It is really painful to read the ideas of people who want to reduce U.S. oil consumption but reject shifting to pay by the mile auto insurance. The concept is pretty simple. Today, most insurance policies are largely a fixed cost. If you drive 100 miles or 20,000 miles, you end up paying pretty much the same amount. But, if insurance were assessed on a per mile basis (accidents are roughly proportional to miles driven -- with some complicating factors), then insurance premiums would rise as people drive more. For a typical driver, the per mile cost would be close to 10 cents a mile. For a car that gets 20 miles to a gallon, this would be equivalent to a $2.00 a gallon gas tax. The disincentive to drive would lead to a reduction in driving of 10%-15%. This would reduce oil consumption in the United States by more than 1 million barrels a day, the predicted peak output from the Arctic Wildlife Refuge. Robert Samuelson gives his plan for energy independence in the Post today. He wants to drill in the Arctic Refuge. He doesn't want to switch to pay by the mile insurance. It's too bad the United States doesn't have an environmental movement that could push policies like pay by the mile insurance.
--Dean Baker
