Lowest Gas Prices in 12 Years Contribute to Record Travel This Holiday Weekend

Two new reports on transportation funding issued in advance of the July 4th weekend focus attention on gas prices and vehicle travel. Seven states will increase gas taxes on July 1 according to the Institute on Taxation and Economic Policy.

3 minute read

June 30, 2017, 11:00 AM PDT

By Irvin Dawid


405 Traffic

Bart Everett / Shutterstock

The national average gasoline price for the holiday weekend is projected to be $2.21 gallon, the lowest since 2005, according to Gas Buddy, and the first time lower than on New Year's Day.

"With 1.25 million more travelers than last year, 2017 will be marked as the most traveled Independence Day holiday weekend ever," reports the AAA. "37.5 million Americans will drive to their destinations, an increase of 2.9 percent over last year." The projection should not come as a surprise as the Federal Highway Administration issued a report in April showing that Americans set another record for vehicle miles traveled.

Low gas prices are an ideal time to hike gas taxes, and seven states will do just that on July 1, mostly due to legislatures who had the ability to overcome significant political challenges.

  • Indiana will see the largest increase of 9.9 cents per gallon while California and Maryland will adjust gas taxes upwards by 1.9 cents and 0.3 cents per gallon, respectively. 
  • South Carolina will implement the first two cents of a 12 cents per gallon increase that Republican Gov. Henry McMaster had vetoed, but was overridden by the Republican-controlled General Assembly.

The Institute on Taxation and Economic Policy (ITEP) describes the details behind all the state gas tax changes that take effect July 1 in the first of three reports.

Click here for diesel tax changes on July 1.

ITEP updated two policy briefs as well on June 28:

Switch to Vehicle Miles Traveled Fee

Finally, Dug Begley, transportation writer for the Houston Chronicle, reports on new research published in the Journal of Public Economics [pdf] concluding that a "federal tax on vehicle miles traveled [VMT], as opposed to a per-gallon tax on gasoline, could raise money for the Highway Trust Fund and improve society, to the tune of a 20 percent increase in social welfare."

The report indicates that a VMT fee would correct the funding problem created by the policy inconsistency of a stagnant federal gas tax, unchanged since 1993, and steadily increasing fuel economy standards, currently set at 54.5 mpg by 2025, though President Trump is trying to roll it back.

The researchers, Brookings Institution’s Clifford Winston, the University of Arizona’s Ashley Langer, and the University of Houston’s Vikram Maheshri, write (in a message tailor-made for the record travel expected this holiday weekend):

A VMT tax has the potential to generate a more stable stream of revenues than a gasoline tax because motorists cannot reduce their tax burden by driving more fuel efficient vehicles. 

Hat tips to Carl Davis and Jenice Robinson, ITEP.

Wednesday, June 28, 2017 in Institute on Taxation and Economic Policy

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Close-up of "Apartment for rent" sign in red text on black background in front of blurred building

Trump Administration Could Effectively End Housing Voucher Program

Federal officials are eyeing major cuts to the Section 8 program that helps millions of low-income households pay rent.

April 21, 2025 - Housing Wire

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 30, 2025 - Diana Ionescu

Ken Jennings stands in front of Snohomish County Community Transit bus.

Ken Jennings Launches Transit Web Series

The Jeopardy champ wants you to ride public transit.

April 20, 2025 - Streetsblog USA

Close-up of man in manually operated wheelchair waiting at urban crosswalk.

Making Mobility More Inclusive

A new study highlights the challenges people with disabilities continue to face in navigating urban spaces.

45 minutes ago - Greater Good Magazine

US and Texas flags flying in front of Texas state capitol dome in Austin, Texas.

Texas Bills Could Push More People Into Homelessness

A proposal to speed up the eviction process and a bill that would accelerate enforcement of an existing camping ban could make the state’s homelessness crisis worse, advocates say.

1 hour ago - The Texas Tribune

Person in yellow safety suit and white helmet kneels to examine water samples outdoors on a lake shore.

USGS Water Science Centers Targeted for Closure

If their work is suspended, states could lose a valuable resource for monitoring, understanding, and managing water resources.

2 hours ago - Inside Climate News