The downward trend in driving miles continued into July of this year for the ninth straight month. In what is usually one of the heaviest driving months of the year as families head out on summer road trips, $4 gasoline and the general economic malaise pushed miles down by 3.6 percent, a smaller drop than the five percent reduction in June. This is consistent with the gasoline consumption figures that were also released by the state of California for June and the second quarter of the year. Gasoline consumption was down 7.5 percent for June and 4.8 percent over the three month period. That amounts to a reduction of 191 million gallons for the period. While all of this is good from the perspective of both emissions and energy use, it does pose another problem that needs to be addressed. Funding of road infrastructure comes largely from fuel taxes and reduced mileage and fuel use means less money. New methods of funding must be found because as we move into the era of electrified vehicles, this phenomenon will accelerate. Transportation secretary Mary Peters has proposed a shift away from fuel taxes to tolls, but it's not clear if this is the best approach. What do you think?

[Sources: Reuters, BussinessWire]

As you may have noticed when filling your tank, the plan for a gas tax holiday put forward by presidential candidates from both party brands, never came to fruition. The idea had been suspend an 18¢ per gallon federal tax on fuel from Memorial Day to Labor Day. Of course the fact that this would have saved average drivers a whopping $28 had little if anything to do with the lack of movement on bills from both Democratic Sen. Hillary Clinton and Republican Sen. John McCain. It turns out the real coup de grâce may have come from the road construction industry. The excise tax money which would have meant little to individual drivers, comes out to an aggregate $9 billion. That's money that is supposed to go toward building and maintaining roads around the country. Without that money, road construction projects would have to be put off. Canceled or delay construction projects would mean laid off construction workers, a prospect that no politician hoping to get re-elected relishes in an election year.

Rather than a tax holiday, drivers are in fact likely to see an increase soon. While high fuel prices have the benefit of pushing people to drive less, and consume less fuel, that starves the highway trust fund as well. As a result the fund is likely to be in deficit this year to the tune of $3 billion. As a result a fuel tax increase may be needed.

Looking ahead, we may need to start taxing electric bills to get funds to build roads. Even though electric cars use no petroleum, they still put wear and tear on the roads and it's only far that the drivers who use those roads should pick up the tab. Alternatively increased use of toll roads may be necessary, something proposed by Transportation Secretary Mary Peters.

[Source: Detroit News]

American drivers getting angry when the gas pump automatically shuts off $50-75 into filling their cars might want to stop whining. In Norway, it can cost upwards of $130 to fill the !3.2 gallon tank of a MINI at $9.85/gallon. A new survey indicates that even at above $4/gallon, American prices are still among the cheapest in the world, in large part due to low taxation. Only 19 percent of the pump price of fuel in the US is attributable to taxes. Pretty much the only countries in the world with cheaper gas than the US are major exporters of oil that essentially give gas away. In the UK, more than 81 percent of the current 9$ price of a gallon of fuel goes to taxes.

At the $4.15 that gas runs where I am right now, even eliminating the tax entirely would still bring the price to only about $3.40. Americans who really want to save at the pump are now following the path of drivers elsewhere and just migrating to smaller, more efficient vehicles, driving less and changing their driving styles. Europeans, on the other hand now actually have a reason to complain about high fuel taxes. Truck drivers, fisherman and farmers are all feeling the pain and pushing for some relief. The taxes in Europe made sense from a public policy perspective in the past to encourage efficiency, but with the price of crude so high now, it may be time to back off.

[Source: Detroit News]

One of the most contentious issues in the discussion of how to wean ourselves off oil is fuel taxes. In spite of the campaign contributions that politicians get from car makers, when push come to shove on efficiency they get the short end of the stick. That's because in this country almost any politician that even hints at raising taxes on anything will get crucified by anti-tax lobbyists. So even though higher fuel prices (through taxes) will drive demand for more efficient vehicles, politicians find it more expedient to mandate higher efficiency from car makers regardless of what consumers might be demanding.

During the debate over CAFE standards most of the automaker representatives have repeatedly said the gas taxes should go up along with the efficiency mandates. If that happens they will have no problem selling more efficient vehicles. However, you rarely - if ever - heard that reported in the media, although we have written about it here numerous times. Now, Toyota is openly asking the question at the Open Road Blog. They want to know what people really think about gas taxes. What do you think?

[Source: Toyota]

AASHTO (American Association of State Highway and Transportation Officials) made a very sobering report to the federal commission on highways on May 9. They pretty bluntly stated that the use of the roads by trucking is outpacing the revenue being collected to maintain the roads. Like vehicles without fuel, vehicles without well maintained roads are just stationary tin boxes. All those lane miles of highway, those graceful overpasses and on and off ramps, cost a pretty penny to build and need constant care. However, many states have a fixed fuel tax rate in pennies per gallon so that the amount that goes to maintain the roads is fixed no matter what the price of the fuel is. This would be fixed by pegging the tax to the fuel price like a normal sales tax. They asked for a 3 cent increase under the current highway bill followed by a 7 cent increase under the new bill. Current federal fuel tax on diesel fuel is about 18 cents.

AASHTO, of course, is looking out for itself. Its members are the professionals that use the tax funds collected to maintain and expand the highway system but they do have a point here. Thousands of 80,000 lb trucks cover the heaviest traveled sections of the highway system every day. "Today, the average Interstate highway mile caries 10,500 trucks. . ." As someone who appreciates the goods that trucks deliver, and likes to use the Interstate highway for myself once in a while, I can only say I am willing to pay the extra tax as long as it is wisely used. I don't want to see a roadway in so-called "designer colors". Nor do I want to see free driver massages paid for by that tax. Hmm, wait a minute! That is not a bad idea. Improves alertness!

[Source: Transportation Topics]