Mary Peters: The Folly of Higher Gas Prices

Today's (Saturday, August 25) Washington Post included an op-ed by US Dept. of Transportation Secretary Mary Peters (who was just mentioned for other reasons on this blog the other day). Her key point is that raising gas taxes to improve transportation infrastructure (which has been raised in the public's consciousness since the bridge collapse in Minnesota) is the wrong strategy. She cites a couple of reasons:

1) Because the money is deposited into a federal trust fund, its allocation becomes politicized, and Congress is apt to skew the priorities for its use. I would tend to agree with this point.

2) It does little or nothing to reduce traffic congestion, because it does not dissuade people from driving during congested times or on congested roadways. I partially agree. Large gas taxes would push people towards smaller cars and also get them to think about using them less, but it wouldn't necessarily affect congestion. Small increases in the gas tax would probably make little difference.

I am in favor of raising gas prices, but for different reasons and in a different way. Burning gasoline creates environmental damage. Gas taxes could be used more appropriately to offset the damage caused by their use by being used for environmental protection. A better strategy in my mind is that gas taxes could replace wage taxes. The taxes collected would be used to reduce wage taxes. This works well for progressivity of tax policy, because rich tend to buy more gas and poor pay more in wage taxes.

Her key point is that we currently provide virtually all of our roadways for free. Any free good will tend to be overutilized. The infrastructure itself should be priced rather than the gas. I completely agree with this point. If people and businesses were charged for the use of the roads--more during congested times; possibly more for larger, more damaging vehicles--then they would start to make decisions based on their use. That's the idea behind congestion pricing (another recent blog): charge people for their use. If we tolled every road then a lot more people would choose to take the train or bus or ride their bike or otherwise think a bit harder before hopping in their car and driving.