Inflationary Effects on Transportation

The U.S. transportation sector is faced with uncertainty, overextension, and bankruptcy, due less to energy-price inflation or the high cost of replacement capital than to a long history of inappropriate government policies. Economic regulation and government promotion, in virtually every mode of transportation, have led to inflexibility and technological stagnation. A complicating factor in this inflationary period, however, is the tie between energy consumption and public user-fee receipts, which has led to modal service declines or higher subsidies as energy prices have risen. A healthy transport sector is an unlikely prospect unless fundamental policy changes occur in pricing, government institutions, and planning.