3 How Much OEs TransporTaTion CosT

Economists often use the CPI-U (box 3-2) as anindicator of general price trends.exceptions. Transportation prices declined forall transportation modes in 2009 during therecession, except the “household and officemoving” subsector of the trucking industry, whichsaw a modest increase in prices (0.5 percent).Overall the PPI for water transportationincreased from 2013 to 2015 (135.1 to 138.9), butduring the same time the PPI for inland waterfreight transportation declined (237.5 to 226.3).Consumer Price Indexes for particular goods andservices, such as ones related to transportation,show changes in prices for those goods andservices. Table 3-2 shows price changes in privateand public transportation from 2014 to 2015. Onaverage, transportation cost less in 2015 than in2014 (table 3-2).The CPI-U (box 3-2) for both private and publictransportation declined from 2014 to 2015(table 3-2). Costs for private transportationdeclined by 8.2 percent resulting primarily froma 27.1 percent decrease in gasoline cost aswell as decreases in the cost of other fuels andConsumer Price Index for Urban ConsumersThe Consumer Price Index for Urban Consumers(CPI-U) is a measure of the average change overtime in the prices paid by urban consumers for amarket basket of consumer goods and services.Table 3-2 Consumer Price Indexes for All Urban Consumers,TransportationRelated Goods and ServicesGoods and ServicesOverall transportationPrivate transportationNew and used motor vehicles 1New vehiclesUsed cars and trucks 1 2Motor fuelGasoline (all types)Other motor fuels 1Motor vehicle parts and equ.TiresMotor vehicle maint. and repairMotor vehicle insur.Motor vehicle fees 1Parking fees and tolls 1 2Public transportationAirline FareOther intercityIntercity train fare 2 3Ship fare 1 2Intracity transportationIntracity mass transit 2 42014 2297.4117.52015 8303.9120.2Change from 2014 to 2.3%NOTES: Based for indexes are as follows: 1Indexes on a December 1997 100 base. 2Special index based on a substantially smaller sample. 3Indexes on a December 2007 100 base. 4Indexes on a December 2009 100 base. All others,average of 1982 to 1984 100.SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, CPI Detailed Report, Table 1A and 3A, Data for January2016 available at www.bls.gov/cpi/cpid1601.pdf as of July 2016.30

Fuel Pricestires. These decreases were partially offset byincreases in the cost of insurance, parking feesand tolls, and vehicle maintenance and repairs.The 2.8 percent decline in public transportationcosts reflected lower intercity costs for rail travel(-1.0 percent) and air (-5.0 percent). On thecontrary, intracity transportation costs increased2.2 percent, while intracity mass transit costsincreased 2.3 percent from 2014 to 2015.Fuel prices are a cost to transportation industriesand a direct cost to consumers. The cost ofpetroleum products is a large share of the totalvalue of the output of for-hire transportationservices, ranging as high as 24 percent for aviationand 21 percent for trucking (figure 3-2). Gasolineand motor oil also account for 27.2 of householdspending on transportation, as discussed inFigure 3-2 Input Cost Shares, by Mode, 2012AirRail14%Petroleum24%Labor58%53%27%23%Other inputs,including private sit1%9%23%76%58%33%NOTE: Chapter 4 discusses labor costs in more detail.SOURCE: BTS, 2012 Transportation Satellite Accounts, Use Table. publications/transportation satellite accounts/2002 2012/2012/2012 detail use/index.html.31

Chapter 6. Fuel cost is very visible to households,as news reports focus on changes in fuel pricesand gas stations (by law) must post prices, makingfuel prices salient to consumers in ways otherprices are not.price just after 2011. Since peaking in 2012, pricesdeclined in 2013 through 2015. In 2015 pricesdeclined sharply below 2009 levels for dieselfuel and kerosene, and just above 2009 levels forgasoline.Sales Price of Transportation FuelAverage Motor Gasoline Prices by RegionPrices for regular gasoline, No. 2 diesel (used byautomobiles and trucks), jet fuel kerosene, andrailroad diesel typically move together with slightvariations (figure 3-3). This reflects the underlyingprice of crude oil from which they all are refined.Gasoline prices vary substantially across theUnited States. Prices can vary because of stateand local taxes, refinery locations, fuel supplies,retail competition, and fuel regulations. Figure3-4 illustrates average regional gasoline pricesin 2015 using data from the Energy InformationAdministration (EIA). The averages include allgrades and blends of regular gasoline. In 2015 theaverage gasoline price in the United States was 2.52 per gallon. The West Coast had the highestgasoline prices in the country at 3.04 perFollowing a decade of relatively stable fuel pricesin the 1990s, fuel prices began to increase.Gasoline, No. 2 diesel fuel, and kerosene spikedto over 3.00 per gallon in 2008. While decliningsharply during the recession of 2008-2009, fuelprices began to rise again, rising above the 2008Figure 3-3 Sales Price of Transportation Fuel to End-Users, Excluding Taxes,1990–2016 (current dollars / gallon)Current dollars per gallon4.0Regular gasoline3.5No. 2 diesel3.02.52.01.5Jet fuel kerosene1.0Railroad 319921991191919900NOTES: Data on the cost of railroad diesel fuel come from the Association of American Railroads. All other fuel cost data come fromthe Energy Information Administration. Gasoline costs are average retail prices. Highway diesel fuel and jet fuel prices are based onsales to end-users (those sales made directly to the ultimate consumer, including bulk customers in agriculture, industry, and utility).Shaded bars indicate economic recessions.SOURCES: U.S. Department of Transportation, Bureau of Transportation Statistics, National Transportation Statistics, Table 3-11, available at www.bts.gov as of July 2016.32

