Julia Ralson Forneris

English

Research Papers in Economics

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8 Region Focus • Spring/Summer 2008
PUBLIC TRANSPORTATION
Gas Prices Boost Light Rail
C
harlotte’s new light rail line, a rarity in sprawling south-
eastern cities, is rolling like a juggernaut. In a case of
perfect timing, Charlotte’s 9.6 mile Lynx Blue Line opened
as gas prices climbed, in November 2007. It has exceeded
passenger forecasts by 40 percent so far.
Pump prices have prompted a 2.8 percent national decline
in vehicle miles traveled so far this year. In fact, an analysis by
Cambridge Energy Research Associates suggests that, if
petroleum prices stay at or near current levels, gasoline
demand in the United States may have peaked. Consumers
are driving less and are also choosing more fuel-efficient cars
based on gasoline prices that began rising two years ago. Car
sales in the United States have declined since mid-2005, and
hybrid vehicle sales have increased by more than a third from
2006 to 2007.
Another byproduct of higher fuel prices is that more 
riders are seeking out public transportation. The Greater
Richmond Transit Corporation (GRTC) reports that more
suburban dwellers are riding the bus. Vanpools have also
become more popular. Last April, nearly 3,000 more people,
15 percent more, rode vanpools than in April 2007, according
to the GRTC. And in Norfolk, Va., 32 percent more people
rode the bus in the first quarter of 2008 than in the same
period in 2007. The city broke ground on its light rail project
last fall.
Charlotte’s rail line has become a model. “Since we have
opened, from December [2007] through the end of April, we
are averaging daily about 13,000, just during the week,” says
Jean Leier, spokesman for the Charlotte Area Transit System
(CATS). The light rail system in Baltimore had almost 
17 percent more riders in the first quarter of 2008 than it did
in that quarter of 2007.
While this spark of public interest may help the benefit
side of the public transportation ledger, light rail remains a
heavily subsidized way to travel. Light rail is tough for econ-
omists to accept because these systems cost big money to
build, money that typically comes from all taxpayers through
federal grants as well as state and local taxes. 
Public transportation doesn’t pay for itself. “Even if every
person in a city rode light rail, the subsidy rate per rider
would still greatly exceed that of the automobile because 
the fares for light rail cover only about 25 percent 
of the operating cost of an additional passenger — the
remaining 75 percent is subsidized,” says Thomas Garrett, an
economist at the St. Louis Fed who has studied light rail
transportation. 
Part of the problem is that driving has seemed cheap by
comparison. But drivers don’t pay the full cost of that either.
They do pay federal and state gas taxes if they drive, and that
helps fund highway construction and maintenance. Yet driv-
ing involves hidden costs. Drivers pay in fuel, time, and car
depreciation, but not costs imposed on others such as pollu-
tion and congestion. That leads to a higher-than-optimal
number of cars on the road much of the time.
Many midsized cities were developed on the assumption
that car use would remain prevalent, and it’s been hard to
design and implement successful rail projects. Charlotte
planned commercial projects around its proposed rail line.
“There is  a lot of density being built around the line,” Leier
says,  mixed-use developments as well as entertainment ven-
ues. The Time Warner Cable Arena, home of the Charlotte
National Basketball Association franchise the Bobcats, sits
adjacent to the Blue Line. The Courtside, a 17-story building
less than two blocks from two light rail stations, has sold out
its 107 residential units. Other projects are under way.
Norfolk’s light rail route will serve the Eastern Virginia
Medical Center through the downtown, with stops at
Harbor Park, the minor league baseball stadium, among 
others. Private developers are responding with transit-
oriented project proposals, says James Toscano, spokesman
for Hampton Roads Transit. 
For the people in Charlotte and Norfolk, these light rail
projects offer a convenient alternative to driving and park-
ing. In general, the benefits of light rail projects like these are
concentrated, with the costs dispersed among many, many
taxpayers, according to Garrett and co-author Molly
Castelazo: “The many who stand to lose will lose only a 
little, whereas the few who stand to gain will gain a lot.” 
— BETTY JOYCE NASH
FRESH FOOD 
DRILL THOSE HILLS 
Fuel Price Spike Lures New Investment
E
nergy firms have pumped up natural gas and oil explo-
ration in fossil-fuel rich West Virginia because of rising
fuel prices and improved drilling technology.
SHORTTAKES
The Charlotte Area Transit System’s Lynx light rail line has
exceeded its ridership projections by 40 percent since it opened
in November 2007.
RF_SUM_08  9/11/08  11:47 AM  Page 8Spring/Summer 2008 • Region Focus 9
“There’s lots of excitement among major players,” says
Charlie Burd, executive director of the Independent Oil and
Gas Association of West Virginia.
