Thinking about what cars really cost

I’ve been writing a bunch about transportation of late, and I got the chance to have lunch with Robin Chase, founder of Zipcar, and talk about the economics.

She proposes that we really need to make the true cost of our transportation visible to solve many of our problems (congestion, pollution, etc.) It’s often been described just how much of a subsidy the U.S. and in particular California gives to the car driver, but to most people it’s not too visible.

She’s particularly interested in changing the rules on parking. We subsidize parking a lot. Most people are aware of the use of roadsides for free or cheap parking on public land. Robin proposes getting rid of the requirements that force building developers to provide adequate parking for their building. Most people think these are a good idea, because otherwise developers would not provide parking, and the cars coming to the building would suck up all available parking in the area and there would quickly not be any.

Her thought is: Exactly! Employers who give free parking to their staff are subsidizing their driving, unless they give an equal value payment to those who don’t park a car. Same with shops and their patrons, or shops that give validated parking. The shops who validate my parking will rarely alternately give me a free transit ticket, or just plain cash if I walked, carpooled, took a taxi or otherwise didn’t park a car.

The same applies to on-street parking permits for residents of neighbourhoods. The house I am in now is in a very busy neighbourhood where it is hard to find parking. I understand why people want them, especially if they have houses built before the must-provide-parking laws were in place that don’t have a private parking space. But again, it’s a fat subsidy. The people who decide to not park cars aren’t given something of equal value. (And monthly parking in commercial garages ranges from $100 to $300 in most cities.)

Removal of these subsidies would help reflect more the true cost of a private car. Of course, this is just a part of it. We still build the giant private road networks. In theory gasoline taxes can be roughly set to charge you based on how many miles you drive on the roads and to charge you precisely based on how much you pollute, though I don’t believe they currently do.

Robin’s zipcars (though they are not really hers, she has left the company) are priced by the hour, and they do have to pay the price of their parking at their pick-up/drop-off points, though they get to use subsidized parking in many cases in the places they drive to. They, along with taxis and transit, would seem a lot more appealing if regular cars didn’t get the subsidy.

Forgot to add: Robin also likes congestion pricing (as currently done in London) to make the costs more visible. Good idea in theory, but in practice, the means suggested to enforce it — transponders and licence plate cameras — are rather Orwellian. Robin wants to propose a system that’s more anonymous, which is not trivial, and the problem is that even when you start with that good goal, it quickly gets suborned. Particuarly when forces, like the police, would love a database of what cars were where, when.

Book: High Cost of Free Parking

You probably know this already, but there's a (recent, detailed, expensive) book on just this subject: The High Cost of Free Parking which claims that “On average [in the U.S.] a new parking space has cost 17 percent more than a new car.”

My employer offers a subsidy

My employer offers a subsidy for using mass transportation, but i doubt it equates to what they pay for in parking.

gas taxes, in the US, are priced per gallon of gas (not as a percentage of sale like sales tax). Theoretically this already punishes gas guzzlers and high-volume drivers more than those of us driving less distance or more economical car models.

The problem is the taxes aren't high enough to affect drivers decisions.

The proposed solution of charging per mile driven has been presented in Oregon. Their solution was mandatory GPS on all cars that tracked the miles. I doubt the EFF would approve such measures.

No GPS

Definitely would not approve the GPS idea, when there is a vastly simpler way like gas taxes. However, I suspect Oregon worries that since Portland is on the border with Washington, and a lot of Oregon lives on that border, gas taxes would just drive a lot of the gas sales into Washington. So effectively people in Portland wouldn't pay it and people in Eugene would, which doesn't sound very fair either.

Same issue here in Kansas

Same issue here in Kansas City. Kansas' gas taxes are higher than Missouri's so a lot of people buy gas on MO side.

I think Oregon also said that the large number of hybrids in the state is pushing them towards a per mile tax, but I think their implementation is a straight per mile tax (I haven't checked the proposal so this could be wrong) which would discourage hybrid purchases.

