Fuel and the Transport Industry
The amount of fuel required by the transport industry has been a problem for many non-oil producing countries, particularly since the increase in the price of oil from OPEC in 1975 and following the Iranian revolution in 1979. This has led many people to speculate on how far we can move away from fossil fuels. Even in the USA, former President George Bush Junior has talked about the need for Americans to move away from their dependence on foreign oil. More attention has been paid to the social costs or external effects of the transport industry. The increase in the number of air journeys has caused concern and most countries signed the Kyoto agreement in 1997 which is trying to limit the amounts of pollution, etc. The Kyoto Protocol to the United Nations Framework Convention on Climate Change, signed by many countries, is an amendment to the international treaty on climate change, assigning mandatory targets for the reduction of greenhouse gas emissions to signatory nations.
Social Costs Importance and Definition
Social costs are total costs to the community and therefore include both private costs and external costs are those which are not borne by the consumer or producer of die goods or services. This could, for example, be die costs arising from a ship that goes down, such as the MSC Napoli near Branscombe, Devon in January 2007, which was carrying several thousand containers and caused considerable pollution.
Social costs are important in transport economics. This is because, whereas other industries have little impact on people who are neither consumers nor producers, the same is not true of the transport industry. We can readily see this with proposals for new transport facilities such as airports or major roads where many people have opinions even if they are not going to use the airport or new road, We deal more extensively with this in Chapter 16 on cost benefit analysis .
Other major examples of social costs are road accidents, which in the UK, are just under 3,000 per year and about 300,000 injuries per year. This is a considerable improvement on the number of deaths and injuries in the 1970s when about 7,000 deaths were caused each year but is still obviously too high. There has been a 62 % decrease in the number of fetal and serious injuries since 1980 to 2005 in spite of die considerable increase in volume of traffic. In the past, lead additives were important in the case of petrol and caused a considerable amount of pollution. Whilst these additives have been phased out with minor exceptions, deaths from pollution are still very high. Ken Livingstone, the former elected Mayor of London, cited pollution effects as one of the reasons for the area expansion covered by the congestion charge. In a city such as London, the traffic pollution is by far the greatest component of pollution since industry pollution is relatively minor by comparison.
Noise
Air transport noise is difficult to avoid, and with any airport expansion proposal there have been complaints. It is not necessarily from the aircraft themselves, Ironically, part of the concerns about additional noise from any proposed expansion of Heath now has been the number of cars travelling to and from Heathrow, adding to both the noise and pollution in that part of the London area.
Public Awareness
The public has grown more aware of related social costs due in part to the growing awareness of global warming. The Stern Report, published in October 2006, warned of such dangers to the UK and other economies.
We might also assume that as people get richer they will be more aware of the problems of social costs, especially if they spend more money on housing. They then will notice the road noise and pollution that could prevent them from enjoying their great wealth. It is very noticeable in the UK that nearly all housing advertisements will stress, if it is true, that the new housing is in a quiet neighbourhood.
Most new roads, apart from bypasses, trunk roads and motorways, are built so they do not have through traffic going to the roads, a trend that is becoming increasingly popular. Air noise, on the other hand, is more difficult from which to be sheltered since it is very difficult to find area not affected by this surrounding an airport.
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