What If We Paid the Full Cost of Driving?

Driving is too cheap in the United States. It’s a complicated thing to unpack, but David Levinson, engineering professor at the University of Minnesota and blogger at the Transportationist, attempted to analyze the cost per-minute.

Car sharing service Car to Go charges on a per-minute basis. What if we made all out transportation decisions that way, asks David Levinson. Photo: Wikpedia
Car sharing service Car2Go charges on a per-minute basis. What if we made all our transportation decisions that way? Photo: Wikipedia

Levinson estimates that the true cost of driving — including vehicle purchase price, insurance, taxes, repairs, and costs like parking and air pollution that are not borne by individual drivers — is about 34 cents per minute.

Unfortunately, the cost we’re most likely to consider when making a discretionary trip — gasoline — adds up to only about 5 cents per minute. If we made driving decisions based on the incremental costs, and drivers bore the full cost of driving, our behavior would change a lot, Levinson says:

Economists use the elasticity of demand with respect to price to estimate this. This tells us how much demand drops as prices increase. The short run elasticity of demand for driving (measured in vehicle miles traveled) with respect to the price of gas is about -0.05, meaning for every 100% increase in the price of gas, there is a 5% decrease in gasoline consumption (which correlates to driving in the short run, in the long run there is also a shift in vehicle fuel economy). So if we hold that to be true for all costs, going from $0.05 per minute to $0.34 per minute is 676% higher cost (a 576% increase), leads me to expect about a 29% reduction in fuel use (mileage) in the short run if people paid their roughly fixed costs plus infrastructure plus externalities of vehicle ownership as variable costs instead. Of course at the magnitude of shift, the elasticity values may no longer hold. In any case, this is no small matter. Certainly the direction is right, countries with much higher fuel taxes see much less driving in general.

Elsewhere on the Network today: Strong Towns examines the personal impact of one car crash. The Transport Politic considers how to make transit-oriented development work around the Metro stop at DC’s Dulles Airport. And Steven Can Plan singles out some of Chicago’s worst red-light-running offenders.

0 thoughts on What If We Paid the Full Cost of Driving?

  1. That is like saying “Asbestos use for construction materials should be a personal decision.”

    Car drivers poison people. In addition to 1,421 dead bodies, the health care and other mortality costs in New York City alone are about $7.1 billion per year. Costs that car drivers are not paying.

  2. Perhaps you need to get out a bit more. If you do, you may notice that cities with extensive car-free zones somehow still manage to provide police, fire and ambulance services. All without violent, dangerous criminals launching lethal cancer poison attacks upon innocent people.

  3. It’s nice that you have all these made up numbers pulled from someone’s behind but that’s all they are.

    Modern cars have exhaust that’s cleaner than the air going into the intake. That said you’re left with these numbers that are someone’s wild ass guess of what lack of exercise and such does to people. And it’s not like government is concerned with pollution. Never has been. Ever bike behind a city bus? I’d rather be behind a ’72 Chevelle with a lumpy cam running so rich that one could probably ignite the hydrocarbons coming out the tailpipe.

    But you expose the nature of interventions to control people. So control freaks aim to socialize the costs of things and then decide that because of these socialized costs they get, through the government, to control people’s lives. Oh it would ‘save X’ if we can just force people to live the way so and so wants them to live. Maybe they don’t want to live the way some control freak wants them to, so what? The only way to fix this issue is to have people responsible for their own costs. Don’t tax the guy down the street to provide health care for ‘Bob’ so we can now tell ‘Bob’ he has to bike to work because that will make him healthier.

    The news media now expresses people’s choices in terms of lost productivity. How we are nothing more than slaves on a national or even gobal plantation. Our value to the crony corporations and government is all that matters. Fungible human resources. And this justifies more laws, more taxes, more suppression of our rights.

    The small apartment living, the dense cities, etc and so forth is just how the people at the top of the system can extract more productivity out of us at lower cost. Make us easy to move to wherever they want us to work at low cost. It also makes us easier to rule and control. Break our independence. To them we are nothing more than livestock, domesticated animals for their use. We can choose to go along with it, or not. The problem with a collective is that someone or some small group has to run it, manage it, and they will do so for their own benefit.

  4. Your arguments are contradictory. On tolls, you say it would increase prices a lot and be terrible. On free parking, which does the exact same thing, increasing the costs of goods, you consider the costs insignificant. Yet, once all is accounted for, reasonable tolls on highways would likely amount to less than the costs to provide free parking in car-oriented areas.

    In fact, many countries have systematically tolled highways like France, Japan, Spain and others. The costs of goods aren’t significantly higher than neighbors who didn’t toll highways.

