Vaporizing the Gas Tax Myth

The United States must move away from the gas tax to solutions that charge people for the roads they use, including a VMT fee, congestion pricing for peak hours and toll roads, says Jack Finn of HNTB. Such efforts will encourage Americans to be less dependent on oil, reduce congestion, take public transit and properly invest in infrastructure.

 Jack FinnAmericans hate the gasoline tax about as much as they love their cars.

At the federal level, money from a gas tax was first placed into the Highway Trust Fund in 1956 as the country embarked on President Dwight Eisenhower's grand vision of establishing a network of interstate highways to spur commerce and aid in the country's defense.

Now, more than 50 years later, Eisenhower's long-ago realized vision is reaching the end of its useful lifespan, and the gas tax itself is running on empty.

This is unwelcome news to the average American driver, already suffering through the current economic downturn and the painful $4 per gallon gas that preceded it.

Photo by flickr user NovaMan396
Photo by flickr user NovaMan396

For years we've comforted ourselves with the notion that filling up at the pump pays for our roads in full. This is nothing more than a myth, a misperception that must end. In fact:

  • There is no such thing as a free road. Anyone who has paid off a mortgage knows there are always costs of home ownership. Renovations, expansions and simple upkeep - while necessary - can be expensive. Simply paying off the original financing on a transportation project doesn't mean it's paid for either.
  • Roads don't pay for themselves. Research from the Texas Department of Transportation has compared how much gasoline is consumed on a roadway with how much gas tax that generates, revealing that no road completely pays for itself over a 40-year lifespan.
  • Weve run up a huge transportation tab. Crumbling roads, rusting bridges and congestion are all signs we've deferred too much maintenance. According to a national commission that studied our surface transportation needs, we need to invest at least $225 billion annually for the next 50 years to repair and upgrade the system. The longer we wait the more expensive it becomes.
  • The gas tax isn't what it used to be. The federal gas tax, now set at 18.4 cents per gallon, was last increased in 1993. A combination of inflation, changing driving habits - due in part to higher gas prices - and better fuel economy of our cars has robbed it of much of its purchasing power. In fact, the trust fund is broke, needing infusions from the general treasury totaling more than $15 billion in the last year alone.

The way we fund our roads is at odds with almost every other public policy America has adopted. While proposed climate change legislation, green energy initiatives and even our foreign policy demand that we move away from a dependence on oil, we pay for our transportation system almost entirely by using more of it.

In the short-term, we need to consider an increase in the gas tax. It's a bitter pill to swallow, but it's the only way we can ease the congestion we face. At last count, that congestion costs every traveler in the U.S. $750 a year. A gas tax increase between 5 cents and 8 cents each year during the next five years will cost average Americans only $10 to $20 each month per car.

In Britain and much of Europe the gas tax is nearly $4 per gallon, 20 times the federal tax in the U.S.

In the long-term, we must move away from the gas tax to solutions that actually charge people for the roads they use, including a vehicle miles traveled user fee, congestion pricing for peak hours and more toll roads. We're willing to pay for actual use of other utilities - like electricity, water and natural gas - why not our roads?

Such efforts will encourage Americans to be less dependent on oil, reduce congestion, encourage use of public transit and properly invest in infrastructure.

Jack Finn is National Director of Toll Services for HNTB Corporation.



Three cheers (and several furthermores + a quick conclusion)

Furthermore: Cambridge Energy Research Associates"Sustained Long-Term US Gasoline Demand Growth Unlikely":

And furthermore: The average CPI-adjusted price of gas between 1952 and today is $2.37...What happens if the real cost of gasoline was calculated? National Geographic has it at about $8 while the high end I've found is $15.42...The greater the cost and/or tax, the faster individuals will choose transit options other than an automobile.

And further-furthermore: Needless to say, we as a society can no longer afford solely focusing upon and so very extensively subsidizing building more and more highways, each bigger than the last one, in order to relieve congestion and mitigate smog. Blindly following this outmoded sprawl strategy will not provide any anecdote whatsoever to our societal illth and will, in fact, only exacerbate it both here and abroad. Not only that but it’s fiscally impossible to do so.

TxDOT's Texas Transportation Institute: “If a region’s vehicle-miles of travel were to increase by five percent per year, roadway lane-miles would need to increase by five percent each year to maintain the initial congestion level…(Our) analysis shows that it would be almost impossible to attempt to maintain a constant congestion level with road construction only...Over the past 2 decades, less than 50 percent of the needed mileage was actually added. This means that it would require at least twice the level of current-day road expansion funding to attempt this road construction strategy. An even larger problem would be to find suitable roads that can be widened, or areas where roads can be added, year after year.” Although I can't find the quote right now, they go on to say that the average DOT can only afford 30% of the cost of maintaining existing roadways!

In conclusion: There will be no quick fixes; it took a couple of generations for the car+sprawl model to become standard, and it's going to take a couple of generations before sustainable urban development and transport become standard.

David Parvo
Most Senior Fellow
The Placemaking Institute

Addendum (of recent news)

"If you don't like gasoline taxes, here's an alternative: a tax on the number of miles you drive in a year. The Texas Transportation Commission has directed a fresh study of the idea, and it is not alone. There are pilot projects in other states and nationally to gauge how such a tax would work. Texas transportation officials say the study is meant to help give lawmakers information on options ahead of their next regular session in 2011, when they confront a funding squeeze that is expected to drain the highway fund of money for new construction contracts by 2012.

“We need to think differently about how we fund transportation,” Texas Transportation Commission Chairwoman Deirdre Delisi said at a Texas Taxpayers and Research Association forum in November. Delisi said the vehicle-miles-traveled tax idea is controversial, but should be discussed because revenue from the state's main source of transportation funding, the motor fuels tax, is declining. The gasoline tax has not been raised since 1991."

David Parvo
Most Senior Fellow
The Placemaking Institute


Wholeheartedly agree especially on what needs to be done, but here is a question. It seems to me that there would be broad political party consensus on this: Dems get to show how "green" they are, Repubs get to show how roads can be user fees and not taxes like a private entity and libertarians or free market advocates like myself would applaud something close to a market based road system (like a utility as you suggest). So why is it so hard? Obama can spend $1 trillion on nothing, we can give hundreds of billions to banks with a combined total of about 3 days deliberation, yet something so common sense and "American" and "capitalist" like this is "politically impossible" as many say. Why?

Agree with both of you!

Sadly, we're aboard the Titanic, which we all know can't be turned on any kind of coin, let alone a dime. I suspect it will require 50 years or a significant melt-down type crisis to get our way of community building changed to a non-auto-centric model. At least the prospect of global warming gives us the opportunity to abandon all of our coastal cities and rebuild appropriately.


Not so sure

This seems to punish the little guy who has to drive far to work everyday. There is no reasonable public transportation to my job. I live in a farming community and drive into the city everyday for work. While I can get transportation i would have to drive to it then it is an hour to my job like that. I can't afford to live in the city. It would be people like me you punish. I have a good idea. Let just use the money we make off of the gasoline tax and use it on the roads.

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