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Pay By the Mile?

But efforts to shift to pay-as-you-drive model slow to catch on.

by on Aug.12, 2011

Might you someday pay by the mile?

It took Carol Hinka some time to get used to paying tolls when she moved to Central New Jersey two years ago, first on the Garden State Parkway, then the NJ Turnpike on her daily commute to her office just west of New York City.

But when she learned her insurance company was experimenting with the idea of charging by the mile – much the way the toll roads base their fees – she began to wonder why she couldn’t pay by the mile for all of her automotive expenses, rather than the current hodgepodge that includes fixed state and federal fuel taxes.

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Hinka isn’t alone.  A number of regulators and planners think the idea of charging by the mile is a great idea – something that could gain even more traction if electric propulsion grows in popularity.  Since hybrids use less fuel than comparable conventionally-powered vehicles and battery-electric vehicles use no fuel at all, there’s the potential for government coffers to lose billions of dollars a year in annual revenues used for road maintenance and other projects.

To replace those revenues, several states – along with a number of European countries – are exploring the idea of establishing per-mile fees that would use GPS navigation systems to track how much a vehicle is driven.  There could be a fixed rate charge or the fee might be adjusted to reflect the fuel-efficiency of a vehicle, perhaps even when and where it was driven.