Penny wise, pound foolish shoppers
Weekend IRS reading

Reduced driving leads to crummy roads

Fewer cars on the road apparently isn't necessarily a good thing. In fact, reduced driving is likely to mean our roads and bridges will deteriorate more quickly.

Isn't that a bit counterintuitive?  I mean, the fewer cars on the road, the less pounding the asphalt takes, right? And that means it's a smoother ride for those fewer vehicles hitting the highways.

Highway1 (2) But that's not how it works in the real, and tax, worlds.

High fuel costs lead to less driving. That means fewer fill-ups. Which means fewer fuel excise tax dollars collected. And that means a smaller balance in the federal Highway Trust Fund, which pays for major road and bridge repairs.

Highway Trust Fund revenue fell $3 billion in fiscal year 2008 as Americans drove almost 11 billion fewer miles, according to the U.S. Transportation Department

Transportation Secretary Mary E. Peters noted that we drove 4.4 percent less, or 10.7 billion fewer vehicle miles traveled, in September 2008 than September 2007. It was the 11th consecutive month of declining driving.

And while the road repair account took a $3 billion hit, DoT officials say federal transportation spending increased by $2 billion.

It doesn't take a math whiz to see exactly what road that calculation will take us down.

Gas taxes across the USA: The The American Petroleum Institute (API), the national trade association for the U.S. oil and natural gas industry, regularly tracks gasoline and diesel fuel tax rates. API's October data shows that the national gas tax average, a combination of federal and state levies, is 48.4 cents per gallon.

The map below gives a good indication of where gasoline taxes are higher. Red states have combined federal and state gas taxes greater than, and in some places much greater than, 48.4 cents per gallon. Yellow state taxes are between 40 and 48.04 cents per gallon. Blue states charge less than 40 cents per gallon.


You can click on the map for a larger version (or here if you're reading via feed; to see a map of diesel taxes, click here).

More details on state fuel tax rates can be found in API's chart (PDF version), which reflects a weighted average for each state. This means that any taxes which can vary across a state's jurisdiction are averaged according to the population of the local areas subject to each particular tax rate.

Lower gas prices, more tax revenue? There is hope, however, that the Highway Trust Fund might get a bit of a boost.

Crude-oil prices have fallen below $50 a barrel, and the average cost of a gallon of gasoline is just over $2. The last time motorists paid less than $2 for a gallon of gas was March 2005, when a gallon of regular cost an average $1.99.

As the prices at the pump increased, we changed our driving behavior. Mass transit and car pooling gained converts. When we had to driver, we hit the road in smaller, more fuel-efficient autos.

Will we keep it up when gas is more affordable? Maybe. Maybe not. If we do, that's better for the country and environment in the long run. If not, then at least the increased fuel purchases will add to the highway repair account.

Regardless of what you drive and the price of gas, it never hurts to squeeze the most miles you can out of your auto, especially in this economy. These 10 tips to help you get better mileage.


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oilfield equipment

the roads in my neighborhood are getting worse every day. this is sad to see.

Wally World

Thanks for bringing to our attention that less driving has resulted in less tax revenue. I figured it would have gone down , but UI had no idea it would have been by that much. I am really proud of the american people looking to more fuel efficient ways to get around. I am also dismayed that the higher price of fuel is slowly taking away the freedoms we always felt when out on the road taking that american cross country road trip or vacation.

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