Soaring gasoline prices are the result of price increases for crude oil, not federal and state gas taxes, which must be raised to help pay for transportation infrastructure improvements, the Institute of Taxation and Economic Policy said in a recently released paper.
“Enacting increases in federal and state gas taxes — whose purchasing power has been decimated by construction cost growth and the switch to more fuel-efficient cars — would bring with it significant benefits in the form of funding for a safe and more efficient transportation system,” said the nonprofit, nonpartisan research group whose board consists of academics and analysts. “At a time when American drivers waste over five billion hours and nearly three billion gallons of burnt fuel stuck in traffic each year, the need for such investments could not be more clear.”
“While the stubbornly high price of gas has made it politically difficult for lawmakers to propose raising the gas tax, voters should be aware that the gas tax is not to blame for those high prices,” the group said. “Continuing to delay raising the gas tax because of crude oil price growth will bring with it enormous costs for American infrastructure and the hundreds of millions of people that use it every day.”
Six out of ten Americans think the federal gas tax goes up every year, the Institute said. In fact, the 18.4 cent rate hasn’t changed in almost 20 years and roughly half the states have not changed their gas tax rates in a decade or more.
“Higher gas taxes are almost entirely attributable to the rise in the price of crude oil — the main ingredient that goes into making gasoline,” the group wrote in the paper.
The spikes in crude, and therefore gas, prices are due to growing worldwide demand for oil, industry mergers, supply decisions made by OPEC, the Organization of Petroleum Exporting Countries, as well as refiners’ decisions to keep more gas in inventory and a growing reliance on imported gasoline, the group said.
The increase in crude oil prices has tacked on an additional $1.73 onto the price of each gallon of gasoline, rising from a cost of 61 cents per gallon of gas to $2.34 per gallon over the past 13 years, according to the Institute.
Meanwhile, the average combined state and local gas tax has increased by less than five cents per gallon over the same period of time, while the federal gas tax has remained unchanged.
At the turn of the century, about one-third of the amount drivers paid for gasoline when toward funding transportation infrastructure through federal and state tax collections, the group said. Today that share has plummeted to just 14%.