Figure 3-4 Average Retail Gasoline Prices by Region, 2015Rocky Mountain 2.48 per gallonMidwest 2.41 per gallonNew England 2.50 per gallonCentralAtlantic 2.56per gallonWest Coast 3.04 per gallonLowerAtlantic 2.42per gallonGulf Coast 2.26 per gallonNOTE: Average prices include all grades and formulations of regular gasoline.SOURCE: U.S. Department of Energy, Energy Information Administration, available at www.eia.gov/dnav/pet/pet pri gnd a epm0pte dpgal a.htm as of July 2016.gallon— 0.50 more than the Central Atlantic,which had the second-highest prices at 2.56per gallon. Prices were highest in California, at 3.13 per gallon, because California requires aunique blend of gasoline to meet environmentalregulations. Meanwhile, the Gulf Coast had thelowest gasoline prices at 2.26 per gallon, or 0.15 lower than the Midwest, which had thesecond-lowest prices at 2.41 per gallon.transportation services is a cost to producersof many goods and services, and thus impactsthe prices of those goods and services. The costof passenger transportation services directlyimpacts consumers as well as the prices ofgoods and services because producers also usepassenger transportation services to conductbusiness.The cost to produce transportation goods andservices is measured using a variety of economicsources, such as producer price indexes forinputs, average wages, and fuel prices. Fromthe perspective of the input producers (e.g.,oil and gas companies, vehicle manufacturers),input prices represent a source of revenuefor their products; but from the point ofview of the transportation service providers,input prices are costs. Those costs impact theCosts to Deliver Transportation ServicesThere are two types of transportation services:freight transportation services provided toproducers of goods and services (e.g., truckingand air freight); and passenger transportationservices provided to both producers andhousehold consumers. The price of freight33

profitability of transportation firms and theprices that transportation firms charge users fortransportation services.equipment show how the producers’ price oftransportation-related equipment changes overtime (figure 3-5). The Producer Price Index(PPI) includes indexes for equipment used bytransportation industries, such as aircraft,railroad cars, and heavy trucks, as well asequipment used by consumers, such as vehiclesowned by households. The PPI shows the trendsin transportation equipment manufacturingprices and reflect their potential impact on thecost of delivering transportation services—the higher the equipment cost, the higher thecost of delivery transportation services. ThePPI for transportation equipment should notbe confused with the PPIs for transportationservices.The major inputs to produce transportationservices are labor, fuel, materials, and supplies aswell as the depreciation of items like airplanes,trucks, railroad locomotives and freight cars,trucking terminals, railroad track, and otherinfrastructure. The depreciation representsthe reduction in an asset’s value attributable towear and tear, accidental damage, obsolescence,and aging. The depreciation and input pricesimpact the price of freight and passengertransportation. The next subsection presents ameasure of equipment costs to the producers oftransportation services. Measures of labor costsare presented in chapter 4.The PPIs for transportation equipment, whichinclude indexes for automobile and lightduty motor vehicles, aircraft, railroad rollingstock, ships and boats, and all transportationequipment, showed an upward trend from2003 to 2015. An exception to this upwardtrend is automobile and light duty motorvehicle prices, which decreased between 2003Equipment CostDifferent modes of transportation

railroads, airlines, or trucking companies; and 3. business and household travelers. . prices for selected transportation industry subsectors. While transportation PPIs have often moved together, some subsectors show Table 3-1 Detailed Producer Price Indices by Transportation Modes, 2003, 2007–2015 .