At the same time Carter deregulated gas and oil prices he deregulated our transportation industry leading to extreme wealth and power and consolidation of our US transportation industry into global industries ----CARTER WAS QUITE THE FAR-RIGHT WING ECONOMICS FROM GEORGIA while pretending to be that compassionate conservative. The left social Democrats must stop allowing global Wall Street tell us who our social leaders are.
The entire economic debacle of 1970s was orchestrated by BIG OIL to push more and more deregulation.
IT WAS ALL RIGHT WING WEALTH AND CORPORATE POWER ECONOMIC POLICIES NOT LEFT SOCIAL DEMOCRATIC POLICIES.
Line at a gas station in Maryland, United States, June 15, 1979.The oil crisis had mixed effects in the United States, due to some parts of the country being oil-producing regions and other parts being oil-consuming regions. Richard Nixon had imposed price controls on domestic oil. Gasoline controls were repealed, but controls on domestic US oil remained.
The Jimmy Carter administration began a phased deregulation of oil prices on April 5, 1979, when the average price of crude oil was US$15.85 per barrel (42 US gallons (160 L)). Starting with the Iranian revolution, the price of crude oil rose to $39.50 per barrel over the next 12 months (its all-time highest real price until March 3, 2008.) Deregulating domestic oil price controls allowed U.S. oil output to rise sharply from the large Prudhoe Bay fields, while oil imports fell sharply.
Remember the fuel shortages and long lines at the gas pumps during Carter's term? Well, that was those sneaky wealthy oil men using deregulation to super-size their wealth while playing havoc with the economy and our lives. We talked of the same for deregulating public electric utilities but we want to focus on deregulated oil and gas and how that brought us to global transportation corporations with WE THE PEOPLE losing all our ability to move around. This is just over a few decades so please stop believing temporary consumption will last.
Below we see an article written by a right wing Washington Times telling us there was indeed a problem in CARTER years and before because of deregulated oil and gas but they place the blame on PRICE CONTROLS. We got to the point of a global OIL CARTEL by deregulating US oil and gas earlier-----allowing for that global association. Once that was done those wealthy oil men could bring down industries and soak citizens like an ATM at will. This is why a Rockefeller/Bush/Koch were able to gain so much power. Rockefeller was that ROBBER BARON during the 1920s Wall Street frauds with Standard Oil-----Bush/Koch were the PLAYERS during these few decades of ROBBER BARON Wall Street frauds.
THE LONG LINES AT GAS STATIONS AND HIGH GAS PRICES KILLING THE ECONOMY CAME FROM THIS DEREGULATION OF OIL AND GAS----IT WAS NOT JIMMY CARTER.
How gas price controls sparked ‘70s shortages
By - The Washington Times - Monday, May 15, 2006
Proposals to control gasoline prices and tax producers’ windfall profits were popular ideas that were tried — without much success — during the oil shocks of the 1970s and 1980s.
The era of price controls is most remembered for long lines at gas stations. The controls were put in place by the Nixon and Ford administrations in reaction to a jump in fuel prices caused by cuts in production by the newly formed international oil cartel, the Organization of Petroleum Exporting Countries.
Back then, “price controls turned a minor adjustment into a major shortage,” said Thomas Sowell, author of “Basic Economics: A Citizen’s Guide to the Economy.”
Mr. Sowell says that although the best response would have been to let prices rise, giving oil companies an incentive to produce more and consumers an incentive to conserve, “this basic level of economics is seldom understood by the public, which often demands ‘political’ solutions that turn out to make matters worse.”
The public — as it does today — wanted low prices. But the artificially depressed pump prices imposed during the oil crisis of 1973 — which stayed in place in various iterations through 1980 — brought about lines at gas stations and an artificial shortage of gas, he said.
The price controls resulted in a fuel-rationing system that made available about 5 percent less oil than was consumed before the controls. Consumers scrambled and sat in lines to ensure they weren’t left without. Gas stations found they only had to stay open a few hours a day to empty out their tanks. Because they could not raise prices, they closed down after selling out their gas to hold down their labor and operating costs, Mr. Sowell said.
