Sunday, January 3, 2010

Changing Federal Gasoline Tax Structure

When gasoline prices go up, as they did in 2008, people use less gasoline. That year, Americans drove 100 billion fewer miles than the year before. So in a world of peak oil and rising gasoline prices, fewer miles will be driven. That also means fewer emissions, fewer crashes, and crumbling roads. Huh?

Gasoline taxes are the main source of funding for road and highway systems. When less gasoline gets used, less tax money gets collected. Much less. In 2008 it was about $800 million less. Ouch. Making matters worse, the cost of asphalt and other construction costs go up with higher oil prices. Our nation’s roads and highways are already in need of repair and replacement because of their general age. One out of four bridges in the U.S. is “structurally deficient” or “functionally obsolete”. One out of seven miles of pavement is rated “not acceptable”. How will we pay for the fixes when gasoline tax funding decreases?

One solution is to change the structure of the gasoline tax from a fixed amount to a percentage. The Federal government currently charges the same 18.4 cents per gallon whether the price of that gallon is $2.25 or $4.50. If the gasoline tax were changed to 10% per gallon, the government would receive 22.5 cents on $2.25 gas and 45 cents on $4.50 gas. The extra taxes will more than offset the revenue decrease when fewer miles are driven. This measure is politically difficult, but will become necessary as our surface transportation system funding problems deepen.

Another solution is to charge usage tolls for rush-hour travelers. In 2003, London implemented a usage toll system to charge vehicles entering its central business district. License plates were photographed and the drivers charged up to $14 to enter. Since then London has seen a 30% decrease in congestion, 25% increase in average vehicle speed, and a more efficient bus system with 37% more riders and 24% less wait time. Air pollution was reduced, as well. Carbon dioxide emissions decreased 20%, smog-inducing nitrogen oxides decreased 18% and unhealthy particulate matter dropped 22%. To top it all off, the system pulls in a net profit of $200 million annually. Similar systems have been implemented in other European cities with success. It is only a matter of time before major American cities implement similar solutions to deal with crowded, crumbling roads.

~Mark Bremer, Green Explored Contributor


  1. I like this blog. I think your blog is better than the ones I post so please write more often. Happy new year The Green Machine

  2. Thanks for the forum, Lindsay. Will do.