Potential for natural gas within a layer of rock called the
Marcellus shale has further fueled that excitement.
Dominion has rights to drill on about 1.9 million acres, and
has leased about 205,000 of those acres in West Virginia and
western Pennsylvania to Antero Resources Corp. for $552
million and a 7.5 percent royalty. Chesapeake Energy Corp.
in 2005 bought Columbia Natural Resources, a natural gas
exploration firm with assets in Appalachia, for $2.9 billion.
This Marcellus shale formation begins in New York and
extends through Pennsylvania down the eastern spine of the
Appalachian Mountains. It holds natural gas that, until
recently, was considered too expensive to extract. But yields
from a similar formation in Texas has focused attention on
this West Virginia shale. 
A geologist with the West Virginia Geological 
and Economic Survey, Lee Avary, is fielding double the 
usual information inquiries from energy firms and many 
landowners, curious about drilling rights contracts they’re
being offered.
This untapped natural gas is good news because the state
lies so close to the large Northeast markets, Avary notes.
Appalachian natural gas is typically shipped to northeastern
utility companies, while its oil is shipped south for refining.
Another way to gauge increased activity is to count oil and
gas rigs. They’re expensive, and volatile prices make the
drilling rigs hard to plan and place. West Virginia had 
32 rigs by the end of 2007, compared to 14 at the end of
2000, according to Baker Hughes, a petroleum industry
services firm.
In the Mountain State’s early history, oil and natural gas
was a complete mystery — a nuisance, in fact — for salt 
miners. A candle flame could cause gas “vents” to flare, and
these “burning springs” were described by Thomas Jefferson
as early as 1781. Deeper drilling yielded oil, and by 1859, 200
barrels a day came out of the ground. Oil production peaked
at 16 million barrels in 1900. 
In 2006, West Virginia produced about 200 billion cubic
feet of natural gas and 1.6 million barrels of oil.
— BETTY JOYCE NASH
FRESH FOOD 
More Shoppers Seek Local Flavors
H
ave you ever gotten to the grocery store only to realize
that the fresh fruits and vegetables weren’t so fresh?
That’s just one of many reasons people have become 
“locavores,” adopting a lifestyle of buying and eating locally
grown produce. 
Though the definition of “local” varies, it typically
describes food grown within a radius of 50 to 150 miles. 
These foods are becoming easier to find. In 1994, there
were 1,755 farmers markets in the United States; by 2006,
that number had reached 4,385. Ellwood Thompson’s Local
Market in Richmond, Va., sells produce within 24 to 48
hours of harvest. Customers know its origin, and farmers
aren’t forced to use as many preservatives since they ship
locally. 
Trail’s End Farm, owned and operated by Sherri Cantrell
and her family, is located in Montpelier, Va. One of its
biggest challenges is keeping up with demand. “If you grow
it, you can sell it,” she says. 
It’s hard to talk about eating locally without addressing
the perception that it is better for the environment. While
that’s a popular way of thinking, it’s not always true. Arecent
article by Carnegie Mellon University economists
Christopher Weber and H. Scott Matthews found that 
83 percent of carbon emissions associated with food are
from the production phase, while transportation represents
only 11 percent. 
However, travel distance affects not only the environ-
ment but also food quality. Food may travel 1,500 miles
before it lands on your dinner table, says Nancy Creamer 
of North Carolina State University. Buying locally may 
create jobs within the farming and food sectors, and keep
potential revenue within a community.
At a 2007 Virginia Food Security Summit in
Charlottesville, Kenneth Meter, president of the Crossroads
Resource Center, reported that Virginians spend $8.9 billion
on food imported from outside the state. If the state was
able to increase purchases from local farms by just 15 per-
cent, Virginia farms could earn $2.2 billion of new income. 
Matt Benson, an economist with the Virginia
Cooperative Extension, says the trend of buying and eating
locally will continue, but its success hinges on creating sys-
tems that benefit both farmers and consumers. “If we could
get area restaurants to buy from local farmers, that would be
a start,” Benson says.
Though it’s difficult to name one specific reason eating
and buying locally has become more popular, one thing is for
sure: It’s hard to beat the freshness factor. With the rise of
farmers markets, it’s becoming easier than ever to enjoy the
“local flavor.”   —  JULIARALSTONFORNERIS
The spinach growing in the foreground won’t have far to go
once it’s ready to harvest — Trail’s End Farm in Montpelier,
V a., ships only within a 30-mile radius.
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RF_SUM_08  9/11/08  11:47 AM  Page 9

Fresh food : More shoppers seek local flavors

http://www.richmondfed.org/publications/research/region_focus/2008/spring/pdf/short_takes.pdf

Fresh food : More shoppers seek local flavors

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