    Parking lots also have major costs for non-car users, by lengthening trips significantly because of the space they occupy. In car-oriented commercial areas, it’s not rare for parking to occupy 50 to 80% of the surface area.

    Another thing you omit to consider is that local streets are funded by property taxes. Where do people walk and bike? Where is transit most likely to travel? Local streets, not highways. So the non-car owners already pay more than their fair share as they pay the same property taxes as car drivers yet use much less of the city streets that their taxes fund.

  5. The City of Chicago has some of the highest gasoline taxes in the country. Whether this money is put in the general fund for all city purposes, or allocated for roadways, if you push the price of gasoline up with higher taxes which results in fewer drivers on a continual basis you will eventually not collect enough taxes from drivers. Tax will have to be collected from other sources including non drivers, yet have the burden of maintaining the roads should bike riders, bus riders or truck drivers, emergency workers need to use the roads.

    Tolls on highways no way correlate to free street parking or free parking in public lots. The collectors of the tolls won’t necessarily be the providers of the parking. Additionally, if you have city streets running nearby tolled highways how do you plan to stop traffic from using those streets instead of the tollways.

    Take a look at any Cook County proprty tax bill and you will find the vast majority of it goes to Schools and the park district/forest preserve districts. Local governents split the rest up, which covers a lot of territory including wages, pensions, fire police jails Cook county hospital affordable housing, the list goes on. This alone is not enough to cover expenses so that why we have high gas taxes, sales taxes, fees and business taxes.

    Tolls and transportation taxes incurred by businesses always get passed on to the consumer, so whether you drive or not, you will pay more for everthing and on top of it more sales tax too.

    There are no simplistic answers, just more complicated formulas.

  6. I think that whooshed right past you in several ways — my vacation was from (well-compensated, hence by free-market-definition productive) work, and we were visiting a place where the Fed does not set interest rates — England.

    Merely establishing Pigovian taxes is not “telling people how to live”, it is a matter of ensuring that if their choices have costs for other people, that they will see those costs (even if the Pigovian tax does not directly convey money or mitigation to those affected) and hence their market behavior will be modified.

    One of our larger interventions in the market, and a source of both much driving and increased cost f housing units, is our widespread system(s) of zoning that set a minimum housing density.

  7. On a related note, government has systematically removed streetcars and railroads on the behest of the automobile and trucking lobbies for over the past 100 years.

  8. The Netherlands are larger, less dense, and less populous than the NYC metro area. Similarly, Denmark is larger, less dense, and less populous than Massachusetts. Here in Massachusetts, the Cambridge-Somerville-Boston trio is denser and more populous than Groningen, a Dutch city with similar demographics (lots of students) and a bicycle trip share larger than 55% (and the other 45% is largely transit and walking).

    References and arithmetic:

    I assume the residents of Albuquerque would prefer that those of us living in the dense and potentially bicycle friendly areas drove less, the better to lower the price of gasoline for them. Or would you prefer to have a bunch of wealthy yuppies bidding up the price of your fuel and hastening the day when we discover when the oil gets even harder to extract?

  9. I might offer a grammar lesson — do you know the difference between “would be” and “was”?

  10. Cities that charge gas taxes are rare. Chicago’s gas tax is a mere 5 cents per gallon. I don’t know at what level you’d need to put gas taxes to reach a point where people drive so much less that they eat the revenues from the gas tax increase completely, but the price of gas has doubled in the past few years, and fuel consumption hasn’t fallen by half, so gas taxes could likely be in the range of 2-3$ and more and still earn more revenues.

    The cost of tolls would be included in the cost of freight and passed on to consumers, just like the cost of free parking is included in commercial and office rents and passed on to consumers and employees. I don’t think “correlate” means what you think it means, but the two do compare in that both are costs that are mandated by governments if they choose to and which result in the cost being paid indirectly.

    The point is that people do anyway pay the cost for highways in different ways, if we choose to go with tolls, it just moves around the money, it doesn’t increase costs. What it does increase is efficiency as it creates incentives to reduce road use if it’s so wasteful that people won’t pay the tolls.

    Yes, if there’s a toll road and an untolled street side by side, some traffic could deviate from the road and unto the street, to which I say: good! Local streets are much cheaper to build than high-speed highways, which is what I would like to see tolled. Highways would still be used by people who want to go somewhere fast, but as people who don’t need to be on them wouldn’t be, it would lower congestion and make building new ones or widening existing ones much less needed.

  11. i just went on vacation to a small city in the USA that is totally car dependent and yet it has cleaner air than NYC, more bike lanes, and you can ride without fear of being killed

  12. Certainly, a fair amount of the Netherlands is rural or semi rural. Are you saying that people ride bikes to work if they work in Amsterdam and live elsewhere in the hinterlands? Comparing apples vs. oranges.

