There has been a lot of talk lately about certain government bodies, be they state, local or federal, considering metered tolling as a way to charge people for their road usage. It’s definitely an interesting solution to a seemingly intractable problem, but it’s one that requires a giant investment in tolling infrastructure–in addition to the fact that it does nothing to reward those who have chosen to conserve fuel.
How tolling would work: Let’s say you drive 1,000 miles per month. That mileage would somehow be reported to a bureaucratic agency that would then bill you or charge you according to that mileage. The idea here is that heavy road users would pay their bigger share while those who don’t drive much or use the roads would pay their smaller share. On its face, the idea makes a lot of sense.
This is a subject that you’ll find in the news more and more going forward because, once again, the Federal Highway Trust Fund looks to be heading toward insolvency. This fund pays out the matching cash for highway projects all around the country; it keeps our roads repaired and finances the construction of new ones, too. The big problems started last year when, in response to $4 gasoline, Americans drove 100 billion fewer in 2008 compared with 2007. We’ve never seen a drop like that before. The problem for Highway Trust Fund, however, is that it gets its revenue when consumers purchase gasoline. The 18.4 cent/gallon federal gas tax gets funneled straight to the fund.
So when Americans drove 100 billion fewer miles last year, it meant that we used roughly 5 billion fewer gallons of gasoline — which means the Trust Fund received about $900 million less than the previous year. This drop in revenue came during a terrible time because as the price of gasoline goes up (like it did in 2008), the price of asphalt and construction goes up at almost the same rate. So just as the Highway Trust Fund needed more money to keep up roads because the price of doing so had spiked, it got less money.
Capitol Hill’s lawmakers are quite aware of the shortfall and working on ways to fix the problem. Last year, Congress injected the fund with $8 billion to keep it afloat. They will have to do something similar this year, but a more permanent fix is needed. So that’s why you hear the metered tolling idea being tossed around–that revenue would go to pay for our roads that, right now, don’t get enough from the gas tax.
It’s important to understand that the federal gas tax was bumped to 18.4 cents per gallon in the early 1990s, when gasoline was about $1 per gallon or less. We’ve seen those prices triple during the last 15 years, but the gas tax has remained static at 18.4 cents. It hasn’t even been moved up for inflation. It seems straight-up common sense that the gas tax has to be raised. Politicians know this. But it’s a political cyanide pill to be known as the guy who raised the gas tax, so nobody, including President Obama, wants to touch this one.
So that’s why we end up with strange work-arounds such as the metered tolling scheme. It would cost billions to install such a system and, going forward, cost billions to maintain it. And it would likely require yet another government agency to track, collect for and administer the program. Why not take the obvious and more efficient path and simply raise the gas tax? What would that cost to implement? $1,000? Not much.
Proponents of metered tolling say that, through a gas tax, drivers of Priuses and small cars get off easy, that they essentially pay less per mile to use the roads than the driver of a Cadillac Escalade. They’re right. But is that such a bad thing? Shouldn’t the government be finding ways to encourage alternative technologies and fossil fuel conservation? (To say nothing of mitigating carbon emissions and global warming).
A higher gas tax of say, $2, phased in by 25 cents every six months, would in the long run be very beneficial to our society. We will face gas prices of $4 again and probably soon. Whether the price of gas gets to $5-$6 through taxes or through pure market forces is irrelevant. It’s going to happen either way. No matter how wasteful our government might be, wouldn’t it be nice to keep some of that money inside our own country instead of shipping it to Saudi Arabia or Venezuela?
Capitalism, in its purest form, offers no solution for our immediate problem. We need innovation. To get great and widespread innovation, however, there has to be an incentive. Gas prices of $3 aren’t incentive enough.
The longer we forestall change, the more painful that change will be.
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