In Harper's this week, Dean Baker has a rather elegant proposal to reduce the amount people drivesimply change the way car insurance is calculated:
Currently, auto insurance is viewed as a fixed expense. People pay the same amount for their insurance no matter how much they drive. This means that when someone is comparing the cost of driving to work with the cost of carpooling or public transportation, they won't factor in the cost of insurance, because they will pay the same whether they make any particular trip or not.
This would change if drivers paid for insurance by the mile. Taking rough numbers, the average person drives her car around 10,000 miles a year and pays a bit less than $1,000 each year for insurance. This means that the cost of insurance is approximately 10 cents per mile. If for each mile they drive drivers paid 10 cents for insurance, then on average they would pay the same amount for insurance as they do nowbut they would have much more incentive to cut back their driving. Quite clearly this is preferable to a simple gas tax, which penalizes people who can't cut back on their driving, because it rewards people who can cut back instead. (That's not to say gas taxes still won't be necessary to reduce carbon emissions down to sustainable levels; they almost certainly would be.) Oregon has already started doing pay-by-the-mile insurance, so presumably it's pefectly possible nationwide.