    Trying to ignore your snark, my point was that the land use patterns in the Southwest were established decades ago, when gasoline (and land) were seen as nearly limitless resources by those non-yuppie unwashed masses; those patterns are hard to reverse. It will be admittedly painful if gasoline gets really expensive out here. As it happens, Albuquerque is formulating a bike plan to try to provide much needed sane connectivity for bicyclists in that city in spite of its dedication to six and eight lane wide superarterials. I’m not a fan of superarterials, but until the public votes out of office the folks like Susanna Martinez who appoint auto-centric DOT directors, we have a problem, Houston.

    BTW, I worked with an engineer in Bremen, Germany, where utility cycling levels are very high and public transit excellent. He lived about 30 km away in his parent’s village and drove to work. Once in Bremen, one need not drive. I walked from the hotel to the tram every morning and took it to the mass spec factory out by the airport. Much easier than renting a car in the States. Bremen was very compact and easily walkable.

  13. I gather that in the Netherlands the hinterlands options are either drive or train, but if you do the train, you usually ride a bike to the station. Apparently a lot of people do drive (according to German friends who have worked in the Netherlands, but who biked here in Cambridge when they visited the US), but the train stations have enormous bicycle parking capacity. We’ve managed to bugger up our train transit quite nicely — was just in England, and there they run a train between Cambridge and London about as often as we run buses here in the Boston area. And the trains we took (express) cover the crow-flies distance (not the rail route distance) at an average speed of about 60mph (and of course you can eat, drink, text, work on the train).

  14. Yes, I recall many pics of those train stations in places like the Netherlands where there are miles of bikes at the train depots. That is how it ought to be.

    When I attended a conference in Cambridge, UK some years back, I rode my bike (which I took with me from the states) from Amsterdam, where I had prior business, to the Channel ferry at den Haag, took the ferry, and rode my bike to Cambridge in one of the most glorious weeks of cycling of my life. I was really short on time returning to Amsterdam, so I took a UK train back to the coast. The train had a “bike car” for all the bicycles. Travel by means other than cars in Europe can be quite seamless, and I really wish we had those options here. It will take some political will, which I hope we find!

  15. and those sources made them up, estimated, it’s intentional guess work to bullshit people like you and me and herd us towards an agenda.

  16. Another tiresome repeated myth by people too lazy to look into themselves.

    1) US street car companies were destroyed by the crony deals they made with city governments.
    2) Buses replaced street cars in cities where GM or other bus manufacturers had no influence simply because they were cheaper to operate and more flexible.

  17. My productive work pays taxes and is eaten away by inflation. Which is being redundant. The central bank in the EU and the CB in the UK is playing the same game as the fed. Blowing bubbles.

    The entire system functions politically where someone or some group decides everyone should live a certain way. Then they go about seeking justification to tax people who don’t want to live that way and subsidize those that do. Currently drivers are to be taxed more and more to subsidize transit and other things to ever greater degrees. This is supported by made up numbers and twisted logic like the article above. But the idea is always to force people into a way of life those with the political powers to make the laws and taxes want.

    zoning again… the same tired old shit day in and day out… doesn’t anyone think for themselves? Come on, let’s have something original.. it’s boring. All zoning does is reflect the political power of the day just like taxes.

  18. Geebus not this shit again. Why does practically every damn thread here result in me needing to deal with this same obviously bullshit political agenda driven analysis?

    This sort of political analysis is done the same way every time. It minimizes what drivers pay by only counting road specific taxation and user fees and maximizes costs by including every possible however tangential externality one can imagine. It also puts the cost of the streets that would exist even if the car were never invented 100% on drivers.

    Drivers pay sales taxes on fuel, vehicles, parts. Taxes on service. Fines for technical fouls when driving, drivers even pay taxes on taxes. Taxes on parking. Taxes on property such as garages. It goes on and on. And lets not forget the income taxes and other taxes that come from the automotive related businesses and employment.

    Driving is very profitable for governments to exploit and there are various interests after those funds.

  19. When rail lines are lost, it’s not for economic reasons, it’s for political reasons. If there’s a downturn in the economy, you’re not going to rip out the road from in front of your house!

  20. The road tax accounting comes straight from the government departments, it’s not political. Sales taxes on X are not devoted solely to the greater glory of more X. Tobacco taxes are not dedicated to the growth of tobacco, alcohol taxes are not dedicated to brewing more beer, and restaurant and hotel taxes are not dedicated to restaurants and hotels. Your idea that in the special case of driving sales tax should work this way is completely nuts.