This article written recently tells us all these deregulations of oil and gas----of transportation was good----it says look at the number of NON-UNION jobs created-----flash forward to these few decades who were the largest losers in jobs and small business trucking? Those non-union employees earning barely enough to live.
CARTER was from GEORGIA and CLINTON was from ARKANSAS----two of the most right wing states so would Democratic voters for labor and justice think electing Presidents from strong RED STATES would bring good policies even if they seem to be good Christian folks or a hipster that plays the SAXOPHONE? Of course not---we knew all along we were heading for GLOBAL 1% EXTREME WEALTH AND EXTREME POVERTY.
'President Jimmy Carter followed Ford's lead by appointing strong deregulatory advocates and supporting legislation to reduce motor carrier regulation. After a series of ICC rulings that reduced federal oversight of trucking, and after the deregulation of the airline industry, Congress, spurred by the Carter administration, enacted the Motor Carrier Act of 1980. This act limited the ICC's authority over trucking'.
Who was that President after national media made a Democratic President Carter sound such a disaster? IT WAS GLOBAL 1% WALL STREET REAGAN NEO-LIBERAL HIMSELF-----running with global empire-building killing all US monopoly and anti-trust laws because of all the deregulating occurring before.
Remember REAGAN firing AIRPORT TRAFFIC-CONTROLLERS for protesting the fact that the DEREGULATED AIRWAYS HAD SO MUCH AIR TRAFFIC THAT THESE TRAFFIC--CONTROLLERS COULD NOT DO THEIR JOBS CORRECTLY AND HAZARDS FOR PASSENGERS SOARED.
by Thomas Gale Moore
- | Trucking Deregulation
Regulation The federal government has been regulating prices and competition in interstate transportation ever since Congress created the Interstate Commerce Commission (ICC) to oversee the railroad industry in 1887. Truckers were brought under the control of the ICC in 1935 after persistent lobbying by state regulators, the ICC itself, and especially, the railroads, which had been losing business to trucking companies.
The Motor Carrier Act of 1935 required new truckers to seek a "certificate of public convenience and necessity" from the ICC. Truckers already operating in 1935 could automatically get certificates, but only if they documented their prior service, and the ICC was quite restrictive in interpreting proof of service. New trucking companies, on the other hand, found it extremely difficult to get certificates.
The law required motor carriers to file all rates—also called tariffs—with the ICC thirty days before they became effective. Anyone, including a competitor, was allowed to inspect the filed tariffs. If the proposed tariffs were protested by another carrier (such as a trucker, a regulated water carrier, or a railroad), the ICC normally suspended the rates pending an investigation of their legality. In 1948 Congress authorized truckers to fix rates in concert with one another when it enacted, over President Truman's veto, the Reed-Bulwinkle Act, which exempted carriers from the antitrust laws.
From 1940 to 1980, new or expanded authority to transport goods was almost impossible to secure unless no one opposed an application. Even if the proposed service was not being offered by existing carriers, the ICC held that a certificated trucker who expressed a desire to carry the goods should be given the opportunity to do so; the new applicant was denied. The effect was to stifle competition from new carriers.
Purchasing the rights of an existing trucker became the only practical approach to entering a particular market. By the seventies the authority to carry certain goods on certain routes was selling for hundreds of thousands of dollars. Because the commission disapproved of "trafficking" in rights, it was hostile to mergers and purchases and attempted to restrict authority as much as possible. The result was often bizarre. For example, a motor carrier with authority to travel from Cleveland to Buffalo that purchased another carrier or the carrier's rights to go from Buffalo to Pittsburgh was required to carry goods destined for Pittsburgh through Buffalo, even though the direct route was considerably shorter. In some cases carriers had to go hundreds of miles out of their way, adding many hours or even days to the transport.
ICC regulation reduced competition and made trucking inefficient. Routes and the products that could be carried over them were narrowly specified. Truckers with authority to carry a product, such as tiles, from one city to another often lacked authority to haul anything on the return trip.
