Gasoline prices are at their highest in recent memory and they appear likely to stay high for months. Is this a dream come true for climate defenders and transportation reformers? Far from it.
Short-term price spikes, such as the one we’re enduring now, have surprisingly little impact on driver behavior. But they constitute a massive drain on the economies of fuel-importing regions such as ours. And they enrich oil companies, strengthening their capacity to resist reform. The only silver lining on this storm cloud is that we might learn something about how much how northwesterners really pay to drive.
The truth is that we pay a lot not only in “external” environmental and social costs but also in cold, hard cash. But the trouble is, we pay most of it in large, fixed costs. And those costs do not vary appreciably in the short term with miles or minutes driven. The result is that drivers know their cars are expensive but perceive their next trip to be virtually free.
Find this article interesting? Please consider making a gift to support our work.
Trimming greenhouse gas emissions could (should and will) eventually come from climate-specific measures such as carbon taxes or cap-and-trade permits. But the most fruitful short-term pricing options are probably those that slice up large, fixed costs into small, incremental ones-so that drivers become more aware of the true costs of owning a car. Examples include insurance-by-the-mile, vehicle licensing and registration, car-sharing, road use, and parking.
In each of these cases, political and institutional obstacles have long hindered efforts to convert fixed into variable charges. But technological change—specifically, the continuing plunge in information technology costs—is pushing them all steadily closer to prime time, and creating some promising opportunities for innovative policymaking, entrepreneurship, and citizen action.
And reduced driving will save us a bundle. British Columbians, for example, whose compact cities and smaller road network yield less driving and fuel consumption, put less than half as much money per capita into roadwork as their counterparts in the Northwest states. And, despite 10 percent higher gasoline prices, their annual fuel bills are at least 25 percent lower.