Bloomberg News

Mileage Rules May Cut Gasoline Tax Income by $57 Billion

May 02, 2012

A proposed rule requiring automakers to double average fuel economy by 2025 may reduce gasoline-tax collections for U.S. highway and transit systems by $57 billion over 11 years, the Congressional Budget Office said.

President Barack Obama’s administration proposed in November that the average fuel economy of U.S. fleets rise to 54.5 miles per gallon. That would reduce the amount of money available for the Highway Trust Fund by 13 percent from 2012 to 2022, the CBO said in a report released today.

“Policies that are designed to reduce gasoline consumption, including those that would impose stricter standards for the fuel economy of vehicles, could decrease revenues for the trust fund and thus could add to the shortfall,” the report said.

The CBO previously said the highway portion of the trust fund would run out of money during the fiscal year that starts in October. The full effect of the fuel-economy standards on the highway trust fund wouldn’t be felt until 2040, given the rate of vehicle turnover and because they would take effect gradually from 2016 to 2025, according to the report.

Lawmakers could deal with the shortfall by spending less on highways and mass transit, using more general-fund money from the U.S. Treasury for surface transportation, or raising the U.S. gasoline tax of 18.4 cents per gallon, the CBO concluded.

Complying with the rule, intended to reduce fuel use and vehicle emissions, would cost as much as $157 billion including a $2,000 boost to the average vehicle price while saving consumers as much as $515 billion in fuel costs, the Environmental Protection Agency and National Highway Traffic Safety Administration have said.

The fund, which pays for road, bridge and transit projects across the U.S., has been bailed out three times by Congress since 2008. The U.S. gasoline tax has stayed constant since 1993 with Obama and congressional leaders saying they are unwilling to raise it in a surface transportation bill lawmakers have debated this year.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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