The federal gas tax has been level, at 18.4 cents per gallon, since 1993, and lawmakers trying to reach agreement on a deficit reduction package by the end of the year are reportedly talking about raising it. While such a hike is long overdue, for political reasons it would be surprising if an increase of any substance got approved. Too bad.
Aside from raising badly needed revenue, a significant gas tax hike would steer motorists’ driving habits in the right direction. Every time there’s a spike in gas prices, they react — buying smaller, more efficient cars and fewer gas-guzzling pickup trucks and SUVs. Then, as soon as gas prices start to slide, they revert to their old habits. (For example, this September, SUV and pickup sales rose 13 percent from a year ago.)
Americans have been driving less since the recession started a few years ago, and the Obama administration has imposed tough new fuel economy standards, rising to 54.5 miles per gallon by 2025. The so-called CAFE standards will eventually resolve the issue for us, but they don’t even start being phased in until 2017. So there would be plenty to be gained by reducing fuel consumption now, and a higher gas tax would surely help.
Among the benefits of reduced fuel consumption: cleaner air and water (leading to fewer health problems and lower associated costs); reduced environmental damage from oil exploration; less traffic congestion; reduced dependence on foreign oil (we’re doing better in this area, but imports still account for roughly 42 percent of total consumption). Using less also helps keep a lid on prices, which move higher as demand increases without an accompanying increase in supply.
Higher gas taxes would also generate money for highway and transit projects, which, among other things, provide jobs. The government spends $52 billion on such projects per year, while the gas tax generates just $37 billion a year; so without an increase in the tax, the shortfall is adding to the deficit.
Perhaps that’s why the Simpson-Bowles deficit commission recommended a gas tax hike in 2010. But revenue enhancement is only one good reason to go this route.