Studies showed that regulation increased costs and rates significantly. Not only were rates lower without regulation, but service quality, as judged by shippers, also was better. Products exempt from regulation moved at rates 20 to 40 percent below those for the same products subject to ICC controls. For example, regulated rates for carrying cooked poultry, compared to unregulated charges for fresh dressed poultry (a similar product), were nearly 50 percent higher. Comparisons between heavily regulated trucking in West Germany and the United States and unregulated motor carriage in Great Britain, together with lightly regulated trucking in Belgium and the Netherlands, showed that charges in the highly regulated countries were 75 percent higher than in the nations with freer markets.
A number of economists were critical of the regulation of motor carriers right from the beginning. James C. Nelson, in a series of articles starting in 1935, led the attack. Walter Adams, a liberal Democrat, followed with a major critique in American Economic Review. Professors John R. Meyer of Harvard, Merton J. Peck of Yale, John Stenason, and Charles Zwick authored a very influential book, The Economics of Competition in the Transportation Industries, published in 1959.
In 1962 President John Kennedy became the first president to send a transportation message to Congress recommending a reduction in the regulation of surface freight transportation. In November 1975 President Gerald Ford called for legislation to reduce trucking regulation. He followed that by appointing to the ICC several commissioners who favored competition. By the end of 1976, these commissioners were speaking out for a more competitive policy at the ICC, a position rarely articulated in the previous eight decades of transportation regulation.
President Jimmy Carter followed Ford's lead by appointing strong deregulatory advocates and supporting legislation to reduce motor carrier regulation. After a series of ICC rulings that reduced federal oversight of trucking, and after the deregulation of the airline industry, Congress, spurred by the Carter administration, enacted the Motor Carrier Act of 1980. This act limited the ICC's authority over trucking.
Both the Teamsters Union and the American Trucking Associations strongly opposed deregulation and successfully headed off efforts to eliminate all economic controls.
Supporting deregulation was a coalition of shippers, consumer advocates including Ralph Nader, and liberals such as Senator Edward Kennedy. Probably the most significant factor in forcing Congress to act was that the ICC commissioners appointed by Ford and Carter were bent on deregulating the industry anyway. Either Congress had to act or the ICC would. Congress acted in order to codify some of the commission changes and to limit others.
The Motor Carrier Act (MCA) of 1980 only partially decontrolled trucking. But together with a liberal ICC, it substantially freed the industry. The MCA made it significantly easier for a trucker to secure a certificate of public convenience and necessity. The MCA also required the commission to eliminate most restrictions on commodities that could be carried, on the routes that motor carriers could use, and on the geographical region they could serve. The law authorized truckers to price freely within a "zone of reasonableness," meaning that truckers could increase or decrease rates from current levels by 15 percent without challenge, and encouraged them to make independent rate filings with even larger price changes.
The Success of Deregulation
Deregulation has worked well. Between 1977, the year before the ICC started to decontrol the industry, and 1982, rates for truckload-size shipments fell about 25 percent in real, inflation-adjusted terms. The General Accounting Office found that rates charged by LTL (less-than-truckload) carriers had fallen as much as 10 to 20 percent, with some shippers reporting declines of as much as 40 percent. Revenue per truckloadton fell 22 percent from 1979 to 1986. A survey of shippers indicates that they believe service quality improved as well. Some 77 percent of surveyed shippers favored deregulation of trucking. Shippers reported that carriers were much more willing to negotiate rates and services than prior to deregulation. Truckers have experimented with new price and service options. They have restructured routes, reduced empty return hauls, and provided simplified rate structures.
In arguing against deregulation, the American Trucking Associations predicted that service would decline and that small communities would find it harder to get any service at all under the new regime. In fact, service to small communities has improved and complaints by shippers have declined. The ICC has reported that in 1975 and 1976 it handled 340 and 390 complaints, respectively, against truckers; in 1980 it had to deal with only 23 cases, and just 40 in 1981. A 1982 ICC study of the effect of partial decontrol on small cities and remote parts of the country found that service quality had either been improved or remained unaffected by deregulation. Increased competition has bolstered the willingness of trucking firms to go off-route to pick up or deliver freight.
