Federal gas tax: Is it at a historic high--or low?

Gas taxes--are they going up, down, or staying the same?

That is one of the main of the issues complicating the discussions in Congress about renewal of the federal transportation bill.

Our gas taxes are no longer funding the Highway Trust Fund.  But why--when gas taxes are going up, up, up?

Here is the answer in three simple graphs.

Let us know what you think about the gas tax by taking our online survey.

History of U.S. Gas Tax Rates

If you think that gas taxes in the U.S. are the highest they have ever been, you can take comfort in our first graph--because they sure are!  Gasoline taxes have gone steadily upwards since they were instituted in 1932:


(Click to view at full size.)

What this graph doesn't account for is that gas prices are set per gallon--and thanks to inflation, that 1 cent per gallon was worth a whole lot more in 1932 than it is today. In fact, 1 cent in 1932 equals 16.7 cents today--a very large difference!

So how what happens if we adjust for that inflation?

Gas Tax Rates Adjusted for Inflation

Whoa--suddenly things look a lot different!

Instead of a continual series of increases--higher and higher and higher--the real cost of the gas tax per gallon seems to go up and down around a central average that has stayed close to the same over the past eighty years.

In 2012 dollars, the average gas tax over the past 80 years has been just a hair over 20 cents a gallon. Our current federal gas tax, 18.4 cents per gallon, is actually a little below the average.

Since inflation is about 2-3% each year, this amounts to an automatic 2-3% annual cut in our gas taxes.  You can see that clearly in the graph above.

The longest downslope is from the early 1960s through 1982.  It ended when President Reagan signed a 5-cent-per-gallon tax increase into place in January 1983.

Gas Tax Rates Adjusted for Inflation AND Mileage

There is another important factor that affects the cost of gas taxes to the consumer--the mileage your vehicle gets.

In 1932, the average car on the road was averaging somewhere below 9 MPG. Today, that average is very close to 20 MPG.

Taking that into consideration, we get a graph that shows the cost of the gas tax per mile driven:

This graph almost looks like the opposite of our first graph.  Instead of showing an ever-increasing gas tax (nominal dollars per gallon) or one that fluctuates around an average value (inflation adjusted dollars per gallon), what we have now looks like the cost of gas taxes is decreasing over time.

Well, that's because the gas mileage of our vehicles has increased to such a degree that in fact we are paying less gas tax per mile than we have for most of the past 80 years.

The average cost per mile driven is well below average and in fact is very near its historical low point.  That historical low point was 0.7 cents per mile in 1981, just a little lower than the 0.9 cents per mile we pay today.

The average the federal gas tax has been just a hair above 1.5 cents per mile (grey line on the graph).  We have been below that average since the mid 1970s and are currently well below it.

What do you think?

So what do you think?  Gas taxes too high, too low, or just right?  Increasing, decreasing, or staying the same?

Would you support an increase in the gas tax, say back to the level it was in the mid 1990s?  Or halfway there?

Would you support pegging the gas tax to inflation--no increase in the tax, but at least it would eliminate the automatic annual tax cuts that have created the crisis in the Highway Trust Fund?

Would you support bringing in tax revenue from other sources to support transportation?

Or do you oppose any increase or change to the federal gas taxes at all?

These are the kinds of questions our members of Congress and the public will be dealing with over the next year and the next decade as Congress works to find funding for transportation in America.

You can let us know what you think about the gas tax by taking our online survey.

How this affects Biking and Walking

Our position is that whatever the source of funding for transportation, and whatever the overall costs and overall priorities, bicycling and walking need to receive their fair share of transportation funding at the federal, state, and local levels.

When bicycling and walking is left out of the transportation funding mix--as happened in federal transportation funding from 1932 through 1991--the results are disastrous.

Nationally, bicycling and walking are 12 percent of trips, 14% of fatalities, but only 1.6% of federal funding.

That is not a fair or equitable way to spend the transportation tax money that we all pay.

What's more, when budget times are tight, bicycling and walking is by far the most cost effective way to spend scarce transportation dollars.  That is where we can get by far the most bang for the buck.

But the flip side is that when dollars are tight, some politicians see that as an opportunity to cut bicycle, pedestrian, and transit funding as "unnecessary."  In fact, the U.S. investment in its infrastructure has been declining steadiliy over time.

Are we spending enough to build and maintain the 21st Century transportation system that we need?


In fact, the tight budget story--"budgets are tight--let's cut bicycling, walking, and transit because they are not necessary"--has been the story of the transportation bill in the U.S. House this year.

The good news is, this kind of extreme, reactionary approach to transportation has not been able to find enough votes to pass even one chamber of Congress.  That is because bicycling and walking is not a partisan issue:  Many leaders in both parties realize the importance of making our communities safe and accessible for bicycling and walking.  That is what makes communities and neighborhoods vibrant, attractive, healthy, and livable.

People who bicycle and walk pay their fair share of our national transportation costs--partly because nearly everyone who bicycles and walks pays gas tax as well, and regardless, fuel taxes and other user fees pay only a portion--an ever-shrinking portion--of the total cost of our transportation system.

In fact, since 2006 when the percentage of the Highway Trust Fund funded by fuel taxes started nosediving, people who bicycle and walk have paid not just their fair share, but far more than their fair share of federal transportation costs.

(Since 2007 the "User" share has dropped even lower as fuel tax revenues continue to decline.) 

The questions for now are:

  • How can we fund the transportation system that all Americans want?  
  • How can we ensure that our transportation system meets the needs of, and is safe for, everyone who uses it, including those vast majority of Americans who bicycle and walk as part of their daily transportation?