Motoring Externalities, Essay Example

Motoring today occupies a very important place in the lives of individuals and the economy. The value attached to it to the individual or the society economically can be the reason why individuals and the society in general have been very faithful to motoring despite its various repercussions. In addressing the negative impacts of motoring, different strategies have been employed some of which do not even have any direct relationship with motoring. One of the most challenging effects of motoring industry is its contribution to global warming. Motoring has been said to be the greatest emitter of greenhouse gases today (Verhoef 380) Putting in mind the importance of motoring to the individual as well as to the, economy and related issues in the society, direct solution to motoring problems has been very elusive.

Environmental pollution through greenhouse gases emission has been the most challenging issue in dealing motoring problem. This is because despite its impacts on the environment being obvious, motoring still grows in almost all parts of the world. According to Verhoef, motoring has been increasing not only in the United States but in all parts of the world. He asserts that from 1960 to 2000, motoring industry has grown in the number of automobiles, passengers and miles covered, by around 250% (367). The result of such exponential growth in motoring has been extensive rise in number of externalities which include accidents, air pollution, congestions in cities, and rise of fuel dependency.

In addressing the problems of motoring, several dimensions have been taken. One very common aspect of them all is the aim of reducing the use and ownership of motor vehicles. Most countries today have experienced congestions in their cities through the rise of the number of individuals using private motor vehicles as their primary means of transportation. As a result to address this, most governments are putting in place measures to reduce the use of motor vehicles in cities through devising ways that can coerce individuals to take the public transport means or other alternative means of transportation. Urban planning departments in cities have always reported that despite the call for use of public transport means in the cities, there is still increase in the use of private owned automobiles as the primary means of transport in the cities. This is manifested in the stagnating growth of the public transport while there constant increase in the demand of parking spaces in cities. Although the above is the reality in most cities, the rising number of externalities associated with motoring requires that there is a serious shift from private transport means to public transport.

Policies that are aimed at addressing this issue are diverse and have different rates of success. The effectiveness of addressing motoring externalities is always determined by policy measure being used. The most common approaches are planning related policies such as reduction of the number of parking spaces in cities or increasing the number of public transport systems. Economists advocate for the use of unique way to address motoring externalities. To them, increasing the relative cost of motoring is the most effective way of addressing motoring externalities.

One approach to the issue is reducing the price of using public transport means. Some cities in the world have used this approach as a means of dealing with the motoring problem. This approach has been one of the oldest known means that has been widely used and gained support not only from planning departments but also some environmental groups. Its success in reducing the use private transportation means has led to its adaptation in many cities in the world. The evidence of the success of such ventures can be measured by the increase in the demand of free transportation means. The city of Haslet Belgium shows the effectiveness of the use free public transport system in the reducing congestion in cities and other motoring externalities through reduction of the use cars. In Haslet, not only has city planning departments managed to reduce the use of cars, they have also managed to reduce their budgets for the construction of new roads. The success of this approach in Haslet has led to preparation of many cities in the world to adopt the idea.

Although the above approach has been successful, its adoption is not very wide. Today, the most common prescription for solving the problems of motoring externalities provided by economists is the use of gas prices. To the economist point of view, gas prices hold the key to the solution of motoring externalities. Manipulating the prices of gas is a strategy that can be used to reduce the number of individuals using public transport a tool that can be useful in solving motoring externalities related to congestion in cities, air pollution, traffic accidents and urban sprawl. Although there has been registered increase in the prices of fuel in the recent past, some people still don’t find connection between the increase in the price of duel and the social benefits associated with. In some quarters, there is a belief that the augment in the prices of fuel is not as a result of the taxes by the government but just as a result of the increase in the demand of the commodity in the international market.

With such beliefs, it is therefore important to assess the importance of the success of using fuel taxing as a strategy against the negative externalities of motoring. Economists are in the frontline of advocating use of fuel taxing in managing use of motoring and its negative externalities. Fuel costs taxes are the most popular form of strategy used by governments in reducing the use of motor vehicles in the society today. Of them all, pollution taxes as a result of use of fuel popularly known as ‘Pigouvian taxes’ is the least expensive means of reducing motoring externalities. This approach was first introduced by the English economist Alfred Pigou to address the social repercussions of the activities of an individual such as motoring (Tol 2068). His idea was that an activity of an individual should be taxed according to the social effects it has. For example a motorist should be taxed according to the pollution effects to the environment he causes. He also proposed that such taxes should be used to reverse the effects of the pollution or that it can be used as capital of creating more efficient ways that such effect can be reduced. With such noble ideas fuel taxes can achieve much in reducing environmental pollution. However critics of this idea already point out that motoring alone can’t be responsible for all the pollution that is being experienced in the society today. Also some critics suggest that motoring emit almost same amount of greenhouse gases with other industries but it is charged more than what other industries pay in relation to fuel cost charges. Already there are complains that the motoring industry is being unfairly treated.