Deregulation has also made it easier for nonunion workers to get jobs in the trucking industry. This new competition has sharply eroded the strength of the drivers' union, the International Brotherhood of Teamsters. Before deregulation ICC-regulated truckers paid unionized workers about 50 percent more than comparable workers in other industries. Although unionized drivers still are paid a premium, by 1985 unionized workers were only 28 percent of the trucking work force, down from around 60 percent in the late seventies.
The number of new firms has increased dramatically. By 1990 the total number of licensed carriers exceeded forty thousand, considerably more than double the number authorized in 1980. The ICC had also awarded nationwide authority to about five thousand freight carriers. The value of operating rights granted by the ICC, once worth hundreds of thousands of dollars when such authority was almost impossible to secure from the commission, has plummeted to close to zero now that operating rights are easy to obtain.
Intermodal carriage has surged sharply since 1980: from 1981 to 1986, it grew 70 percent. The ability of railroads and truckers to develop an extensive trailer-on-flatcar network is a direct result of the MCA and the Staggers Act (1980), which partially freed the railroads.
The motor carrier industry has made little use of the rate zone provision and instead has opted for independent filings, which have increased sharply. These independent filings have increased price competition. Such filings by definition are not agreed on through rate bureaus. Truckers have been able to slash rates mainly by improving efficiency—reducing empty backhauls, eliminating circuities, pricing flexibly, and reducing by about 10 percent the proportion of employees who are drivers and helpers. At the same time, it has cut the pay of such employees by over 10 percent relative to wages of workers in the economy generally. In other words, although wages of drivers and helpers are still considerably higher than wages of comparable workers in other industries, the differential has shrunk.
One of the economy's major gains from trucking deregulation has been the substantial drop in the cost of holding and maintaining inventories. Because truckers are better able to offer on-time delivery service and more flexible service, manufacturers can order components just in time to be used and retailers can have them just in time to be sold. As a result inventories are leaner. Without the partial deregulation that resulted from the 1980 act, these changes would not have been possible. In 1981, inventories amounted to 14 percent of GNP; one study found that because of improved transportation services traceable to the Motor Carrier Act of 1980 and the Staggers Act, the total fell to 10.8 percent by 1987, for a saving of about $62 billion. A more conservative estimate by the Department of Transportation is that the gain to U.S. industry in shipping, merchandising, and inventories is between $38 and $56 billion per year.
Federal law still requires new carriers to apply for certificates of public convenience and necessity. All tariffs must be filed with the commission. Most states continue to enforce strict entry and price controls on intrastate carriers. These controls cause inefficiency. One result is that in some cases, shipping products from overseas is cheaper than shipping the same goods within the United States. Shipping blue jeans from El Paso, Texas, to Dallas, for example, costs about 40 percent more than shipping the identical jeans from Taiwan to Dallas.
The continuing obligation to file tariffs results in higher costs. Rates for shipping dog food, which are regulated, are 10 to 35 percent higher than the unregulated rates for other animal foods. Chicken, turkey, and fish TV dinners can be carried free of regulation, but a frozen dinner with a hamburger patty instead of a chicken leg requires trucking rates that are 20 to 25 percent higher. When the commission ruled that used beer bottles and kegs were exempt under the "used, empty shipping containers" provision, costs to haul the empties dropped 20 to 30 percent.
Even if the filing of tariffs did not lead to higher charges, the requirement adds to paperwork and confusion. For example, rates must be published for peanuts "roasted and salted in the shell," but a trucker carrying peanuts "shelled, salted, not roasted or otherwise" is exempt from any need to file. Truckers must submit tariffs for carrying show horses but not exhibit horses. Motor carriers must list their prices with the ICC to carry railroad ties cut lengthwise, but not if they are cut crosswise!
Current law also authorizes truckers to collude on tariff increases in rate bureaus. In any other industry such agreements would violate the antitrust laws. Although any single carrier can file separate rates, a rate bureau's filing for higher tariffs leads to pressures on all carriers to boost their prices.
