The American Road & Transportation Builders Association argues in a recent report that a proposed 15 cent federal gas tax increase would not necessarily mean higher prices at the pump.
The report, called Pump Shock: Study Finds Surprising Market Impact of Gas Tax Increase, was conducted by Alison Black, chief economist for the American Road & Transportation Builders Association (ARTBA) in Washington, D.C.
“A (15-cent) gas tax increase would cost drivers about $90 a year,” Black said. “People are paying one way or another; they pay for it in traffic congestion and extra time on the road instead of spending time with their families.”
Black said states are borrowing for road projects and Congress is adding to the deficit by repeatedly patching the Highway Trust Fund, which is due to expire July 31. Congress has increased national debt by $50 billion in transfers from the general fund to the Highway Trust fund since 1993.
Black said it is better to raise the federal gas tax compared to states raising their gas taxes.
“The federal monies go to each state, at the state level not all of the monies will necessarily go to roads, it also goes to departments of transportations’ overhead.”
The study looked at gas tax retail impacts in Massachusetts, Maryland, Pennsylvania, Vermont and Wyoming.
Wyoming increased its gas tax by 10 cents per gallon in 2013. According to Wyoming Department of Transportation officials, the price at the pump only increased 5 cents per gallon.
Black said there is not a penny-for-penny translation between the tax and retail price of gas due to several factors. “The price of crude oil, refining costs, profit margins, retail and distribution costs and taxes drive most of the variability in pump prices,” Black said.
The federal highway program represents about 50 percent of projects done in the nation, Black said.
“We’re facing a situation where we don’t have enough money coming in. We need to put the program on a path of modest growth to help our economy grow.”
Black said when the federal gas tax was last adjusted, data show the U.S. average retail price for all grades of gasoline was $1.045 per gallon the week before the 4.3 cents per gallon increase went into effect. The retail price of gasoline increased to $1.047 the week of the adjustment. Although retail prices did go up in the next three weeks, they decreased to $1.036 cents per gallon by the first week of December.