Two Takes on Transport: Fares and Carpooling in a Time of Crisis
Key Takeaways
- In this blog, Sam Sklar and I discuss the pros and cons of free fares and car pooling in response to the oil crisis.
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In favour of free fares:
- Removing fare collection speeds up boarding times, improves schedule reliability, and creates a positive ridership spiral that benefits the whole network.
- Free or heavily subsidised fares send a powerful signal that travel is a right rather than a privilege, shifting the cultural default away from car dependency.
- In some cases, the administrative cost of processing fares can actually exceed the fare revenue itself, making subsidisation not just socially beneficial but economically rational.
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Against free fares:
- Free fares are a blunt instrument. The financial incentive to switch from driving already exists when fuel prices are high.
- Fare subsidies are rarely funded by new progressive taxation; in practice, they tend to come at the expense of maintenance and capital investment.
- Once introduced, free fare policies are politically very difficult to reverse, even when their shortcomings become apparent.
- Overcrowding is one of the most powerful deterrents to long-term public transport use, and free fares can accelerate it.
- New public transport patronage driven by free fares often comes from people who were previously walking or cycling, not from former drivers.
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In favour of car pooling:
- High fuel prices have created a rare window of opportunity where people are genuinely more open to changing their travel habits.
- Pulling multiple policy levers simultaneously: HOV lanes, matching apps, tax incentives, and parking charges, is what delivers successful carpooling.
- Unlike free fares, carpooling once established largely sustains itself without ongoing public subsidy, making it a crisis intervention with genuine long-term benefits.
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Against car pooling:
- Even a shared car trip is still a car trip, and in most cases, the better long-term investment is in robust public transit that removes the need for the journey entirely.
- The logistics of meaningfully matching carpoolers are complex enough that the administrative burden often outweighs the benefit, except in a handful of naturally occurring cases like workplace commutes.
- Over-incentivising carpooling risks inducing car trips that would not otherwise have happened, potentially making congestion and fuel consumption worse rather than better.
What Next?
Have you considered changes to fares and car pooling policies in response to the oil crisis?
Introduction
This week, I'm back with Sam Sklar of the Exasperated Infrastructures newsletter for the second instalment of our ongoing series on policy responses to the oil crisis. If you missed last week's discussion on improving bus services, you can catch up here.
This time, we're turning our attention to two topics that sit at the heart of the transport policy debate: public transit fares and carpooling, a measure long championed as a magic bullet, yet one that has stubbornly resisted successful implementation almost everywhere it has been tried.
As before, Sam and I will be laying out the arguments on both sides and leaving the verdict up to you.
Part 1 - Fares
Even before the current oil crisis, the idea of cheap or free public transit fares had been gaining serious traction in policy circles. Nowhere is this more visible than in New York, where Sam is based: the city's newly elected Mayor campaigned on a promise of free buses for all New Yorkers, although he has since conceded that this won't be happening in the immediate future.
The crisis, however, has given the debate fresh urgency. Several jurisdictions have already moved from discussion to action, including here in Australia, where both Victoria and Tasmania have announced free fare policies in direct response to the crisis.
The Case for Cheap or Free Fares (Sam)
Sam's argument can be found on his blog here.
The Case Against (Russell)
The argument for free or heavily subsidised fares during an oil crisis has obvious appeal: people are struggling with the cost of living, so why not ease the burden by making public transport cheaper? More riders, less fuel consumed, more left over for those with no alternative. It sounds straightforward.
But that is precisely the problem. Transport is not a straightforward system. It is full of feedback loops and unintended consequences, and free fares are a textbook example of linear thinking applied to a systems problem.
Before making the case against, it is worth being clear about what good policy should actually achieve both during the crisis and after it. In the short term, we want more people on public transport, less fuel burned, and household costs reduced. But the long-term goal matters just as much: we should emerge from the crisis with a transport system that is less car-dependent and more resilient, not simply return to where we started. Free fares, as I will argue, risk undermining both objectives.
Problem 1 - Value for money.
Free fares are a blunt instrument. The surge in fuel prices is already driving a significant shift towards public transport; the financial incentive is already there. The evidence shows that further subsidy through free fares increases patronage from driving only marginally, while introducing a host of other problems.
There is also a distributional concern that is rarely acknowledged: in most cities with relatively high public transport use, the majority of riders are already reasonably well-off commuters. Lower-income households, who tend to live in areas with poorer transport coverage, often have little choice but to keep driving regardless. Free fares, therefore, risk becoming a taxpayer-funded windfall for those who need it least.
Problem 2 - Where the money actually comes from
Proponents of free fares sometimes argue that because taxation is broadly progressive, funding subsidies through general revenue is itself a progressive policy. It is a superficially reasonable argument, but it does not reflect what happens in practice.
The real-world experience is that free or cheap fares are rarely funded by new progressive taxation. They are funded by raiding the rest of the transport budget, deferring capital projects, cutting maintenance, and stretching the life of ageing rolling stock. The result, over time, is a public transport network that becomes older, dirtier and less reliable. Patronage then falls, which defeats the original purpose. The longer this crisis persists, and the greater the pressure to sustain free fares, the deeper the compensating cuts to transport budgets are likely to be.
