Posts Tagged 'pricing signals'

Peak-Hour Tolls And Global Warming

I’m intrigued by (Oregon) Governor Kulongoski’s speech last Friday on transportation and global warming. It’s not many politicians who are brave enough to consider peak-hour tolls, which are also known as congestion pricing.

London and Stockholm have found that these reduce rush-hour traffic by about 20%, which is huge in the transportation context. The tolls were highly unpopular at first, but became more accepted as people found themselves spending less time stuck in congestion.

I agree that peak-hour tolls are the right thing to do. Why? My personal willingness to pay them stems from my deep concern about global warming. In terms of fiscal policy, we sorely need pricing signals that reflect real costs of services. Oregon’s gas tax has not risen since 1993. But inflation has progressed so that our gas tax is now only covering 27 cents on the dollar of our actual road transportation costs. Most of our highways were constructed to last for 50 years — and were built about 50 years ago.

That means that Oregon is going further in the hole financially with every mile driven and gallon of gas consumed. And our atmosphere is going further in the hole at the same time, since every gallon of gas we burn creates 20 pounds of carbon dioxide, which is the primary source of global warming.

The Governor’s Climate Change Integration Act named ambitious goals in reducing global warming emissions, while being noncommittal about methods of reaching the goals. His specific idea of requiring drivers to pay part of the real cost of driving via a peak-hour tolling system would reduce vehicle miles traveled, and help Oregon reach those goals.

The Real Cost Of Gas: $15/gallon

Last night my friend Jean gave me the first chapter of Lester Brown’s book Plan B to read. Whoa.

I learned that when the International Center For Technology Assessment studied the entire cost of the gas in our cars, including the military costs of protecting access to Mideast oil and the health care costs of treating illnesses created by air pollution, what our country is really paying for gas is not $3/gallon. It is $15/gallon.

Lester Brown is highly readable because he’s so succinct. “In order for markets to work . . . they must give us good information. But the market is giving us bad information, and as a result we are making bad decisions — so bad that they are threatening civilization”.

My takeaway here is that if we were paying even close to the real cost of gas, we wouldn’t just drive less and carpool and walk more. We would make sure we were living and working in places within reasonable distance of each other. Instead, in the past four decades our citizenry has steadily increased our commuting distances and also the sheer number of cars we own. We can be choosing differently.

As for dealing with sticker-shock around raising the price of gas to depict reality, think of the shock it was when we all left our parents’ homes where we paid no rent and got into our first apartment, complete with utility bills and groceries that actually cost us money out of our pockets. It wasn’t easy to start paying all those costs of living, but they were reality. And we all rose to the occasion and started living in reality, even though we had to live somewhat differently than we had before we moved out on our own.

Similarly, it won’t be easy to eventually start paying the real cost of gas instead of letting it be subsidized for us. But we’re adults and we’re strong enough to deal with reality.