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By Samuel R. Avro on Jan 2, 2009 with no responses

Federal Commission Recommends 50% Gas Tax


Falling gas prices aren’t necessarily a good thing. So says a federal commission appointed by Congress to investigate ways of building and repairing highways across the country.

Lower gas prices, a decrease in Americans driving habits, and more fuel efficient vehicles all add up to less tax revenue for repairing bridges and other transportation projects. The commission is expected to recommend to Congress later this month that a fuel tax of 50 percent be imposed on both gasoline and diesel fuel.

The National Commission on Surface Transportation Infrastructure Financing, a 15-member panel, wants to raise the federal gasoline tax from the current 18.4 cents per gallon to 28.4 cents per gallon. Diesel fuel would see a raise of between 12 and 15 cents per gallon.

At the same time, the commission will recommend tying the fuel tax rates to inflation.

According to data released by the U.S. Department of Transportation, Americans drove 100 billion fewer miles during the 12-month period between November 2007 and October 2008 compared with the prior year.

The recent drop in fuel prices is saving consumers more than $1 billion a day on their gasoline bill, according to one energy analyst.

“I’m not excited about a gas tax increase, but the reality is our current gas tax doesn’t pay for upkeep of the system we have now,” Adrian Moore, vice president of the Reason Foundation, a libertarian think tank in Los Angeles, and a member of the highway revenue commission told the AP. “We can either let the roads go to hell or we can pay more.”

Gas prices are currently at a 4 year low, and only 2 states have an average price of more than $2 a gallon — Alaska, where it’s $2.521 a gallon, and Hawaii, at $2.304.

The average price of gas across the nation rose Friday for the third consecutive day and now stands at $1.626, up almost a cent from the previous day, according to AAA.

Even so, prices are down by nearly 20 cents from the prior month, and are off by nearly 47%, or $3.052 from this time a year ago.

Since revenue from gas taxes are not sustainable, the financing commission will recommend that the nation incorporate a new system that taxes motorists according to how much they use roads.

The estimated annual gap between revenues and the investment needed to improve highway and transit systems was about $105 billion in 2007, according to a study by the Transportation Research Board of the National Academies. Their research also projected that the gap will increase to $134 billion in 2017 under current trends.