Value of time vs. Cost of gas

In Dynamist Blog: Angelenos for Higher Gas Prices Virginia Postrel notes the upside of higher gas prices ... less traffic. We can do a back-of-the-envelope calculation. So let's say her car gets 30 miles per gallon, and gas is $3 per gallon, she is paying $0.10/mile. If she were traveling at 50 miles per hour when gas was $2 per gallon ($0.067/mile) and 60 miles per hour now (at $3/gallon), she is traveling 20% faster (a one mile trip used to take 1 minute and 12 seconds but now only takes 1 minute). (I doubt average speeds have increased that much, but if she is noticing it, it is probably at least 10%).

That time savings of 12 seconds costs about $0.0333 in higher gas prices. Since she thought the deal worthwhile, Virginia's implied value of time is at least $8.89/hour. Since most roads are operating at or over the edge of congestion during peak hours, (congestion sets in when the flow exceeds capacity), and delay rises very quickly with additional traffic, a small reduction in traffic can sharply reduce travel time, especially if other equilibration processes (people changing route, modes, vehicle mix, departure times, destinations, or locations) have yet to fully take advantage of the changed conditions.