The result of such criticism has led to comments by environmentalists and economists to assess the impact of the use of high fuel prices as a strategy to reduce the rate of environmental pollution (Walters 679) suggest that taxing fuels as a means of reducing motor vehicle use as a strategy of reducing green house gas emissions may not be a very successful. They suggest that although such means may not be very efficient in reducing the amount of pollution caused, it in some ways encourages the development of more efficient means of transportation for example development of hybrid cars that use less fuel for long distance travelled. In the United States, an emission charge which is tax per level of pollution substance emissions can be seen as the most appropriate means of dealing with the negative externalities in motoring. Emission charges in motoring reduce the use of ineffective cars by taxing it more than the hybrid cars. With this, the most efficient cars in terms of fuel consumption will in the long run be the only cars that run the roads.

Today, recommended way that the efficiency of a vehicle especially cars is measured is by the amount of fuel it consumes by the distance covered. Despite the call for the use of the above approach, many manufactures still insist in using the speed and the engine capacity in illustrating the efficiency of different car models. Should the focus of the approach of measuring vehicle efficiency shift to fuel efficiency, often by gallon per mile then fuel motoring externalities can be said to have reduced. Although this may be a very good idea, there are serious challenges in advocating for such measures. One of the most serious repercussions of adopting the above way of measuring vehicle efficiency is that it will make cars made in the United States to lose relevance in the auto making industry in the international market. This has been the major reason why the motor industry has not adopted the building of much fuel efficient cars. This also explains the small number of the fuel efficient cars in our highways today. Considering the current situation of the General Motors and Ford which are indeed the biggest motor producers in the United States, it is with no doubt that the reality of reducing motoring externalities through use of reduction of fuel consumption by vehicles show that this approach is not working by any means. In point of fact, using such approach in measuring vehicle efficiency will hurt the economy of the country. This is because research indicates that the U.S motor industry contributes 10% of jobs in the auto industry through sale of vehicles out of the United States. (Yang and Hai-Jun 47). With such statistics no one needs to investigate further to see if the motor industry will use the given means that is always suggested by the environmentalist as a means of reducing externalities related to motoring. It should be noted that not only is the Auto industry useful in employing most of US citizen but it also bring a lot of income to the economy through exports. For example in 2003, the auto industry reported that the export earnings through car export was higher that of pharmaceutical and drug manufacturing companies (Verhoef 369).    Although the United States faces serious economic repercussions for adopting fuel cost strategies in managing motoring externalities especially in reduction of fuel consumption in its vehicle models through the use of tax per fuel consumption, it still has put into place measures that discourage the use of fuel guzzlers in the roads. Compared to the world largest auto markets, the United States is the only country that has the highest number of fuel efficient cars in its fleets (Yang, and Hai-Jun 49). This therefore shows that the U.S has the lowest fuel economy in the world when compared to other industrialized nation of its status. To some extend the U.S rules of managing externalities in motoring has been beneficial to the country economy. Due to its strict rules on emission rates to control pollution, many automakers from other countries find it hard to enter the US market. With this, only cars that meet the regulation get access to the US market. With this many US automakers are capitalizing on this venture to increase their sales within the US.

In another approach used to manage emissions of greenhouse gases, high cost fuel prices have made it hard for people to use fuel guzzlers when travelling to distant places. Contrary to the situation in the 1970s where an individual’s car was the ideal mode of transport when going for holiday within the United States, many people today prefer to use the public transport system to reduce the cost of their journeys. The number of fuel guzzlers in the roads today has greatly reduced. Many individuals today use small cars to do small journeys within cities or estates. This is one of the areas of that the regulation of oil prices to reduce emissions has really worked. Likewise, in some other countries like Germany the use of fuel efficient cars has been adopted to reduce the cost of fuel. This is because the prices of oil have been increased as a means of managing externalities in motoring. Another success factor of increasing fuel price in the management of the number of vehicles in the city has been the case of Haslet in Belgium where people have been coerced into using free public transport system as a way or reducing the amount of pollution by cars as well as to reduce the pollution caused by the carbon emission by the cars. This strategy has been emulated by many countries wishing effectively manage congestion in their roads. For the Belgium case, not only had the provision of free transport reduced carbon emission and reduced congestion in the city but also it had greatly reduced the budget of the development and planning agencies for constructing new roads that would have been used by the big number of cars in the city. As exemplified by this case proper planning of taxing fuel with provision of adequate or feasible alternatives can bring the desired results.

