05 June 2008

congestion gasoline

I had an idea when considering oil prices, driving, and general problems therein with things like congestion and so forth.

There are a number of toll roads around the world that have moved to congestion pricing. In other words, if you want to use the road at rush hour it will cost more. The idea actually works to reduce congestion and spread out commutes more naturally (the road is used more or less evenly throughout the day).

Couldn't the same thing be applied to gas prices? Gas is a fixed commodity true, but why couldn't it cost more around rush hour to encourage people to commute at different times on public roads. Quasi-privatizing all public roads is never going to work in America because there are so many roads and so many small neighborhoods from which we commute. Perhaps major highways and beltways will be eventually all 'smart' toll roads and that may have some impact on general congestion (though cheap people just take major side streets instead and crowd them up instead).

Why not take the next step and charge gas prices differently based on demand pricing. When most people get gas, make it cost more (it already sort of does this by increasing every summer, but that's only a seasonal adjustment, not a congestion adjustment). Make it cost more in the mornings and around quittin' time, less in the wee hours and mid afternoons/late evenings and I think we'd see people spreading out their commutes and evening entertainments where gas is needed. I suspect this is just as impractical (eventually people would think it is the same as price gouging). But I have to think that some gas stations do this anyway already, to the extent they can legally. It is true that gasoline costs them the same, but they could (and probably would) offer the gas at a true loss in competitive markets when there is little to no demand (and don't think people won't line up in those before bed trips to save several dollars a tank). Most gas prices at the pump are actually at a break-even point or a very thin profit margin at best. If this is slowly distributed and allowed to adjust in a some test markets I think we would see some progress on spreading out driving habits somewhat or people would stop driving as much in general. I'm not advocating as extreme a price margin as these toll roads operate on. Even 20-30 cent adjustments in price over the course of one day gets people's attention, so it wouldn't need to be something major. Perhaps an upper limit of 50 cents surcharges during rush hours?

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