Gas Pass: A Solution to America's Driving Addiction

Now that you're done laughing at the name gas pass, time to get to business. So I'm reading this book, The Undercover Economist. It's very similar to Freakonomics in that it is a guide to important economic concepts and the way they work in everyday life that you can read without ever having taken an economics class. God knows I haven't. There aren't any complicated graphs or math, just solid arguments and stuff that makes the world around you make sense. So far I've learned about why coffee costs so much and where that money goes and how Starbucks tries to get you to pay more than you need to just because you can. Also, about how and why supermarkets organize their shelves and sales the way they do (organic products are never put next to their much cheaper counterparts so you don't know the price difference). There's a lot of good knowledge in there. I recommend.

So anyway, I just got done reading this chapter on the negative externalities of gasoline. A negative externality is something that lowers the quality of life of other people without the consumer compensating them. For gasoline, the negative externalities are the pollution produced, as well as the noise and congestion mainly in cities, as well as the danger to pedestrians. No one puts a dollar in your pocket every time you get a face full of exhaust. It's like a guy that goes to a football game and buys a huge foam hat and then sits in front of you. When he bought the hat, he didn't pay you for your inability to watch the game, he just paid for the foam and construction costs and wages of workers and everything that went into getting that particular hat to that particular sports venue. Not for any of the consequences. Of course, there can be positive externalities too, like a guy that makes stuff out of old beer cans so they aren't thrown away. He gets money for his product, but he also helps the environment and reduces litter at no extra charge.

But back to gas. There are too many people dependent on driving in America, and the environment is getting fucked as our cities and highways get more and more crowded. I'm currently working on an idea to help change that. It's called the Gas Pass. Before I can explain it fully, you need to know some history of dealing with gas externalities. In order to offset the cost of externalities, it is traditional practice for the government to levy a tax to compensate for the burden on society (cigarettes, gasoline). The way gas taxing is done in Britain is called the Vehicle Excise Tax. It's basically a big lump sum you pay every year based on the emissions rating of your car. SUVs pay much more than hybrids. Still though, after you've paid this, you can drive around as much as you want. This allows the rich to just pay off this tax and still drive around in inefficient cars and pollute everything. Not cool. To read more about the Vehicle Excise Tax, click here.

In America, we just levy various taxes on oil companies and gas imports, and they're nice enough to pass those costs along to us, so we just all pay more for gas. That's not a huge problem, except it leads to poor people spending a much higher percentage of their total income on gasoline then we'd like, whereas in England most poor people are put off by the Excise Tax and ride the train or a bike. Both solutions have problems, so I suggest a fusion of the two.

Every year you pay a lump sum, like the Vehicle Excise Tax, for a Gas Pass. The Gas Pass would be something you are required to attach to the front of your car, or the inside of your window or something. Like a parking permit. There would be fines for not having one, like there are for the British Tax. Anyway, you sign up for this pass at the DMV, and whenever you go to a gas station, you have to put the pass through a reader before you can buy gas. At start the gas prices would be lower than they are now, because the other taxes would be removed. So you go to the gas station and fill up for cheap then your out. However, the more you go to the gas station in a short period of time, the more it costs you. If you go twice the same day, you might have to pay an additional $5 on top of it. If you go a third time $10. Or you could do it by the gallon per week or something, where the price per gallon goes up every 20 gallons or so. The major point is that the price accelerates the more frequently you drive, in order to discourage you from being dependent on a car. This should motivate poor people to use public transportation and bicycles, while also keeping the rich from driving around all they want without taking a serious monetary hit.

Now the conversion might be tough, but if we can rearrange the tax laws so that the oil companies will be in favor of it, or so consumers want it so much the gas companies have to comply, I think the Gas Pass could be a success.

That took me 3 days to write.