Perfectly Shapeable Charge

Reader response to the post "The Mileage Fee Might Have Legs" posed legitimate concerns about a mileage fee's ability to generate enough money to maintain roads and to discourage heavy, inefficient vehicles (or to properly charge them for the added wear and tear they impose on our roads). From Jim Whitty, chief architect of the plan, the response to the response (presented here so as to not be lost in the bowels of our posts):

"We at the Oregon DOT have faced these questions often.  There are many inaccurate assumptions about the nature of mileage fees underlying the conclusions reached.  One such assumption is that the mileage fee rate must be flat.  That is not the case.  The mileage fee rate can be variable according to vehicle characteristics identified by a state legislature to accomplish desired policy goals. 

For example, the Oregon mileage fee system could have a multiplier assigned to each vehicle type according to its fuel efficiency.  That multiplier would then be applied to the base rate to determine the charge owed.  Thus, a Prius might have a multiplier of 1.0 and a Hummer might have a multiplier of 6.0 (or higher).  Thus, the Hummer would pay six times the mileage charge as the Prius.  This assigned multiplier could take into account not only fuel efficiency but weight as well.  Trucks that weigh over 100,000 lbs. definitely cause more damage than small passenger cars and the system can reflect that.  It may sound complicated but it is not because  it's all based on computing formulas applying simple arithmetic.

The lowest multiplier would have to be no lower than 1.0 to ensure the road system revenues do not decline to levels that are non-sustainable for the existing road system.  After all,  we expect to see ever more fuel efficient vehicles in the future in response to changing consumer demand and perhaps new public policies to respond to climate change.

As for simply raising the gas tax, transportation policy makers of all stripes across the USA understand that the gas tax is failing and cannot keep up with the vehicle changes coming.  The problem is not raising the gas tax once but continually raising it as the traveling public undertakes a continuing search for ever more fuel efficient vehicles.  With the price of gas expected to continue to rise over time (not withstanding the recent temporary decline), the public cannot be expected to voluntarily agree to raising the cost of purchasing gas by consenting to regular gas tax increases.  That's simply against human nature.  The nation therefore must move off taxing by the gallon and move to taxing by the mile.

Most of this is explained in the Oregon DOT Final Report Chapter Nine which can be found at http://www.oregon.gov/ODOT/HWY/OIPP/ruftf.shtml ."

Jim's response corroborate's the notion that the Oregon mileage fee study is thoroughly researched (down to testing with real GPS systems in real cars using real gas stations) and has considered various policy implications from many angles.

If anything, the mileage fee's biggest flaw might be that it is so flexible that once it enters the public policy arena, politicians might never be able to agree on how the fee should be implemented. To this concern, Jim responds: "Rejecting autocracy, our government was formed and operates as a republican form of democracy. As such, the will of the people has great sway in developing the policies adopted (though at times it seems as if the public is being duped, but this doesn't last for long before the public begins to correct errors)." Reassuring to hear this said by someone who has spent a good deal of time operating within the system. He went on to say that his organization's job is to "propose systems that have flexibility for adoption of policies for whatever political will can muster sufficient support."

I want ringside season tickets for this one.

Photo: Chester Tugwell www.sussex-photography.co.uk

Comments

[stomv]

This is a political solution, not a technical one.

Sure, you can scale the mileage fee according to weight and efficiency. But, the gas tax already does precisely that and it even takes the weight of the cargo, the efficiency due to driving habits, etc. into account, something that the mileage fee can't.

Furthermore, the claim that the traditional gas tax fails because the public has to agree to continually agree to raise the tax is specious. By defining the lowest multiplier to be 1.0, the taxes paid by the same person in the same car driving the same routes will increase every year as more efficient vehicles hit the market -- meaning that the public will have to agree to increasing gas taxes every year if the mileage system is implemented.

If that's the case, then why not simply define the gas tax as it is now to do precisely the same thing -- use the past few years of data to predict how much the gas tax per gallon must be to reach the funding level necessary. It's the exact same technique of the "1.0 system" the mileage fee is enacting.

The mileage system requires far more political willpower than the current taxation system because the weighting of MPG, emissions, etc. will be defined by politics and not physics. The mileage system requires far more money to implement, because once you know how many gallons of gas a station has sold, you simply multiply -- no need to install gadgets in every single car, ensure that they're working 100% of the time, and keep track of all of that data. Both systems have to have a system to keep the revenue paced to need, and those systems can behave identically [although I'd adjust monthly and not yearly to keep things smoother].

I just don't see where this is an improvement. It requires consensus instead of physics to get the same degree of progressiveness w.r.t. mpg and pollution. It requires something close to $10 billion in hardware [$100 x 100,000,000 autos], requires energy to run all of these devices, and *still* requires a taxation policy that increases every month or year to maintain tax revenue.

In what single way is it an improvement?

[Chris]

stomv, simply for its ability to address traffic congestion, the mileage fee would make my 70 mile workaday commute better, and thus represents an improvement.

My guess is that it WOULD take significant political willpower to implement the mileage fee, which is what makes it such an attractive subject to post on: it can attack problems like the traffic jam, but needs public acceptance to do so.

It needs help. It needs to see the light of day. It needs to be threshed out in blogs and editorials and other public forums.

[stomv]

So that's fair -- it can be used to reduce congestion on heavy roads, presuming that it's precise enough to know that you're on the highway and not the road that runs parallel to the highway.

Then again, so can using congestion pricing and EZPass on those roads in particular, which are much fewer in miles than total roads. California is doing this now.

Also useful for reducing congestion: mo' better commuter rail, dense livable cities and close suburbs, timeshifting work, more telecommuting, etc.

The gas tax is elegant and simply implemented as a means of generating revenue as a function of miles traveled and vehicle weight. Toll roads, be they congestion priced or flat fee, serve to reduce congestion on those roads. In both cases the pricing isn't always optimal, but there's no reason to think that the pricing scheme for the OR-method would be optimal either. This OR-method still seems like a solution in search of a problem.

[James M. Whitty]

We at the Oregon DOT learned early in our research that toll roads would be incredibly expensive to operate systemically and thus not a cost effective way of either raising revenue nor of managing traffic flow. Because the Oregon mileage fee system collects the charge at the fuel pump where the gas tax is collected, not only is the elegance of the gas tax collection method retained but the additional cost of the new charge is minimized to an affordable level. The mileage fee is also easy for motorists to pay because it is embedded in an existing commercial transaction and also simple for the cash economy to pay because they pay the same way they have always paid their road charges - at the pump.

While it is true that the gas tax can theoretically be structured to automatically increase with the adoption rate of fuel efficient vehicles (note: we thought of this very early in our analysis), the gas tax does not have the flexibility to accommodate other public policies that legislators might find desirable to structure the rate around, as the congestion pricing discussion illuminates. Neither the gas tax nor toll roads are instruments of the future. We need something new to address the challenges of the 21st century - an electronically collected per-mile charge.

[Chris]

the gas tax is elegant, it attaches simply and elegantly to the price of gas, but Oregon is saying it won't keep up with the increasing fuel efficiency of our vehicles (increasing to perfect gasoline fuel efficiency if our vehicles become all electric, for instance).

the other means for reducing congestion, commuter rail, timeshifting, telecommuting and so on, are encouraged by the mileage fee and congestion pricing.

the mileage fee seems more attractive than tolls because it is all encompassing and can adapt infinitely to changing traffic saturation patterns. not sure what the cost to build and maintain toll systems is, but it seems it would be more expensive than the mileage fee to deploy.