Problem 3 - The political trap.
Free fares are enormously popular, which is exactly why politicians reach for them. But popularity creates its own problem: once introduced, these policies are very difficult to reverse, even when their shortcomings become clear. Having worked directly on successful efforts to wind back free fare schemes, I can say that it will not be easy. What begins as a temporary crisis measure has a strong tendency to become permanent.
Problem 4 - Overcrowding.
Before COVID, most urban public transport systems were running at or near capacity during peak hours. The pandemic reduced patronage significantly, and many networks have not yet fully recovered, leaving some spare capacity in the system. Free fares, however, can quickly overwhelm even that buffer, as Victoria is already finding.
Overcrowding matters beyond mere inconvenience. It is one of the most powerful deterrents to long-term public transport use. Passengers who endure crowded, unpleasant journeys are far more likely to return to their cars the moment fuel prices ease, particularly if the overcrowding has been compounded by a lack of investment in additional capacity, because the money was spent on fare subsidies instead.
Problem 5 - It doesnβt just get people out of cars.
Perhaps the most counterintuitive finding from jurisdictions that have introduced free or heavily reduced fares is where the new passengers actually come from. The evidence consistently shows that the increase in public transport patronage is driven not by former drivers, but by people who were previously walking or cycling and by induced demand, meaning journeys that simply would not have been made at all if travel had not become free.
In a fuel crisis, the last outcome we want is people abandoning active travel in favour of public transport. It adds to overcrowding without reducing car use, and delivers none of the fuel savings the policy was supposed to produce. Early evidence from Australia indicates this is happening during this fuel crisis as well.
In summary, free or cheap fares are poor value for money, tend to be funded at the expense of the broader transport network, are politically difficult to reverse once introduced, accelerate overcrowding, and often shift people away from active transport. There are better policy levers available, ones that address the crisis more directly and leave the transport system in better shape once it has passed.
Part 2 - Car Pooling
Carpooling, the sharing of car journeys between two or more people, is one of those policy ideas that seems almost too sensible to argue with. Fewer cars carrying more people means less congestion, lower fuel consumption, and reduced travel costs for everyone involved. In the context of an oil crisis, the logic is compelling: no new infrastructure required, no large public expenditure, just better use of the cars already on the road.
So what are the pros and cons of promoting car pooling in response to the oil crisis?
The Case for Encouraging Car Pooling (Russell)
When responding to a crisis, governments are understandably looking for interventions that are fast, low-cost, and capable of delivering lasting change. Carpooling ticks all three boxes and in the current climate, it may be more achievable than ever.
Historically, carpooling has remained a niche behaviour. But high fuel prices are a powerful motivator, and there are real signs that people are more open to changing their travel habits than they have been in a long time. The crisis has created a window of opportunity that good policy should exploit.
The good news is that governments have a wide range of levers available to encourage carpooling, and the evidence suggests that pulling several of them simultaneously is what makes the difference. These include:
Dedicated high-occupancy vehicle (HOV) lanes, which give carpoolers a tangible, time-saving advantage over solo drivers
Matching apps, which have transformed the logistics of finding a carpool partner, handling everything from introductions to payments
Tax incentives for individuals and employers who actively support carpooling arrangements
Parking policy, including removing free parking or introducing charges at major commuter destinations such as offices, universities and hospitals, making the cost advantage of carpooling even more compelling
One of the clearest lessons from successful carpooling schemes is the importance of community. Matching works best when people already share a connection and a destination, a workplace, a business park, a university campus, or a hospital. Employers and institutions therefore have a central role to play, and governments should be actively engaging them as partners rather than treating carpooling purely as an individual behaviour change challenge.
The case for optimism is also stronger than it might appear. The technology has genuinely improved. Modern apps make driver-passenger matching straightforward, remove the social awkwardness that once put people off, and handle payments seamlessly.
Jurisdictions that develop a comprehensive strategy, combining infrastructure, incentives, employer engagement and technology, stand to see meaningful increases in carpooling rates, particularly while fuel prices remain high.
And crucially, the benefits need not end with the crisis. People who try carpooling and find it convenient, affordable and reliable are likely to stick with it. Unlike free fares, which require ongoing and escalating public subsidy to sustain, carpooling, once established, largely sustains itself. That makes it one of the few crisis interventions that could genuinely improve the transport system for the long term, without leaving a large bill behind.
The Case Against Car Pooling (Sam)
Sam's argument against can be found on his blog here.
Conclusion
Both debates we've explored today reveal a recurring tension at the heart of transport policy: the difference between what looks like a solution and what actually works.
Free fares and carpooling share a certain intuitive appeal. They are easy to explain, easy to sell, and easy to reach for when a crisis demands visible action. But as we have each argued, from different directions and on different issues, even the most superficially appealing interventions have unintended consequences.
We've tried to lay out the arguments fairly and leave the verdict to you. We'd love to hear where you land, and what we've missed.