Urban transportation is a critical component in the development of sustainable cities. Bicycle sharing systems (BSS) emerge as a viable solution, offering an eco-friendly alternative to motorized transport. However, a key question remains: can BSS effectively reduce car dependency in cities? This blog post explores the findings of a research that examined the relationship between fuel price shocks and BSS usage in Budapest, Hungary, and provides insights that are crucial for urban planners and policymakers.

Traveling in cities and the emergence of micromobility

The dominance of motorized transport in urban environments poses significant challenges, including air pollution, traffic congestion, and high CO₂ emissions, all of which negatively impact urban sustainability. In response, cities are increasingly turning to micromobility solutions, such as bicycles and scooters, as alternatives for short-distance travel. These modes of transport offer benefits such as lower emissions and reduced noise pollution, contributing to improved urban liveability.

Shared micromobility solutions, like bicycle sharing systems, have been widely adopted in cities around the world. These systems, supported by technological advancements like GPS tracking and mobile apps, operate under various models, including government-funded initiatives and public-private partnerships. Research has demonstrated their effectiveness in reducing car dependency and alleviating traffic congestion, but BSS often replaces trips that would otherwise be made by public transport, reducing the sustainability benefits of the system.

Fuel prices are an important factor influencing travel behavior. Previous studies have indicated that higher fuel prices can lead to increased bicycle usage as people seek more cost-effective alternatives to car travel. However, the relationship between fuel prices and cycling is complex and influenced by factors such as weather conditions, safety perceptions, and the availability of cycling infrastructure. This study aims to deepen the understanding of how fuel price shocks impact BSS usage, using Budapest as a case study.

Background

Budapest, the capital city of Hungary, has a population of approximately 1.7 million, with the broader metropolitan area exceeding 2 million. The city’s transportation network is dominated by sustainable modes, with public transport accounting for 47% of trips, walking for 16%, and cycling for 2%. Despite this, private car usage remains significant, representing 35% of trips.

MOL Bubi, the Budapest BSS

The Budapest BSS, known as MOL Bubi, was launched in September 2014 and has since expanded to over 200 stations and 2,000 bikes as of 2023. However, usage of the system is seasonal, with peak usage occurring between May and October. The pricing of the BSS is designed to encourage usage, with affordable monthly and annual passes that offer the first 30 minutes of each ride for free.

Fuel price cap

In response to rising inflation and the cost-of-living crisis, the Hungarian government introduced a retail price cap on petrol and diesel in November 2021. This cap was unexpectedly  lifted on December 6, 2022, leading to a sudden and significant increase in fuel prices by around one-third. This unique situation provided an opportunity to study the immediate and short-term effects of this price shock on BSS usage.

Analyzing travel data and user survey

The research combined administrative data on BSS trips with weather data and Covid19 government response data to analyze the impact of the fuel price shock on BSS ridership. 

We applied a difference-in-difference (DID) setting with fixed effect negative binomial regressions. DID is a statistical technique used in the social sciences to estimate the causal effect of a treatment on an outcome. DID does this by comparing the difference in the outcome between the treatment group and the control group before and after the implementation of the treatment. Therefore, the DID method requires two groups of observations, one that is treated and one that is not treated. As the removal of the fuel price cap affected the entire country, we applied a time-lagged control group, namely, the BSS data from the same period of the previous year. At that time, fuel prices were approximately the same as during the cap period, so this period can serve as an ideal comparison group. There may be weather differences between the two years, but we control for these.

To complement the administrative data, a survey was conducted in March and April 2023, targeting BSS users in Budapest. The survey collected information on respondents' commuting habits, BSS usage, and demographic characteristics, with a focus on how they responded to the elimination of the fuel price cap.

Key findings

1. Increase in BSS usage: The study found a 2-6% increase in BSS ridership following the removal of the fuel price cap, indicating that higher fuel prices incentivized more people to use the bicycle-sharing system.
2. Geographical variation: The impact of the fuel price shock varied across different parts of the city. The outer areas of Budapest saw the largest increases in BSS usage, suggesting that residents in these areas were more sensitive to the fuel price changes. However, some areas experienced a decline in BSS usage. This may be due to the fact that commuters who previously combined car and BSS reduced their car use, which also led to a reduction in BSS use. This highlights the complexity of urban transport dynamics.
3. Survey insights: The survey results supported the regression analysis, with 6.5% of the respondents indicating that the higher fuel prices had influenced their decision to use BSS more frequently. Two-thirds of them still use their car in the city on a weekly basis, so they have not been completely discouraged from using their car and have only reduced their use.
4. Short-term vs. long-term impact: The study focused primarily on the immediate and short-term effects of the fuel price increase, up to six months after the price cap was lifted. While the short-term effect was significant, we observed a smaller increase in BSS usage compared to the immediate effect. The long-term effects on BSS usage remain uncertain and warrant further research.

Policy implications

The findings of this study have important implications for urban transportation planning and policy. The increase in BSS usage following the fuel price shock suggests that economic incentives, such as fuel price adjustments, can encourage the adoption of sustainable transportation modes. However, despite the substantial one-time price increase, the increase in BSS usage was relatively modest, amounting to 2% (on workdays) seven months after the removal of the fuel price cap. This increase in BSS usage does not result in a comparable reduction in car usage. Consequently, the impact on reducing the number of cars is minimal. In contrast, the fuel price increase was considerable, reaching approximately 33%. This is much larger than the typical observed increase in developed countries. These results suggest that fuel price increases may have only a marginal impact on BSS usage.

The study also highlights the need for continued investment to support the growth of BSS.  Building more bicycle lanes and improving the user experience can achieve much greater increases in BSS usage, as previous research has shown. Enhancing the connectivity and accessibility of BSS, particularly in areas where usage is low, can further encourage modal shift away from private car use. Additionally, policymakers should explore complementary measures, such as improving public awareness of the benefits of cycling and integrating BSS more effectively with other forms of public transport.

As cities around the world strive to become more sustainable, understanding the factors that drive the uptake of BSS will be critical to achieving long-term urban sustainability goals.