Pay-by-the-Mile: Is Oregon’s New System the Way of the Future?

Source: Chevrolet
Source: Chevrolet

Oregon lawmakers recently launched a trial program that will charge participants 1.5 cents for every mile they’ve driven. Participation is voluntary for now, and the goal is to investigate viable alternatives to the current gas tax.

Due to the growing number of hybrid and electric cars being sold and the increasing fuel efficiency of gasoline-powered cars, there’s been a steady decrease in the revenue Oregon collects from its gas tax. Drivers may enjoy not having to fill up as often, but gas tax revenue is used to maintain roads and bridges. When drivers aren’t buying as many gallons of gas, it leaves the state’s infrastructure budget underfunded.

“Oregon and other states know that the gas tax drivers pay at the pump isn’t cutting it anymore,” said Oregon Department of Transportation Director Matthew Garrett. “As newer cars squeeze more miles out of each gallon of gas, and more hybrid and all-electric vehicles are sold, paying for road use by the mile instead of by the gallon ensures that everyone pays their fair share — no more, no less.”

Oregon residents who sign up for the program receive a mileage tracker that they plug into their car. Billing is handled by one of three third-party companies, and participants receive a credit for the 30 cents per gallon they pay any time they fill up at a gas station.

The question is though, is a program like OReGO the future of the gasoline tax, and will it see widespread adoption?

Oregon isn’t the only state that sees the potential value of having drivers pay by the mile. California, Colorado, Idaho, and Washington are reportedly considering launching similar programs.

Source: Ford
Source: Ford

One of the biggest concerns people have is with how a pay-by-the-mile system will handle privacy. Two of the three options in Oregon’s program are GPS-based, which means participants are having their locations and movements constantly tracked. Having the government recording so much information on where people travel could be concerning, but even if that information isn’t collected with nefarious purposes in mind, storing it means there’s always the risk of a security breach.

There are also concerns over how much these third-party companies are being paid to handle the billing. If the program becomes permanent in Oregon and especially if similar programs become more widespread, how much of each dollar collected will end up making it into the state’s infrastructure budget?

Finally, paying per mile driven offers a disincentive for people to purchase hybrid and electric cars. As states are looking to cut down on pollution and encourage encourage residents to transition away from gasoline-powered vehicles, increasing the taxes that electric car owners pay is counter-intuitive.

That said, as people continue to buy fewer gallons of gas, what other options do states have? Maintaining and improving infrastructure is an important part of each state government’s responsibilities, and telling them to do more with less doesn’t exactly work. The American Society of Civil Engineers already gives the United States’ infrastructure a D+ grade. The ASCE also estimates that $3.6 trillion is needed to by 2020 to fix the current problems.

It makes sense that the people who use the roads the most should pay more to maintain them since use equates to wear and tear. For a while, the gasoline tax was a fairly efficient method of doing that. Unfortunately, it doesn’t look like it’s going to remain a viable option for much longer.

If hydrogen was the most popular alternative to gasoline, states could continue to tax fuel at the pump and be fine. They might have to adjust the tax rate a little bit, but the basics of the current system could still remain in place. Unfortunately, it looks like the future of transportation is going to involve people using different fuels for different types of vehicles. Electricity might be the most popular, but with so many different ways to produce electricity and with many electric car owners able to produce the electricity they need at home, finding a reliable system to tax it may prove difficult.

If states could figure out a way to institute a pay-by-the-mile system without actually tracking and recording drivers’ locations, and if they could come up with alternative incentives for alternative fuel vehicles though, the future of the gas tax could very much look like OReGO.

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