In the comments of this post, Common Tragedian Daniel Hall says something very smart:
I think about this sometimes when I drive around, because buying a tank of gas sucks but then once I have the gas I tend to treat it like a sunk cost and donâ€™t really think much at the margin about what my driving costs.
This is spot on. It also has important policy implications. Gasoline prices, and by extension gasoline taxes, function very weakly as a means to price driving marginally. That’s one reason why I think that congestion is primarily responsible for urban revitalization and increased mass transit ridership (as opposed to higher pump prices). It’s also why I believe that congestion pricing will be far more effective at reducing vehicle emissions than carbon pricing–the more so if the proceeds fund automobile alternatives.