Texas (and large portions of the other parts of the country) is going the toll road route. You're charged every so many miles for driving on the toll roads, unfortunately the electronic system they have in place is as privacy lacking as the GPS suggestion (although you can put the RFID tracker in a case to block detection).

I'm not sure there is a good solution. Most states have an inspection requirement on cars and an emissions requirement. Perhaps a fee based on milage change since last inspection, with rewards if the actual emissions of the car are below certain levels. Not all the milage would have been driven within that state but is that a significantly high amount to worry about (for residential cars at least).

But to be honest, Americans seem to ignore any effort to move from the car to mass transportation. I think we'd start moving to it if the price of gas doubled from what is now, but I'm not even convinced of that.

The odometer

The odometer has some value though it can't do congestion charging. Still an issue in states where lots of the population is right on the border. If the tax is high it's a big incentive to find a way to register your car in Vancouver, WA. Of course the GPS system also would not have been able to tax out of state cars so easily. Checkpoints at the border have constitutional problems, they impede interstate commerce.

Note that mass transit isn't necessarily the answer. Robin's approach is to let people pay the true cost, and the market will then work it out. I think people do love point to point transportation, do love having a private vehicle they can personalize and put stuff in.

My prediction of the likely trend is fleets of self-driving cars, many privately owned and never shared, many privately owned and rented out when not shuttling their owner, and many always rented out, with mass transit operation on the most dense corridors. Darpa grand challenge produced 1st generation self-driving cars with just a $2M prize. The real prize here is many, many billions, so I think the next generation (crash-avoiding cars safe enough to carry humans and drive streets with pedestrians) is not so far out of reach.

Idea for congestion pricing

Actually, I think an odometer could be used as the basis for congestion charging with a simple addition -- time-enable it, putting some accurate (and nondefeasible) timebase in the vehicle that for example updates off the WWV clock signal. Then use a beacon system to signal entry/exit or location within restricted travel zones...

At least some of the access systems -- Manhattan as a case in point -- have a reasonable number of 'gatekeeping' accesses for traffic management that are amenable to use of a 'smartpass' or RFID tag system. You'd be required to have one of the devices set up in order to pass the 'gate' ... or, perhaps better, to receive a 'discount' over the prevailing congestion access charge if you have reason to be going by car. Easy to dereference user information from anything captured directly by the access system, while preserving a reasonably quick ability to scam-detect by passive identifiers,

Might not pay to catch 'cheaters' if there are a sufficiently small number of them. There are a couple of places you can cross the Delaware River free. But the fuel and time you use to negotiate them, vs. just going over the toll bridge, makes the value less, and the capacity (two-lane roads and bridges, sharp corners) limits the traffic per hour even if the pure financial advantage wasn't there.

Why stop at cars?

The big problem with solutions of the pattern "allow the tragedy of the commons to take effect and leave the solution to the natural learning curve" is the uncomfortable interim between the problem appearing and the market adapting. I wouldn't mind as much if it only took a few weeks to convert an office building into a parking garage, or a few years to pull excess carbon dioxide and methane out of the atmosphere.

Why not make all prices reflect the actual cost of goods through their entire lifecycle, from creation to disposal? Right now, I pay a flat fee for getting rid of garbage; the only bonus for bothering to separate things for recycling is to my conscience. This general "throw anything away, it's OK" policy constitutes a subsidy to people creating goods that have no plan for end-of-life beyond "be part of landfill until someone figures there's enough valuable stuff in there to mine it".

Trash usage pricing is coming

If you are a commercial customer, it is here. Commercial customers pay per ton or per yard already. In some towns there is also a per amount fee for consumers. My town requires a fee sticker per bag/barrel. Recycling is motivated by being free (actually subsidized by the bag fee). Hazardous waste and other restrictions also apply (e.g., appliances must be taken to the recycling center). This change will spread gradually. There is a transaction cost to be absorbed, and the actual local disposal costs may not justify it.

