DALLAS — Lower gasoline prices will benefit toll roads as traffic increases on freeways, according to Moody's Investors Service.
"Lower gas prices increase traffic congestion on free roads, encouraging some drivers to use less congested toll roads that provide faster and more predictable trip times," Moody's analyst Maria Matesanz wrote in the agency's weekly Credit Outlook, published Thursday.
"Lower gas prices also increase leisure or discretionary travel, which stimulates greater toll road use in some areas."
The average retail price of regular gasoline fell nearly 50 cents between July and October this year to $3.06 a gallon this week, according to the US Energy Information Administration.
Gasoline prices are at their lowest levels since January 2011 and about 12.5% below its average price of $3.51 in 2013.
"Lower gas prices stimulate use of toll roads by commuters and leisure drivers, a credit positive for U.S. toll roads," Matesanz wrote.
Total vehicle miles traveled increased 0.5% between January and August this year after rising a 0.4% in 2013 and 0.3% in 2012. Those gains followed declines 2008-11, the first declines in 28 years.
"We expect median toll transactions for our rated toll roads to increase by 1.5% this year, up from growth of about 1.0% in both 2013 and 2012," Matesanz said.
The lower price of gasoline could also benefit state and federal highway funds, as more fuel is sold. The fuel tax is levied per gallon basis, rather than as a percentage of the price of fuel.
With Congress and many state legislatures refusing to raise fuel taxes for more than two decades, the ability to support free roads has diminished. When pump prices were increasing, American motorists responded by buying more fuel-efficient cars.
Motor gasoline consumption grew by 160,000 barrels per day or 1.9% in 2013, according to the U.S. Energy Information Administration. That was the largest increase since 2004. However, the agency expects consumption of gasoline to fall by 20,000 barrels per day this year and another 20,000 barrels per day in 2015 as improving fuel economy in new vehicles offsets highway travel growth.
Underlying falling gasoline prices are reduced prices for oil amid record production in the U.S. Oil was down nearly 1.6% to $80.91 on the NYMEX exchange on Thursday. With the oil price down more than 20% since June, the fuel is experiencing a bear market.
In the oil producing state of Texas, where toll roads have expanded dramatically in the past decade, gasoline has fallen below $3 per gallon for regular unleaded.
By 2018, North Texas will have more than 100 miles of managed toll lanes, transportation specialists estimate.
"As toll roads gain more traffic, their revenues and financial metrics improve, although the relationship between revenues and traffic is affected by toll pricing decisions that may reflect local political considerations or future capital funding needs," Matesanz said. "Toll roads, especially in fast-growing urban areas, such as Dallas and Houston, Texas; San Francisco, California; and Denver, Colorado, are likely to benefit the most."
Moody's is observing a positive traffic and revenue trend for the Harris County Toll Road Authority (seniormost revenue-backed rating Aa3 positive) in Houston, the North Texas Tollway Authority (A2 stable) in Dallas, the Bay Area Toll Authority (Aa3 stable) in San Francisco, and E-470 Public Highway Authority (Baa2 stable) in Denver.
"The 2012-13 median 4.9% transaction growth and 8.2% revenue growth for these five urban roads was significantly higher than the sector's median 0.6% growth in toll transactions and 3.5% growth in revenue," Matesanz said.
