Fixed-Effects Panel Data Analysis of Gasoline Prices, Fare, Service Supply, and Service Frequency on Transit Ridership in 10 U.S. Urbanized Areas

Gasoline price increases since 1999 have generated substantial discussion about their effect on travel behavior. With panel data for 10 selected U.S. urbanized areas between 2002 and 2011, this study analyzed the effects of gasoline prices and three factors that were internal to transit agencies—fare, service supply, and service frequency—on ridership of bus, light rail, heavy rail, and commuter rail, as well as their aggregate ridership. Improving on past studies on the subject, this study accounted for the simultaneous relationship between service supply and ridership and controlled for factors that were external to transit agencies’ control but might have influenced ridership. With fixed-effects models that examined temporal changes within each urbanized area, the analysis found that the possibility of simultaneity was low. The results of estimated coefficients showed that the short-term increase in ridership due to gasoline price increases was relatively small for bus and aggregate transit and marginal for rails, certainly smaller than the effects of the three internal factors. The total influence of the three internal factors was found to be more substantial than that of external factors; this finding indicated the potential to increase ridership by transit agencies’ efforts when resources were available. In addition, it is recommended that transit agencies prepare for a ridership increase more for bus than for rail because of gasoline prices, considering that even a small increase could require a substantial service increase to accommodate travelers’ needs during peak periods