Oregon Program Could Reduce Traffic Congestion While Making Gas Taxes a Thing of the Past

Published: 
Thursday, August 27, 2015

Wikimedia Commons

Oregon has become the first state to implement a mileage-based user fee, and it could ultimately revolutionize how America funds its roads. Instead of paying state gas taxes at the pump, participants will pay 1.5 cents per mile for every mile driven. The voluntary program, known as OReGO, is expected to expand as the state works to refine it.

Fees are assessed using a tracker that counts miles driven, but it does not record the vehicle’s location. In the initial phase of the program, drivers will still pay the gas tax at the pump, but they will be refunded at the end of every month, minus the OReGO fee. For example, a driver who pays $50 in gas taxes but only owes $30 in OReGO fees will be refunded $20 at the end of the month.

Oregon became the first state to implement a gas tax to fund its roads in 1919 – a move eventually replicated by every state and the federal government. Oregon’s gas tax is currently set at 30 cents a gallon – or $4.50 for a 15-gallon fill-up.

For much of its history, the gas tax adequately funded the state’s road infrastructure. In the near future, however, Oregon’s Department of Transportation expects to face shortfalls as more drivers switch to electric vehicles or fuel-efficient hybrids. These drivers won’t pay enough in gas taxes to cover their share of road construction and maintenance costs.

As a result, drivers with less fuel-efficient vehicles – predominately low-income drivers who may not be able to afford newer and more expensive cars, trucks, and SUVs – will pay a larger share of the cost of state road projects.

Oregon’s traditional gas tax structure does little to reduce pollution and congestion. Congestion not only increases travel time, it also causes vehicles to produces more air pollutants than during free-flow driving.

The Texas A&M Transportation Institute estimates that in 2011, Portland produced 503 million pounds of excess carbon dioxide due to congestion. The town of Eugene wasted 20 million pounds of CO2.

Congestion is created because commuters have little incentive to avoid driving at certain times. The new mileage-based user fee could discourage unnecessary trips and reduce congestion by placing a clear price for every mile driven.

To better tackle congestion in the future, policymakers could also increase OReGO’s per-mile fee during peak hours and reduce it during off-peak times. Such a plan would thin out congestion by encouraging people to make careful decisions about when they drive.

OReGO could solve one of the most serious environmental and financial concerns facing Oregon’s roads today. It ensures all automobile commuters pay for their share for road use regardless of the type of vehicle they drive, and it provides a way to reduce congestion and excess air pollutants. Oregon is currently looking for volunteers to opt into OReGO. Interested Oregon drivers can apply at myOReGO.org

Michelangelo Landgrave is part of the inaugural class of PERC Impact Fellows in 2015. He is finishing up a M.A. in Economics from California State University, Long Beach and hopes to begin doctoral studies in fall 2016. He was previously a research intern with the Cato Institute and Reason Foundation where he worked on immigration and...
Read More > More Articles by Michelangelo Landgrave >