What Effect Do Cars Have on the Economy?

Cars' mobility and relatively low price have revolutionized modern economies.

Cars affect the economy. Petroleum demand increases. Suburban real estate becomes available to many. Vehicle concentration in cities may raise health-care costs as polluted air takes its toll. Megastores exist since cars enable many consumers to converge on one location. Road tolls and parking fees pay for government operations and services.

Petroleum Demand

The vast majority of vehicles consume gasoline. As the number of cars grows, petroleum prices increase.

Suburban Real Estate

Car owners take advantage of cheaper real estate further from urban centers. The Wall Street Journal reports that the trend of fleeing to suburbia may be reversing as of 2010.

Urban Health Costs

Exhaust fumes from cars (and factories) can pile up in cities—especially if wind is lacking—and cause near-toxic breathing conditions. Health-care costs resulting from polluted air are substantial.

Big Box Retail

Superstores exist because customers can travel and load up on purchases. This allows the store to save money via huge economies of scale. Without cars, people cannot travel and make bulky purchases at a large shopping center such as a suburban mall.

Revenues

Local and state budgets get a boost with parking and toll revenues. If the tolls and parking meters make a profit, the money can enable lower taxes and/or more benefits to the community.

References

• U.S. Energy Information Administration: Gasoline Explained
• The Washington Post: The Suburbs Are Calling
• The Wall Street Journal: Affluent Leaving Suburbs, Moving to Cities
• University of California Irvine: Clearing the Air
• The Infrastructurist Magazine: Big Box of Trouble

Resources

• State of Washington: November 2009 Transportation Economic and Revenue Forecasts