Delaware’s Robber Barons

I recently drove across the Delaware Turnpike while traveling from Washington to New York.  It had been a while so I didn’t remember that the toll had risen to $4 in 2008 – this for a road 11 miles long. It amounts to 36 cents for eacdelaware-turnpikeh of those 11 miles.  This is ridiculous.

The other tolls I paid driving up Interstate 95 were $2.50 for the JFK Highway in Maryland and $9.05 for the full length of the New Jersey Turnpike. The Maryland highway is 50 miles, and I drove 122 miles in New Jersey, amounting to 5 cents and 7 cents per mile, respectively.

Other Northeast tolls are much like New Jersey and Maryland. Driving the full length of the Massachusetts turnpike covers 135 miles and costs $6.85, amounting to 5 cents per mile. The length of the New York Thruway is 376 miles, costing $17.50, also 5 cents per mile.  The $28.45 toll for driving the entire 358 miles of the Pennsylvania Turnpike comes to 8 cents per mile.

So how can Delaware get away with tolls 5 to 7 times higher than other nearby states in the Northeast?  It is said to be the highest toll per mile in the United States. It helps that the Delaware Turnpike feeds into the Delaware Memorial Bridge, one of the few ways of getting across the Delaware River. There are no good alternative routes if you are traveling up the east coast. Once on the New Jersey side of the river, by contrast, it is easy to take Interstate 295, a toll-free road which allows you to bypass at least half of the Turnpike.

Of course, another factor is that the great majority of Delaware Turnpike drivers are from out of state. Since Delaware residents don’t use the road all that much, they don’t object to high tolls. On the only other toll road in Delaware, which is locally used, the toll is 5 cents per mile, similar to other tolls throughout the northeast.

But for the Turnpike Delaware is free to exploit its monopoly position, and the state has been happy to behave like a rational monopolist. Like every other state these days, it can use the money. In fact, the tolls could be even higher in the future if Delaware decides to go take total advantage of its geographic hold on east coast traffic.

When I was in college, I studied how in the thirteenth century, the robber barons in Germany were famous for the exorbitant tolls they charged boats traveling up and down the Rhine River. There could be a new toll as often as every five miles, each with its own high demands. As in Delaware, there was no good transportation alternative. Maybe Delaware politicians have been studying German history.

The tolls on the Delaware Turnpike have always been high. The Turnpike was completed in 1963, and later the toll was set for many years at $1. Then, from 1991 to 1998, the toll was $1.25, or about 11 cents a mile, but still twice the levels of nearby states. Starting in 1999, however, Delaware began to get greedy, raising the toll to $2.00. Apparently all this “free” money from out-of-staters was becoming addictive. Just five years later, Delaware raised the toll to $3 and then again in 2008, as I was recently reminded, to $4.

In 2008, a total of 25 million vehicles passed through the toll gates, yielding total revenues to Delaware of $118 million. In a small state, this amounted to 3.5 percent of the entire state budget — paid by mostly out-of-state drivers. As recently as 2003, Delaware Turnpike revenues had been just $62 million.

Adding insult to injury, Delaware has failed to use this money to add enough toll collection capacity to accommodate peak traffic flows. On holidays and other high demand periods, some of the worst traffic jams on the east coast are found at the Delaware toll booths. I have personally witnessed a 20 mile backup — fortunately going the other way. Delaware not only extorts your money but can hold you up an hour in the process.

In the medieval era, each toll on the Rhine River was supposed to be approved by the Holy Roman Empire. It was recognized even then that a local monopoly power over transportation had to be subject to wider controls. The famous era of the medieval robber barons was a limited period when the authority of the Empire had been undermined and there was little to restrain the unruly subjects.

The Delaware Turnpike, however, is part of the Interstate Highway System. It is a national highway system designed and overseen by the U.S. Department of Transportation. The constitution gives the federal government full power over interstate commerce. Delaware’s exorbitant tolls may not be unconstitutional but the federal government clearly has the authority to regulate the Delaware tolls.

How about the following? The highway bill will be coming up soon for renewal. Congress should enact a law limiting any toll that primarily affects interstate travelers to twice the average toll per mile on the whole Interstate Highway System (leaving out bridges and tunnels which are a special category due to the very high expense of constructing them). I am guessing this limit would be about 10 to 15 cents per mile.

In the meantime, for those of you who may want to avoid the Delaware toll, there is actually a little known way.  You can bypass the toll station by driving on local roads, getting off the Turnpike just before and then right back on just after the toll. For an extra ten minutes or less (unless too many people start to use it), you can save the $4. Here’s a map showing you how to do it.

7 thoughts on “Delaware’s Robber Barons

  1. Jeremy H.

    How does this post square with economists' calls for using tolls to price roads? Are we saying that the toll is too high in Delaware, but a toll of some level is okay? How do we set that level, assuming a second-best world where government still owns the roads?

    It is unclear to me why the cost-per-mile is an efficient pricing mechanism. As Nelson notes, there are few substitutes to the DE tollway along the eastern corridor. So fewer substitutes, higher price. Wouldn't we expect the same result if the road were private?

    1. Jeremy H.

      I don't think loaded words like “extortionary” have any place in sound economic analysis. Monopoly price will do just fine.

      Again I ask, how are we to determine the proper price for DE to charge? Assume the market is perfectly competitive, with thousands of bridges? That seems fraught with difficulties, and also unrealistic since no tollways operate in this theoretical environment.

      Furthermore, as Nelson notes in the post, the DE TP still experiences traffic jams at certain hours, despite the price it currently charges. But this implies that the price they are charging is, in fact, too low! Forcing DE to lower the toll would only increase congestion, making drivers pay by waiting in line rather than by paying a few more dollars in tolls.

      As one counterexample, the Holland Tunnel is less than 2 miles long, but charges $8. Should the federal government force this toll to be lowered as well? Again, this will only increase congestion and create more deadweight losses.

  2. Jeremy H.

    I don't think loaded words like “extortionary” have any place in sound economic analysis. Monopoly price will do just fine.

    Again I ask, how are we to determine the proper price for DE to charge? Assume the market is perfectly competitive, with thousands of bridges? That seems fraught with difficulties, and also unrealistic since no tollways operate in this theoretical environment.

    Furthermore, as Nelson notes in the post, the DE TP still experiences traffic jams at certain hours, despite the price it currently charges. But this implies that the price they are charging is, in fact, too low! Forcing DE to lower the toll would only increase congestion, making drivers pay by waiting in line rather than by paying a few more dollars in tolls.

    As one counterexample, the Holland Tunnel is less than 2 miles long, but charges $8. Should the federal government force this toll to be lowered as well? Again, this will only increase congestion and create more deadweight losses.

  3. Jeremy H.

    I don't think loaded words like “extortionary” have any place in sound economic analysis. Monopoly price will do just fine.

    Again I ask, how are we to determine the proper price for DE to charge? Assume the market is perfectly competitive, with thousands of bridges? That seems fraught with difficulties, and also unrealistic since no tollways operate in this theoretical environment.

    Furthermore, as Nelson notes in the post, the DE TP still experiences traffic jams at certain hours, despite the price it currently charges. But this implies that the price they are charging is, in fact, too low! Forcing DE to lower the toll would only increase congestion, making drivers pay by waiting in line rather than by paying a few more dollars in tolls.

    As one counterexample, the Holland Tunnel is less than 2 miles long, but charges $8. Should the federal government force this toll to be lowered as well? Again, this will only increase congestion and create more deadweight losses.

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