Trucking deregulation is unfinished. According to one study, abolishing all remaining federal controls would save shippers about $28 billion per year. A Department of Transportation study done by researchers at the University of Pennsylvania's Wharton School estimated that abolishing state regulation would save another $5 billion to $12 billion.
While national media shows a smiling face of religious soft spoken Carter and the glamorous Kennedys making left social Democrats proud to have these right wing wealth and corporate profit pols in our left social Democratic Party-----the results of all their policies are killing WE THE PEOPLE and a CARTER and KENNEDY knew this would be the result but they did not care because they were those global 1% Wall Street players PRETENDING TO BE LEFT SOCIAL DEMOCRATIC.
'Skyrocketing fuel prices are creating significant costs for truckload carriers that cannot be fully recovered through existing fuel surcharge formulas'.
A deregulated oil and gas industry gave the Bush/Koch people the extreme wealth and power they needed to capture our politics----it was BUSH SR who chose a CLINTON to capture our Democratic Party and we are led to believe and it is likely true that Obama is related to BUSH FAMILY on his mother's side. This was the sequence of political events that gave us REAGAN/CLINTON/BUSH/OBAMA.
FDR NEW DEAL AND LEFT SOCIAL DEMOCRATIC POLICIES PROTECTED AGAINST MONOPOLY AND ANTI-TRUST EXTREME WEALTH AND EXTREME CORPORATE POWER AND RIGHT WING ECONOMICS BROUGHT ALL OF THOSE PROTECTIONS FOR SMALL BUSINESS AND WE THE PEOPLE DOWN.
We must educate from sources other than national media to understand broadly PUBLIC POLICY FOR WE THE PEOPLE TO BE CITIZENS AND NOT SLAVES.
The Impact of High Fuel Prices on Logistics
The topics explored in this issue will be discussed at the eyefortransport
'The Impact of High Fuel Prices on Logistics' Summit - December 8/9 Los Angeles
The Impact of High Fuel Costs on Mergers & Acquisitions in the Trucking Industry
by Douglas Christensen, Managing Director with Chapman Assocates
The trucking industry has gone through, and continues to go through, some of the most difficult times since the Motor Carrier Regulatory Reform and Modernization Act of 1980. Deregulation effectively eliminated scores of major carriers over a ten year period as carriers fought for survival. The year 2008 is shaping up to be just as difficult as we are experiencing what can best be described as a “Perfect Storm”. There are five key events that are occurring simultaneously:
- Skyrocketing fuel prices
- Major reductions in economic activity
- Massively changing supply chains
- Falling US dollar
- Significant pockets of debt secured by trucking assets
As you can see, the simple rise from $2.00 per gallon to $5.00 per gallon, using a moderate 10% empty miles factor, is a $5294.12 per tractor, per year, hit to the bottom line of a truckload carrier. Using average revenue per mile of $1.65 per mile, as an example, generates $198,000 per year, per tractor. This extra fuel cost represents 2.7% degradation in income margin. This could be the entire income of a marginal carrier.
With major reductions in economic activity there is less freight being shipped. Smaller carriers in particular are doing more chasing to find backhaul freight. This increases the number of empty miles driven by a carrier. With LTL carriers there is a secondary effect from rapidly rising diesel fuel prices. Fuel surcharges are passed on based on the previous week’s fuel prices. When diesel prices rise very rapidly there is a lag between the fuel surcharge rate and the price of diesel fuel purchased that week. This has an immediate impact on earnings. Conversely, this is a benefit when diesel prices fall rapidly as well. As an additional contributing factor to a drag on earnings, lower economic activity results in smaller average shipment sizes for LTL carriers. It costs generally the same amount to pick up an 800 pound shipment as it does an 840 pound shipment but there is less revenue. The same is true for delivery costs. This has a direct impact on the bottom line of LTL carriers.
