One of the most inescapable papers on the true cost of driving is "Going Rate: What it Really Costs to Drive," a 1992 paper from the World Resources Institute. "Motorists today do not directly pay anything close to the full costs of their driving decisions," writes co-author James MacKenzie. The current transportation system, he says, favors cars by providing direct and indirect subsidies to drivers. MacKenzie posits that this produces a distorted, inefficient market and encourages people to drive excessively.
A host of reports from organizations such as the World Resources Institute and the Sierra Club claim to show that automobiles are massively subsidized by both the government and those who bear the costs of pollution, noise, and accidents. The amount of the subsidy varies from $300 billion per year, calculated in the "Going Rate" report, to a staggering $2.1 trillion, as reported by the Sierra Club.
Anti-automobile economists claim that although drivers do pay for their vehicle operating costs and some percentage of road construction and maintenance, they don't pay for many other costs: roadway land value; municipal services such as highway police that cater to drivers; air, water, and noise pollution; accident costs; resource consumption; land-use impacts; military expenditures in the Middle East to protect oil supplies; and the Strategic Petroleum Reserve. For example, according to the Federal Highway Administration, federal, state, and local disbursements for highways were $129 billion in 2000, while user-fee receipts from fuel and vehicle taxes and tolls totaled only $77 billion. The rest of that $52 billion came from general fund appropriations, property taxes, and "other taxes and fees." These appropriations comprise a direct subsidy, analysts like MacKenzie say.
Congestion is another large external cost--one not created by a producer or consumer. With free access to the roads at all times, drivers do not have to pay more to drive during commutes, when demand for driving is highest. The result of this "market failure" is traffic jams that wastes the time of drivers, time that MacKenzie estimates to be worth at least $100 billion a year.
In essence, writes Alvin Spivak, author of the anti-car tract The Elephant in the Bedroom, our policy toward the car is like the Soviet policy toward bread: The price is kept so artificially low that over-consumption is bound to occur. According to Spivak, Soviet economics in former President Mikhail Gorbachev's time made rolls so cheap they were often used as surrogate soccer balls. In the United States, cars have become surrogate feet, Spivak argues--and our use of them has mushroomed out of control because using them seems almost free.
Unable to compete against this giveaway, mass transit, once privatized and profitable, is unable to pay its own way. The government has had to take over and, despite intervention, those hapless souls in America who cannot afford a car are ill served by limping bus and rail systems.
Anti-car papers claim that the solution to these two broken systems--the overused auto and ineffectual mass transit--is to restore the free market to transportation. Whether through an increased gas tax that would push the cost per gallon to anywhere from $2.86 to $16.11 (the range is due to different reports' findings), congestion pricing, or increased user fees, once people start paying for their use of the roads and the damage they cause to the environment, a whole new pattern of transportation use will emerge.
In Europe, where drivers pay up to three times the amount Americans pay for a gallon of gas, it has not been difficult to implement high gas taxes. Gas taxes are not earmarked for highway and road expenses in Europe, and politicians are more willing to raise the tax to increase general revenue. But in the United States, where gas tax revenue must go toward road projects--though increasingly it is being used for mass transit projects, too--raising the price of driving is a tough sell. Some would argue that the gas tax is a third rail that politicians will never touch for fear of angering a public that considers low gas prices a birthright.
But even if it were politically feasible, some say proponents of an increased gas tax are not necessarily using sound economic analysis, despite their claims of "fair pricing." In the exhaustive report, "The Annualized Social Cost of Motor Vehicle Use in the U.S.," University of California at Davis economist Mark Delucchi writes that "there is not a single external cost, with the possible exception of CO2 emissions from vehicles, that in principle is properly addressed by a gas tax." He argues that the majority of external costs imposed by drivers are not a function of how much gas they use. For example, Delucchi says a gas tax would not be a fair way to compensate for noise pollution because gas consumption is not necessarily related to the amount of noise a car produces. A Harley-Davidson motorcycle or a broken muffler will out-noise a Toyota Camry any day, regardless of gas consumption.
Surrogate feet