FRIDAY THOUGHTS – In the Fast Lane

 FRIDAY THOUGHTS – In the Fast Lane

15-Mar-13

While visiting a client in Los Angeles this week, I got the opportunity to experience Congestion Pricing at work.  I’ve had a few other experiences with Congestion Pricing, but I wasn't writing Friday Thoughts then.

The concept of Congestion Pricing has been around for a long time.  The famous economist, Milton Friedman, co-authored a paper on the topic in 1951.  The first toll road in the US was the Philadelphia and Lancaster Turnpike, built in the 1790s. And the concepts of payment for passage dates back to the earliest of humans.  However, pilots and implementations of dynamic pricing schemes to solve urban congestion have only been around for a decade or so.

Urban congestion exemplifies the problem of effectively coordinating individual decisions to use largely un-priced goods like roads.  Drivers are adept at anticipating delays and factoring them into decisions on whether and when to hit the road.  But, absent tolls, they are not compelled to factor in the delays their driving imposes on others. (NYT “Traffic Jam Economics” Jan 20, 12).

LA is certainly a poster child for urban congestion.  To test methods to combat this congestion, LA started a demonstration program called Metro ExpressLanes in November, 2012.  The concept is simple.  High Occupancy Vehicle (HOV) lanes are being converted into High Occupancy Toll (HOT) lanes.  Cars who wish to drive in the HOT lanes must have a Metro ExpressLane electronic pass.  Cars are then charged a rate per mile depending on traffic volume based on a target speed of 45 mph.  Rates range from $.25 / mile to $1.41 / mile.  Watch this cool video to see how it works.

Seeing congestion pricing in action got me thinking about all the possible applications for this type of strategy in the world of Consumer Products and Retail.  One of the big historical challenges was the lack of available technology to:  1) sense the constraint (speed of traffic in LA’s case) and 2) dynamically adjust price.  These hurdles are being lowered at a rapid pace. 

Are you living your life in the Fast Lane?

The potentially interesting but unrelated department:

• ·       The highest mountain peak in both the United States and North America is Mount McKinley in the Alaska Mountain Range.
• ·       The highest elevation one can drive to in the United States is Mount Evans, at 14,240 feet.  Many think it is Pike’s Peak, but Mount Evans has it by 135 feet!
• ·       In 2012, over 60 million new cars were produced globally.  That’s over 165,000 every day!  The US is 6^th in total production, producing ~5% of all cars made globally.
• ·       For the last decade, there have been ~3 Trillion, +/- 50 Billion, total miles driven in the United States.    That’s just over 16,000 round trips from the earth to the sun.

Random Closing Thought

"Be a friend to yourself and others will be so too."

-          Thomas Fuller

Periodically, on a Friday of course, I will post a “Friday Thoughts” to my GreggClarkEY Blog.  It is a lighter-side-of-life look at my experiences and how I apply them to being a better person and leader.   Hopefully there will be something here for you.