As the cost of a gallon of diesel fuel rises rapidly, this creates a major impact on the costs of certain products which will result in significant changes in those supply chains. Case in point – lettuce and other produce. With recent diesel fuel prices approaching $5.00 per gallon, this results in a $1.00 fuel surcharge for refrigerated goods. These types of commodities cannot simply wear the cost of transportation across great distances anymore. This will result in more locally grown produce and other lower value products being warehoused locally. This also increases the cost of imported goods as steamship companies pass on their fuel surcharges coupled with an already weakened dollar. Near-sourcing for supply chains then becomes more popular versus production in Asia.
A weakened US Dollar is actually creating a double phenomenon with imports slowing and exports rising. This changes the freight flows both domestically and internationally. Is it dramatic? No, but it all has an impact on changing supply chains.
In the first six months of 2008, 1,908 trucking companies have closed their doors and liquidated or gone bankrupt. This has resulted in approximately 120,000 tractors leaving the roads. A 6% drop in trucking capacity. While an estimated 30,000 of these used tractors and trucks have been shipped overseas, this represents a significant flooding of used equipment into the marketplace. Prices for used tractors and trailers have fallen like a rock. The trucking industry has historically been an asset intensive business. This has generated a significant amount of debt to be continually reinvested in new equipment. The first sources of collateralization are the tractors, trailers and trucks. There is no clear estimation of how much debt actually exists in the trucking industry where the debt exceeds the value of the assets. This potentially looming crisis is not something that is written about in the press but certainly exists. This is a situation not likely to change anytime soon unless economic activity increases.
What does all of this mean to merger and acquisition activity in the trucking business today? There are numerous owners of trucking businesses that would like to sell their business before the bank forecloses or they are forced to close their doors due to losses. These distressed businesses are selling at very attractive prices. In some instances they are going for just the market value of the assets. In other cases there is a slight premium of 3% - 6% of the revenue for the customer base. It is a buyer’s market for these marginal carriers and many successful trucking business owners are taking advantage of this market condition. If your balance sheet is strong and your management team capable, this is a terrific period to add geographic coverage, new service offerings, or just more volume and density at a very low cost. Not unlike the aftermath of the Motor Carrier Act of 1980, this is a time where the strong carriers get stronger and the weak carriers get weaker.
Private Equity Funds and Hedge Funds are now circling the marketplace. Their investment thesis is that with reduced capacity; pricing will rise (which it is now doing in the truckload market segment). Additionally, some of these larger carriers that have significant amount of debt are also looking attractive as that debt begins to trade down in value. They will insert stronger management (which is supposed to be strong suit of Private Equity), put a stronger focus on growing non-asset services and bet on an economic recovery. A private equity firm can exit this investment in three to five years with an attractive return from their original bargain priced investment.
What does this mean to profitable carriers? The M&A market is still alive but slower. Valuations are trending closer to 2X – 3X EBITDA based on an efficient mix of assets. Obviously, significant investments in land or specialized rolling stock change these numbers.
Non-asset or asset light logistics companies are mostly unaffected by high fuel costs. This segment continues to grow and thrive in difficult economic times. Client volumes do fall and this is usually reflected in lower variable revenue. The merger and acquisition activity for this segment is extremely strong. There are just not enough logistics companies that are willing to sell to meet buyer demand.
I was prepared, until the banking meltdown, to predict the beginning of a financial recovery for truckload carriers. Real GDP was up 3.3% in the second quarter of 2008, capacity is down and pricing is on the rise. Unfortunately, these are extremely volatile times that suggest that meaningful economic recovery that drives freight volumes is probably sometime well into 2009.
In summary, what does this mean for Merger & Acquisition activity for the logistics industry in a high fuel cost economy?
- Buyers market for distressed trucking companies
- Trucking business valuation fundamentals are improving
- Credit risk on trucking equipment debt is rising
- Decent market for profitable trucking companies
So, yes----as we shout all the time----HISTORY REPEATS ITSELF! Now we had to listen to an Obama and Trump tell us more and more deregulation is really going to give us cheaper methods of transportation all the while having a goal of completely eliminating ways for 99% of global citizens to move freely.
