Americans tend to regard cheap gasoline as a national birthright. So go ahead and hyperventilate for a moment before considering the alien idea that maybe it would be good to pay a bit more for gas.
Breathe in. Breathe out. Theeeere.
Now for the unhappy news: A new bipartisan bill in Congress would raise the federal gas tax by 12 cents per gallon, in two annual hikes of 6 cents each. The reason for this sure-to-be-unpopular plan is that the Highway Trust Fund, which pays for interstate highways and other important parts of the nation’s road network, is out of money. That leaves a choice between taking the needed funds from other programs (every one of which has powerful protectors in Washington) or foregoing road-building and maintenance.
The Highway Trust Fund is meant to be financed by the federal gas tax, which is now 18.4 cents per gallon (and 24.4 cents for diesel). The last time Congress raised the gas tax was in 1993, and inflation has since eroded its current value to about 11 cents, according to the Government Accounting Office. Congress has gotten in the habit of backfilling shortfalls in the trust fund from general tax revenues (which mostly come from personal income taxes), but that exposes highway construction and maintenance to all the dickering and delay voters find infuriating about Washington.
The new bill’s two sponsors — Republican Sen. Bob Corker of Tennessee and Democrat Sen. Chris Murphy of Connecticut — want to eliminate perennial shortfalls in the Highway Trust Fund by indexing the gas tax to inflation, so the tax would rise every year by the same proportion as overall prices. The odds of the bill passing before the November midterm elections seem low, but they might improve next year. Here’s why the higher tax would be good for drivers:
We have to pay for roads and bridges somehow. Most drivers recognize the value of good roads and structurally sound bridges — especially when potholes start to swallow their tires and detours around failing bridges take them far out of their way. An efficient road network is also an economic necessity, since truckers need to move goods around and commuters need to get to work. Shortchanging transportation so motorists can save a few bucks today will backfire, even on drivers who think they can’t afford the tax or shouldn’t have to pay.
Alternatives to a higher gas tax are worse. The gas tax isn’t perfect, but it does a pretty good job of imposing the cost of building and maintaining roads on the people who use those roads. Using income tax proceeds (or worse, borrowing) to pay for highways spreads the cost to people who don’t even use them, such as urban residents and non-drivers.
Besides, other schemes for financing roads have their own problems. One alternative to a higher gas tax, for instance, is more toll roads, which are also unpopular and penalize drivers who have no choice but to use such roads. Another idea: Congestion fees, which would apply to drivers who use roads during peak driving times — and seem unfair to people who have no other way to get to work except driving during rush hour. Public-private funding arrangements might make sense, except Congress seems to have no interest in taking up such legislation. And one high-tech solution is to attach tracking gizmos to every car in America, to measure “vehicle miles traveled,” or VMTs, and assess fees based on actual road use — since nobody in America minds if the government follows their every move.
You might not even notice. Americans have been driving less, on average, and burning less gas, for a variety of reasons: Fuel economy has improved considerably and will continue to do so, on account of aggressive new government MPG targets. The exodus of people from cities to suburbs and exurbs has reversed, with more people living closer to where they work. And financial pressure has simply forced some people to plan driving trips more efficiently and find other ways to save on gas.
Gas prices overall have generally been rising, because oil prices have been rising and a limited supply of refineries in the United States tends to keep gasoline supplies tight. Even so, a 12-cent gas tax hike could easily be offset by better fuel economy. Since 2010, for instance, average fuel economy has risen from 22.1 MPG to 25.6 MPG. For an average driver logging 12,000 miles per year and paying $3.50 for gas, the savings from fuel economy alone during that time are $260 per year. If a 12-cent gas tax suddenly kicked in, the savings would still be $204. And if that new tax revenue helped repair roads, it might mean fewer potholes, fewer car repairs and a smoother trip to work, too.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.