In assessing the theory of congestion of externalities of motors, the cost of a car running in a mile in a given area is used. Also the time that a vehicle takes to travel in a mile in the given area is taken into consideration. The aggregate time lost and the average cost used by the entire motorist in the given area is said to be the congestion rate in that area. The application of tax to on fuel helps to reduce and equalize the level of lose that every individual using that road meets. This is because individuals always tend to calculate the loss they incur in such congested roads as the average total  of what they would lose as an individual in terms of time and money. Studies that have been undertaken to assess the effectiveness of this model as a means of reducing motoring in congested cities produce diverse results. In some studies, effectiveness of the model is seen when the cost of travelling in rural roads leads to great reduction in costs per mile. While in other studies travelling to rural area using private means increases the cost per mile when compared to travelling in urban areas like Washington DC. The contradiction of the results of such studies makes it difficult to show a clear direction of whether fuel cost charges is effective in reducing congestion in urban areas (Yang, and Hai-Jun 53).  However when other ways are used to assess the success of the use fuel cost charges to manage externalities of motoring related to solving congestion in cities. A good example is when another model used to beat the congestion in urban areas by encouraging the use of public transport means by increasing taxes on cars that are for personal use. Other strategies that have been used are through increasing parking fees associated with motoring in the city. The success of such strategies have been seen in the ways that individuals in many cities today prefer to use public transport means to get to their places of work rather than use their private vehicles. Today there are emerging concepts that have been as a result of such strategies. A good example is the concept of the shared car. Car sharing among urban dwellers is becoming a popular term as people find it difficult to use their cars to come to their places of work. The manner of their operation (shared cars) is like cabs and hired cars. Individuals working in central business districts in cities arrive at the terminals of major public transport systems such as the subway then drive themselves to their places of work using the small hybrid hired shared cars. Companies such as Flex and Zipcar are good example of companies that have taken advantage of the economic situation of individuals and provided them with the best alternative solutions that they can afford. With such innovative ways it is clear that the use of the fuel levy on use personal vehicles has greatly reduced the number of individuals using the private transportation to their places of work. With such methods of public transportation becoming more popular in the cities and most urban areas, individuals know that they are using a lot of money using such methods of transport so they try as much as possible to limit their movement. In such circumstances, it is evident that raising the cost of oil encourages people to use public transport system and therefore helps in the management of mortaring externalities that are related to congestion and pollution through reduction of the number of cars that run in the cities.

Another aspect that can be used in determining the success of fuel levy as an approach of dealing with issues of motoring externalities is through the use of the opinions of the individuals in the society on the feasibility and effectiveness of the approach used. With feasibility, different perspectives and opinions are made. Apart from the social feasibility there is also the economic feasibility of a given policy which is aimed at indicating the total social benefits that are derived from implementation of a policy in mind. Institutional feasibility helps in assessing the losers and gainers when a given policy is put in place while legislative feasibility of a given policy shows how a policy that is about to be introduced is compatible or incompatible to the already existing legal framework which plays a big role in influencing individual and public perception and especially political opinion of parties and also voting patterns. Different opinions of individuals may always lead to failure on the implementation of the planned policy. The social feasibility, which indicates the general public acceptance of given policy, is the best way that can be used to assess if policy can succeed or fail when implemented. The problem with the use of this feasibility style is that it comprises several aspects such as individual, psychological and cultural in determining the possibility of a given policy succeeding. If judged from the above concepts we can definitely say that there are many mixed reactions on the use of fuel levies in the management of motoring externalities. In most cases, individuals are always complaining of the high fuel costs that are made on them by the government. In some situations individuals in the society feel that the prices of gas is no longer influenced by forces of demand and supply as it has always been the case. They feel that the government is always up to making them pay for services that they do not see their importance (Tol 2072). Although the government still insists that the heavy taxing of gas is because they want to improve the way that individuals in the society today can enjoy better motoring through improvement of road networks. Other charges that are related to motoring such as driving license road licenses and other insurance requirements are all aimed at improving the service delivery that road user’s get (Tol 2072) judging from the above opposition from the general public, it can therefore be said that the use of fuel levies have not succeeded in managing the motoring externalities in the society.

In externalities related to reduction of the number of accidents in roads today, there is a wide held belief that when individuals drive for a long distance, their general driving ability is increased. With the  high fuel prices only permitting individuals to drive in very short distances it can be assumed that whenever they are to engage in long distance driving they can easily  cause accidents which beats the all meaning of the fuel levies. Such cases can also increase insurance compensation paid by companies.

In conclusion, the importance of the restricting the growth of fuel levies as a means of controlling the extensive motoring externalities cannot be denied. However their success or failure heavily depends on how individuals in the society have been oriented to.

Work Cited

Tol, Richard S.J. “The Marginal Damage Costs of Carbon Dioxide Emissions: An Assessment of the Uncertainties.” Energy Policy 33 (2005): 2064-2074.

Verhoef, Erik T. “Second-Best Congestion Pricing Schemes in the Monocentric City.” Journal of Urban Economics 58 (2005): 367-388.

Walters, Alan. 1961. “The Theory and Measurement of Private and Social Costs of Highway Congestion.” Econometrica 29 (1961): 676-97.

Yang, Hai and Hai-Jun Huang. “Principles of Marginal Cost Pricing: How Does It Work in a General Road Network?” Transportation Research A 32 (1998):45-54.