Don’t Expect Congestion Pricing In The U.S. Anytime Soon
By Aaron Crowe
Americans have bought into being charged more at peak demand times, with tickets for airlines, baseball games and plays costing more at popular times of the day, and electricity costing more at peak times. But when it comes to driving, they’re not buying it.
The simple economic theory of supply and demand deems that when supply is low and demand is high, prices will go up. That’s why airline tickets are cheaper for a 6 a.m. flight and weeknight theater ticket prices are less outrageous than Saturday night shows.
Try moving that type of pricing onto America’s roads, and you’ve got a problem. Congestion pricing hasn’t yet worked in the U.S., leaving commute-time tolls the same price when roads are packed as they are in the middle of the afternoon when there are a lot fewer drivers out.
Along with speeding up traffic and collecting money for road improvements, congestion pricing is supposed to help increase use of public transportation and lower pollution.
The city that’s probably most well known for charging drivers more at the busiest times of the day is London, where drivers are charged about $16 between 7 a.m. and 6 p.m. on weekdays to enter the city’s urban zone. Car usage has dropped 20%, $197 million in annual revenues has been raised, and London’s bus system is growing.
Other cities that have congestion pricing include Stockholm, Singapore and Milan, and some small cities in Europe also use it.
In America, congestion pricing has been limited to high-occupancy toll lanes on some highways, but has been rejected or delayed in urban areas. New York state legislators killed a plan for congestion pricing in Manhattan in 2008.
The U.S. Department of Transportation had five cities in 2007 study charging drivers to enter city centers, but the only city to move forward with plans beyond the initial trial is San Francisco, which will begin a congestion pricing trial in 2015.
More Americans don’t use public transportation because it’s cheaper to own and drive a private car than to take a bus, says Kamal Hassan, an entrepreneur and former CEO of Skymeter Corp., which specializes in payment systems for cars and trucks.
Instead of paying about 3 cents per mile through road taxes, American drivers should be charged as much as it costs to run a city bus — 30 cents a mile, Hassan says.
“If you sell your road space for zero dollars, you’re going to run out of it,” he says.
Given the rise of dog walking services, personal chefs and other tasks that people pay someone else to do so they can have more free time, it’s clear that people value their time, says Chris Carbone, an analyst and futurist at Innovaro. Getting that message across with congestion pricing on busy roads is one way to relieve traffic and get more people to use public transportation, Carbone says.
Innovaro’s report on road-use fees details how to replace gas taxes by charging drivers how many miles they drive. Miles can be tracked with GPS, radio-frequency identification, onboard diagnostic units and other methods that cause some to worry that their privacy is being invaded and that their car’s location is being kept track of.
“We have a different outlook on things — like the privacy piece — than they do in Europe,” Carbone says of Americans’ view of such ways to track miles driven.
Getting back the extra 60 hours that the average commuter wastes being stuck in traffic annually is just one benefit of congestion pricing or charging by vehicle miles traveled. Along with the $1,100 that it cost the average commuter to lose that many hours of time, there’s also the cost of gasoline and less wear and tear on cars that are driven less.
The Brookings Institution in 2009 recommended, “road-use pricing” to help relieve traffic congestion in the Washington, D.C. metro area. Congestion pricing could lead to 19.4 million fewer miles driven per day, the group found, along with reducing carbon monoxide emissions by 16.8% and cutting travel delays by up to 80%.
Its road-pricing system was also projected to not only raise enough money to replace fuel taxes, but also property and sales taxes that are used to pay for road construction, maintenance and repair.
Yes, you read that right: Lower taxes and zero gas taxes by charging drivers more during peak driving times. Maybe that will be enough incentive to get American drivers on the congestion pricing bandwagon.
Aaron Crowe is a journalist who specializes in personal finance topics and covers the auto industry for CheapCarInsurance.net.