How Likely Is A Federal Gas Tax Increase?

January 9, 2015

Gas prices have dropped rapidly in the past several months as the price of crude oil went down by 40%. For the first time since 2009, gas prices are below $2 in some areas, and prices around the country have plummeted overall. Consumers have been rejoicing over the cheaper gas, but what other effects will these low prices have?

Considering how cheap gas has gotten, and the country’s critical need for transportation funding, the idea of increasing federal gas taxes has been tossed around with a bit more intent lately. Federal gas taxes have not been raised since the early 90s, and any initiative to raise them have been a complete bust in Congress. GOP Senator Jim Thune isn’t ruling it out for this year as a means for funding the Highway Trust Fund when it runs out and Rep Nancy Pelosi is calling for it since gas prices are low. At the same time, a federal gas tax increase hasn’t happened for over a decade, and would be somewhat surprising.

The price of gas in the US was low relative to the rest of the world even before the price decrease, and one of the reasons is because Americans aren’t paying the full costs of driving. Current gas taxes don’t even cover the cost of maintaining the roads and bridges people drive on. Not only that, driving comes with many negative externalities, such as health risks, traffic congestion, and injuries/death due to accidents. Accounting for these, the current cost of driving is nowhere near its true cost.

Some, including Professor David Levinson argue that we don’t need to increase the gas tax to pay for infrastructure as we don’t use the money we have very wisely.

While an increase in gas taxes seems unlikely, it’s nice to consider the hoped for effects it would have–decreased congestion, fewer traffic fatalities, and maybe a small reprieve to the disaster that is federal transportation funding.  We aren’t holding our breath.

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