency of the United States on oil. Plus in the long run this would be better for the environment. If we take companies like Honda as a model we can see that rather than seeing legal restrictions on things like emissions as a barrier they have used it to develop their thinking and now make some of the most technologically advanced cars available, and make better profits than their competitors are able to.

At a time when the world oil markets are as crazy as they are any way of reducing oil consumption that is possible should be exploited. I was always impressed at the US for having a 55mph speed limit and think we should do the same in the UK (except that it's not really necessary due to all the traffic jams!!)

Also, just looked at your edits, I think planes are more fuel efficient than cars/lorries, so haulage may not necessarily be the cheapest mode of transport.

Answer 4

You cannot compare the Autobahn to US Highways.  The Autobahn has been designed for high speeds. Long swooping turns and such. In the US you have roads designed for 55/mph and people driving 75 on them. So any speed related accidents are most likely ones occuring over 55/mph and not below. Thus skewing any comparisons.

Answer 5

I am joining the debate following Pyrex's msg to resond to her question. Pyrex does have strength in her argument for raising the speed limits and America needs to improve substantially in transportation time per mile for both owner drivers, goods carriers and office/ factory goers, if the US wants to improve her international competitiveness and vibrabcy in domesti economy. New and bold technology and planning initiatives are necessary as the question raised by Pyrex seems to lead us to. My response is as follows:

There are a few alternative ways to look at the issue of speed limits:

First. finding the optimal speed limit s*. Assume that the imposed speed limit is s. If s=0, there are no costs resulting from accidents as there will be no accidents since cars would not be used. Now as you increase the value of s, the following happens:

1. Fuel efficiency is the lowest for a while, then improves and beyond a point fuel efficiency remains constant or falls: we denote savings in fuel costs per mile driven as q and q is a function of s. Assuming a total mileage driven as m, total savings on fuel costs is given by m*q.

2. Probabilty of accidents depends on speed limit and loss due to an accident also depend on speed limit. As s increases probabilty of accidents increase and the loss from an accident increases for a while but after a point  the loss due to an accident remains constant. The Loss (L) due to accident is equal to the probability of accident multiplied by the average loss per accident is therefore a function of s.

3.Savings in driving time increases with increase is s..Like a total milage driven by all cars, there is a total hour driven (h) which depends on the speed limit s. An hour driven is on an average a loss of hour that could have been devoted to production of goods and services. So we can say higher the s, lower is h and lower the loss of production due to h. Let this be denoted by G.

4. Improvement in Technology of car making (t) and the conditions of the road and road network (r)  increases fuel saving m*q, decreases L, increases G.

This is a simplistic model (and actually needs to be detailed for estimating the optimal s*).

s* is thus a function  s*= f ( m*q, L, G) for any given t and r. If t and r improves, s* will increase.

Now let us assume (though it may not be true) that the speed limit of 55mph set during Carter.s time was optimal. Since then, t (yechnology) and road conditions(r) have improved, so has there been an increase in m.  It is quite likely All this implies that at present the optimal speed limit would work out to be  higher than 55mph. Besides there has been a reduction in the probability of accidents and the loss per accident, though the actual number of accidents may have increased.because of the increase in the number of vehicles. This could have had a small effect of reducing s*. But this effect would be more than offset by the effect that the increase in the number of vehicles has on increasin m*q and G.

So, one would tend to agree that the optimal speed limit now should be higher than 55mph. How higher has to be computed with data.

The second approach is to think of improving the road conditions and road network. Such improvements will help increase the speed limt without increasing L.

Another approach would be to think in terms of building a competely new network version 2100 Turnpikes all above the ground where speed limits can be 100mph and funded with higher tolls (for those who value time savings would be prepared to pay double or triple the current rates of road toll.

Please not that I am not giving importance to the gas prices because at some high level of prices, gasoline would be replaced by alternatives like solar batteries.