  21. What is political is deciding that only certain taxes paid by drivers ‘count’ while all sorts of expenses do. This is how one creates an analysis that supports one’s existing political agenda. By carefully deciding what counts and what doesn’t. It’s also done by presentation method. It’s about forwarding an agenda.

    Without the activity there can be no tax collected on it. Which is of course often the point of taxing it, to reduce the activity.

  22. Many rail lines were built for political reasons and with crony capitalist subsidy.
    Many were abandoned due to economic conditions. But why change the subject again? It’s the same old wack-a-mole around here.

    The simple fact is that street cars became an outmoded expensive means of operating a transit company in the 1940s and 50s.

  23. If you had bothered to follow the link, you would see that the source is Toronto’s Public Health department, headed by their Medical Officer of Health. And Health Canada, an official Canadian government ministry. Numerous other research is cited as well.

    This is data-driven evidence from official sources. All it takes is high school math to use the same methodology and linearly scale the results for New York City.

    The real question is why this kind of research is not sponsored by the US government and New York City. Can we say “bias”…?

    Here is the link once more.

  24. the key is it lumps private autos into the same category as trucks and buses for the dangerous pollutants.
    and everyone knows that almost every car made in the last 10 years is very low in emissions of dangerous pollutants. and yet there are a lot of older trucks and buses on the roads that pump out these pollutants.

  25. Again, just because they are ‘experts’ doesn’t make the numbers factual. They make up numbers too. Coming from government doctors only makes it more suspect. If you read your ‘link’ you’ll note it’s all based on estimates fed into a computer program. When we estimate things we can introduce bias. The computer programs are usually a black box of bias. The public at large of course is too ignorant and too trusting of authority to question it.

    What you are left with argument by authority. The numbers the authorities, the experts, pulled out of their rear ends are valid because of their authority.

    Back in the 1990s there were all these skewed studies by health/medical experts on bicycle helmets. Those wishing to force foam hats on to all used these with great shrill. This nonsense with regard to motoring is no different. At the root are highly subjective estimates, arbitrary values really. It’s crap with a layer of authority over it. And BTW, the key study for foam hat mandates was debunked when someone realized that amount of bicycling went down much more than the injuries with the foam hat mandate.

  26. because most if not all cars made in the last 10 years barely pollute due to catalytic converters and computerized fuel injection. a good number of cars i see in NYC are ULEV.
    it’s been proven that most of the pollution on the UES is due to the ancient boilers in those buildings.

    in the USA you have over 10 million new vehicle sales every year. probably closer to 15 million. that’s about 10 years or less to turnover older polluting cars for newer clean cars. and most of the strict standards date back to middle of the last decade

    can’t say the same for a lot of the delivery trucks i see here, about half the taxi cabs and some buses. a long with the pretty pre-war buildings some people go crazy over with their decades old boilers that belch black smoke into the air in the winter time

  27. So, you spitball some number, offer to walk through the math, and then want me to do the research to disprove your unsubstantiated spitballing?

    So, you found that the average age of the cars in Toronto and NYC are similar? That the AAVM are similar? That the average wind speed is similar? That the difference in average temperature has no affect on dispersal of pollutants? Etc, etc, etc.

    Please, walk me thru the math that shows that a straight linear relationship, based solely on population, is statistically defensible.

  28. Yeah, there isn’t much of a difference between regular teabaggers and green teabaggers.

    Still that doesn’t change the fact that rail lines are lost due politics, not economics.

  29. What do teabaggers have to do with anything? They didn’t exist 60 years ago. Or is it just the typical misguided insult flinging that occurs when someone such as yourself can’t form arguments supported by facts instead of political mythology?

    Anyways… Well I suppose if you’re talking about railroads serving coal fired power plants you might have a point. However when there are too few customers for a particular line it falls into disuse. Ultimately railroads are a business and they don’t have the ability to simply take money from the population to run lines where costs exceed revenues. Or are you saying that politics caused the customers to go out of business, move away, or use other means? Regardless, rail lines do indeed become disused for economic reasons as do roads, canals, and various other infrastructure.

    Or is your point that the government should extract wealth from the population to keep failing rail lines operating? That seems to be part of the progressive model, to suck businesses into crony relationships with government, bankrupt them, then take over and continue to run the operation at a loss on the backs of taxpayers as a social service.

  30. Read it again and again until you figure out the basic economic requirement that revenues must equal or exceed costs.

  31. So how are you going to keep a privately owned rail line that costs more to operate than the revenues it brings in running without using politics?

  32. Still waiting for you to walk us through the “analysis”. Which I must expect is more than (NYC-pop/TOR-pop)*TOR-EconCost = NYC EconCost. Because that’s not analysis.

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