Between gas prices and government regulation, fuel economy on vehicles has started to climb significantly. Manufacturers fought the regulation, but now they aren’t fighting consumer demand. When the recession hit people stopped buying new cars. There’s now pent up demand as consumers are tired of paying for repairs and dealing with crappy mileage. Millions either now have jobs or at least feel better about the ones they have. As a result, the automotive industry is now doing so well both Obama and Romney are taking credit.
Fuel consumption is falling not only thanks to vehicle efficiency, but also thanks to consumers driving less too. Below is a chart showing the average amount of miles we travel each year per person. Not only has this been falling per capita, but it’s also been falling on a gross scale too.
This is all great news for our wallets, technology, and the environment. But there’s no such thing is a perfect outcome, and better fuel economy is no different.
Think about what you do when you’re in your car. You drive, mess with your phone, flip bad drivers off ignoring your own bad driving, curse the radio for too many commercials, and sit at lights. But you’re also wearing down the roads, and clogging them up. Even with a reduction in driving, we still need new roads and existing ones have to be repaired. A lot of the funding from those roads comes from taxes on gasoline sales. And if we’re buying less gas for a number of reasons, we’re paying less into the fund that pays for the roads.
So we’re left with a couple of options. The easiest one is to just increase the tax on gasoline. But unless the cost of making roads has dropped considerably, consumers are going to lose the savings from better fuel economy to higher taxes.
There may be better ways. We could charge taxes based on your miles driven. Gas taxes attempt to do this at the pump, but that’s really a tax on how long your motor is running. And that’s different than how many miles you drive.
Whatever way we raise money is up for debate. But that is a debate that needs to occur soon before our roads start to become a problem.