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AAA Cost of Ownership Calculator
Owning and operating an automobile has always been quite an expensive endeavor. After housing, it’s often the second biggest expense type for many. Similar to housing, if done wrong, it can cost you the chance of retiring in terms of health and wealth. For all those interested, the American Automobile Association (AAA) provides a great tool, a calculator that can tell you how much your favorite make and model might cost you in California. This can easily reach $2 per mile before even considering other costs that might be specific to your situation, like paying for a parking garage or using FasTrak.
And while everybody is complaining about “The High Gas Tax” – that expense only adds $0.04 per mile. That is correct, only 2% of what a driver pays to own and operate his car are going to all these billion dollar highways, million dollar city streets, and traffic signs and signals that can cost $250-$500k per intersection. Somehow those numbers don’t add up, someone else must be paying for this pyramid scheme. This is possible because politicians and industry lobbyists have worked very hard to find ways to subsidize cars and driving. Can people see the comparison to, let’s say, the ‘tobacco industry’?
All the numbers we mentioned so far do not cover all the externalities of driving that are borne by society as a whole. According to Forbes and this peer-reviewed ScienceDirect paper, a small car has a lifetime cost of $689,000, of which society subsidizes some $275,000 or 40%. A large car has a lifetime cost of $1,000,000+, and almost 30%, or $300,000, is paid by the rest of us.
Time to dig into Externalities
The costs mentioned in research done by AAA or the Earth Institute are all based on all the possible Direct Costs of owning and operating a fairly new car. But what is included in these 30% or 40% of lifetime costs that are mentioned by Forbes?
This particular research paper (2022, Linnaeus University, Victoria Transportation Policy Institute VTPI) tries to put monetary value on things like …
- Land use and infrastructure
- curbside parking
- Infrastructure maintenance
- Air pollution
- Noise pollution
- Climate Change
- Uncompensated crash damages
- Barrier effects
- Resource requirements and subsidies
They leave out many externalities and are quite conservative in their assessment, yet their calculation leads them to make the case that society bears 30% to 40% of all driving costs. Their numbers are based on a German environment, which means these numbers would look even worse in low-tax and high-subsidy America.
2005 – San Francisco
The research paper “The hidden costs of driving” was done for the San Francisco Bay Area Planning and Urban Research Association (spur.org) in 2005. This paper looks only at four major externalities and the associated costs and comes to the following numbers:
- Deaths and illnesses caused by air pollution (CO, NOx, SOx, etc): N/A
- Air pollution (only particulate matter PM): $0.07-$0.13 per VMT ($1.30-$2.50 per gallon)
- External collision damages (just insurance cost): $0.04-$0.09 per VMT ($0.80-$1.80 per gallon)
- External collision damages (all cost): $0.15-$0.33 per VMT ($2.80-$6.30 per gallon)
- Congestion (imposed by the driver onto others): $0.07-$0.09 per VMT ($1.30-$1.70 per gallon)
- Road maintenance (construction, maintenance, emergency response, street lighting, traffic control): $0.05 per VMT ($0.84 per gallon)
These numbers are very specific to San Francisco, and some of those costs might be covered by user fees, registration, bridge tolls, etc. But even with those rather conservative estimates, it should become obvious that a gas tax of a measly 2 or 3 cents can never make up for all that damage and additional cost. To pay for all this, gasoline in San Francisco would need to be $5 more expensive than it actually is. Using today’s values, that number would be even higher.
2015 – Copenhagen
This research paper, “Comparing the cost of cars and bicycles,” reviewed cost-benefit analysis (CBA) frameworks used to assess bicycle infrastructure projects. It specifically focused on the CBA framework developed in Copenhagen, Denmark. In this framework, the costs and benefits of automobiles and bicycles are assessed and compared across externalities like collisions, pollution, climate change, health, and travel time.
Results for the societal cost of both transportation modes:
- Automobile: EUR 0.50 / km
- Bicycle: EUR 0.08 / km
Since acknowledging the obvious advantages a people-centric approach would bring to the city and society overall, Copenhagen has been pushing various measures like two-way travel on one-way streets, separated or elevated exclusive bicycle tracks, shared bus/bike lanes, signed bicycle routes, colored lanes, bike boxes, bicycle phases/traffic signals, bicycle stations, or bike share programs.
2018 – Denmark
After testing their CBA cost-benefit analysis framework in Copenhagen, the team went bigger and looked at national data. This study assumed a pedestrian walks 6 km/h, the cyclist moves at 16 km/h, the motorist drives 50 km/h. Therefore, the “time cost” is highest for walking, better for cycling and lowest for driving. However, the “health gains” are highest for walking, great for cycling, and none for driving. The researchers factor in externalities like collisions, air pollution, climate change, noise, road wear and tear, and a few more.
All in all, the Total Cost of moving one kilometer in Danish Krona comes down to
- Pedestrian: DKK 7.53 societal gain
- Cyclist: DKK 4.79 societal gain
- Motorist: DKK 5.29 societal cost.
- The delta between driving and cycling is, therefore, DKK 10.08 per km (2.31 USD per mile)
- The delta between driving and walking is, therefore, DKK 12.82 per km (2.94 USD per mile)
Transportation planners in Denmark are now calculating that every car mile of travel that is replaced by biking saves the Danish taxpayer an estimated $2.31. Since health care costs are so much higher here, the “health gains” and the delta are even bigger in the U.S.
If you consider the time spent walking or biking towards the recommended daily activity (RDA), the “time cost” for walking and biking would become zero, whereas the “time cost” for automobiles would become more expensive in comparison.
San Mateo County
San Mateo County might be part of Silicon Valley, but that doesn’t mean their transportation planners use modern methods. If San Mateo County would be doing similar research, politicians would have a hard time justifying projects like the SR-101 highway widening or the SR-101/Woodside Interchange. These projects are only going to increase Vehicle Miles Traveled (VMT) and are, therefore, a huge burden to society with little to no ROI for Redwood City and the county.
For example, a 30-mile commute by large car from Redwood City to San Francisco can cost the owner over $60 just in direct costs alone. A train ticket for that distance would be under $10. The train ticket is expected – almost required – to pay for the cost of Public Transportation, otherwise people would start revolting. But nobody ever mentions the externalities that society pays for that car ride. Society doesn’t even know that we are subsidizing each car ride to San Francisco with almost $20, and there are thousands of those per day. All train tickets would be free with money to spare by stopping all subsidies for cars.
And there is clearly another sort of pyramid scheme going on. The bigger and more expensive the car, the more the cost is subsidized through the general fund and paid for by taxpayers who don’t drive. It is high time we think about incentivizing people to buy smaller cars again. This can be achieved easily through narrowing streets, narrowing parking spots, smaller roundabouts, replacing speed humps with chicanes, and a few more traffic calming measures.
More Information
- Forbes: Society Subsidizes Ownership
- ScienceDirect: Cost-benefit of cycling infrastructure
- ScienceDirect: Comparing the cost of cars and bicycles
- Vienna: Leafy Vegetables Found to Contain Tire Additives
Editor’s Note: The views and opinions expressed in all blog posts are those of the authors and do not necessarily reflect those of the Redwood City Pulse or its staff.
