by Alex Marshall - articles and essays

This morning, millions of Americans will step into their cars, start their engines, and motor to work. Few will probably know that their government is picking up much if not most of the cost of this journey. In fact, the American driving experience relies on what is probably the biggest socialized transportation system in the world our road and highway network.

In 1999, the federal, state and local governments spend $113 billion on building and maintaining roads, according to the 1999 book of Highway Statistics put out by the Federal Highway Administration. Of this, only $65 billion comes from the gas tax, which is the closest we have to a user fee. That means the gas tax is only paying 57 percent of what we now spend on roads. Local and state governments provide most of the rest, chiefly through property taxes and general fund receipts.

And these figures only calculate direct expenditures on roads, chiefly construction and maintenance. Once you add in externalities like policing, ambulance service and pollution, the actual costs of driving go even higher.

Understanding how much we subsidize our road network, and thus driving, could help this country craft better transportation, energy and environmental policies in ways that both conservative and liberals could support.

Consider the current debate in the U.S. Senate over whether to allow drilling for oil in the Arctic National Wildlife Refuge. The Right, as led by Vice President and former oil executive Dick Cheney, says allow the drilling as part of an overall policy of letting the market rule. If the laws of supply and demand are allowed to operate, producers, spurred on by profits, will find the oil for consumers, who will buy what they can afford based on prices at the gas pump and elsewhere.

The Left says the market is not so smart. Instead, emphasize regulation that would promote or require conservation and better fuel standards. This will wean us from dependence from foreign oil and help us protect the environment because we will use less energy.

These two positions are poles apart, but there is a way to bridge them. Simply raise the taxes on gasoline to better reflect the true cost of driving. This would save gas, reduce driving, conserve energy and prompt less pollution through a rational, market mechanism fair pricing.

A more accurately priced gallon of gas is such an obvious policy that it seems strange that policy leaders have not embraced it. The Right in particular does not usually favor government subsidies, but here is a case where government subsidizes prodigiously. The explanation is probably less ideological than simply that driving is so much a part of life that we tend not to examine all the different ways we pay for it.

It is both funny and contradictory that Amtrak, which receives a mere half billion a year from the federal government, is frequently urged that it be ³run like a business² and make ends meet. We place no similar demand on our road and highway network.

An easy policy correction would be to require that a newly increased gas tax pay all the costs of building and maintaining roads. The federal government could raise its gas tax, now at about 19 cents per gallon, and only permit state and local governments to share in the new receipts if they stopped subsidizing roads through their general funds.

What would happen if we substantially raised the tax on gasoline, say by $1 a gallon? Well, an interesting thing happens. With higher gas prices, people drive less, which means the government makes less money than one might expect on a higher tax. To account for the diminished driving, government has to raise the gas tax even higher. Researchers who study these things estimate that the country would be facing European level gas prices of $3 or $4 a gallon if highways were required to pay their own way. Very quickly, the laws of supply and demand would dramatically alter how we use our cars.

I doubt that we would ever raise the gas tax enough to cover all the costs of driving and indeed, there are perhaps too many social costs to doing so. But, we could narrow the gap. Higher gas prices would push car companies toward greater fuel efficiencies, and drivers toward smaller cars and toward homes closer to the city, where commutes are shorter. Mass transit would also become more economical, when compared to driving that is more accurately priced.

Through a more accurately priced gallon of gas, we would go a long way to accomplishing the goals of both the Left and the Right, and through a mechanism both should be able to embrace.

Alex Marshall, a New York based journalist, is the author of How Cities Work: Suburbs, Sprawl and The Roads Not Taken