This man reminds us that it was Kennedy/Carter era that deregulated our public taxi services that were KEPT AFFORDABLE---bringing all those private taxi businesses driving costs up for fair riders. Today these same global Wall Street players are now saying we need UBER because those private cab corporation rates are too high............WAKE UP AND STOP THE MOVING FORWARD.
Taxis, TNCs and Deregulation: Is History Repeating Itself
“Regulations” are simply rules. The impact of Uber and Lyft vying to avoid safety rules is verging on taxicab deregulation. Some may see this as the way forw...
WHAT IS REGULATION AND WHY IS IT NEEDED?
Regulations are rules put in place to achieve social, political, environmental and economic outcomes that would otherwise not be achieved within an open marketplace. Subsequently, regulations are especially necessary when competition within a market has the potential to exploit consumers and harm society. In such instances, regulations are intended to benefit consumers and drive a healthier business environment.
However, the modern market place deems regulations as anti-innovation and anti-competition. It’s often argued that rules and regulations are unnecessary because market forces can effectively regulate companies.
THE HISTORY OF TAXICAB REGULATION AND FAILED DEREGULATION
While regulation may not be beneficial or necessary for other industries, history has proven time and again that the taxi industry is different. An unregulated taxi industry is harmful to everyone – consumers, driver and operating companies.
During the Great Depression, people jumped at the opportunity to drive unlicensed taxicabs at the absence of stable jobs. This caused an increase in accident rates, poor insurance coverage, and a painful level of road congestion. As a result, American cities quickly enacted laws to address safety, liability and driver rights issues.
Fast-forward forty years to the 1970s and early 1980s, a political era of laissez faire, and suddenly – after decades of prosperity – a wave of deregulation alters the taxicab industry. Local governments in more than twenty cities enabled open-entry and removed regulations on fares, licensing and accessibility requirements. These cities included: Atlanta, Indianapolis, Milwaukee, Kansas City, Phoenix, San Diego, Oakland, Portland and Seattle among others.
However, deregulation in these cities proved to be a failure for many reasons. In just a matter of years, almost every city re-regulated its taxi market because:
- Prices for taxi riders increased.
- Vehicle quality decreased.
- Average age of vehicles increased.
- Fares became confusing and unpredictable to passengers.
- Taxi riders in low-density areas were neglected and access to 24/7 transportation became difficult.
- Taxi riders became prone to price inflation and exploitation.
- Drivers struggled to make a living wage due to an increase of new drivers and an abundance of supply vs. rider demand.
- Driver quality decreased.
- Accidents increased due to an increase of inexperienced (and sometimes untrained) drivers on the road.
- Operators struggled to fund business operations and maintain top quality standards because of increased competition and decreased revenue.
- Traffic in high-density areas increased due to an influx of cars on the road and more “cruising” activity.
- Air quality decreased.
We cannot afford to face these issues again.
A FAMILIAR STORY“THOSE WHO CANNOT REMEMBER THE PAST ARE CONDEMNED TO REPEAT IT.”
History’s failures have shown us that for-hire transportation fills a necessary public service. Smart regulations ensure all have access to safe, affordable and timely door-to-door transportation. Meanwhile, a deregulated environment puts passengers in danger financially and physically, and leads to an unhealthy business environment – preventing companies from providing top quality service.
Unfortunately, with the deregulation of for-hire transportation services like uberX and Lyft, we may be experiencing the same consequences that resulted from the anti-regulation movement of the mid 1970’s and early 1980’s. In modern-day markets where Uber and Lyft are lightly regulated and maturing, (like San Francisco, Los Angeles, Washington DC and Chicago), the results of past year’s deregulation experiments are resurfacing.
If the past provides any indication, we are in trouble.
Let’s take a look at many of the familiar issues that we’re experiencing today:
THE QUALITY OF SERVICE IS DECREASING
As we saw in the 1970’s, quality is slowly decreasing because of an increased supply of drivers and a decrease in driver earnings. As Uber matures in large markets, we will likely see vehicle quality decrease and inexperienced drivers continue to struggle with the responsibilities of being a professional driver.
By looking at the tweets below, one may think that the aforementioned decline in overall service is already happening.