Recycling has been increasing steadily over the years. Metals recycling is very well established. By percentage it is nearing 50% for iron, and is well above that for copper and aluminum. Paper has been climbing one or two percent per year, and is currently at about 50%. Plastic is much lower, rarely 2 uses before burn/landfill, because it is technologically much harder to recycle plastics. Those are total US consumption vs recycling numbers. As usual, the industrial and commercial sectors are way ahead of the consumers. Talk is cheap and popular with consumers. Action is easier for commercial organizations. They have the larger volume, the cost accountants to compute the savings, and the engineers to make the changes.

tragedy of the commons

At least here in Sydney, the problem with the commons is that we have an unofficial rule that if you can walk away from it, it's a good parking manouvre. So especially in residential areas footpaths, intersections, parks, you name it, are all commonly parked on. It makes walking less easy than it might otherwise be. The interim period between subsidised parking and a market solution would probably see the usurption of any accessible space for parking, as motorists exeercise their "right" to park close to their destination. Not to mention the rise of "paking rage" casualties.

I also made one local council change their rules, as they failed to notice that my "X number of off-street vehicle parks" were sized to take bicycles not cars. They worked it out when they finally saw them on the ground and had a hissy fit, but it was a bit late as they accurately reflected the plans :) Now the rule says "motor vehicle" and gives a minimum size.

taxing fuel is the only way

If you want people to pay the true costs, which in the case
of driving they should, simply tax fuel. This is much, much easier
to implement than toll roads, pay-by-the-mile GPS or whatever. It also
has the big advantage that it additionally encourages people to
save fuel by driving a more efficient car, carpooling etc.

I can see exceptions for a transit country such as Germany where high
fuel taxes could lead to lorries filling up before entering the country
(Germany has recently implemented a GPS-controlled pay-per-kilometer
system FOR LORRIES), but for 95% of all transportation, fuel is bought
and consumed locally.

Well sure

Everybody has known this for years. It's just also considered to be political suicide.

I guess they have found a way to raise the cost of fuel through political action, namely to start wars in the middle east. Frankly not the best way to do it, but it seems to work.

I don't see how it is more

I don't see how it is more political suicide than tolls or
GPS-pay-by-the-mile systems. They ALL increase the cost.
The only way it could be political suicide is if the politicians
are more concerned about the votes of the gas guzzlers than
of other folks---which in the U.S. might very well be the case.

Gas tax rebate

An alternative approach for gas tax that I've never seen much discussion about involves a rebate. Basically, you add $5 a gallon in gas tax, then rebate everybody the average per-capita amount. So if the average usage is 500 gallons per year (for example), everybody gets a $2500 gas-tax rebate on April 15.

The idea is that if you drive less, you are essentially making money off this deal. You still get the $2500 rebate, but you haven't paid that much in over the year. OTOH, gas-guzzlers won't get rebated as much as they paid out, and are effectively penalized for driving a lot.

Other benefits: It's revenue-neutral by definition; and, when gas is costing $8/gallon at the pump, it's a constant reminder to everyone to drive less.

Interesting thought

However, you would be amazed at how resistent the public is to “revenue neutral” tax changes that look like they are costing a lot. The revenue neutral GST in Canada, which took a 13% hidden sales tax on goods and replaced it with a 7% visible sales tax on goods and services was the greatest act of political suicide in the history of the country. (The party went from having a majority of seats to having 2. That’s not a typo. Two.)

But there are things that make sense about this plan, though some will also say it punishes those who are forced into a long commute because they can’t afford to live close to work. And of course, suddenly every teen-ager will be filing a return the moment they are legally old enough to do so, to get the refund. (If you require they own a car, they’ll get a junker and leave it parked to get the $2500.)

Assuming you can keep a car legal for less than $2500 a year

Don't you have to pay for registration and insurance for the car?

But that might have a beneficial side effect - it could amount to subsidised insurance for car owners, since to get the $2500 you have to have the insurance...

Some progress on paid parking in suburbia

Brad,

Paid parking is gaining ground in the BART system in San Francisco. Just today, daily parking at BART in Walnut Creek is no longer free. By the end of June, 10 stations in the East Bay will charge for parking. BART directors did this to help balance the budget. More details at BART's Web site, http://www.bart.gov

Scott Mace

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