With Budget Shortfalls, Gas Tax Discussion Re-emerges
The biggest single factor determining the success of advanced fuel-efficient cars is the cost of gasoline. Gas prices go up, and hybrids sales pick up. Gas prices go down, and sales of hybrids and small cars slow down. But despite the correlation—and the call for higher gas taxes from pundits and auto industry leaders like Bill Ford, GM’s Bob Lutz, and Auto Nation’s Mike Jackson—politicians are usually afraid to utter the words “gas” and “tax” in the same sentence.
Yet, tight government budgets for maintaining roads and highways—rather than concerns about the environment, efficiency or oil use—are forcing the issue back on the table.
Sen. Dick Durbin (Dem-IL) is pushing for a new transportation bill to pass by early next year. Speaking earlier this week at a gathering of Midwestern business and political leaders, Durbin wondered how the federal government is going to pay for improving the country’s crumbling highway infrastructure. “We have to pay for it, and paying for it may mean an increase in the federal gas tax,” he said. “Nobody wants to say those words. I’ve said them to you because unless we’re honest about this, we’re not going to see an (adequate) federal highway bill.”
On Monday, New Jersey Governor Jon Corzine said he’ll consider raising his state’s gasoline tax during a second term. Corzine is up for re-election in November and is trying to juggle infrastructure needs with the state’s budget shortfall of approximately $8 billion. Corzine’s other alternative is to diverting money from other programs to pay for transportation projects, such as a $8.7 billion commuter rail tunnel to New York City.
“I’m more than happy to do either one of them, not because I like doing it, but because it’s going to be necessary,” Corzine said during a meeting with The Record’s editorial board. As expected, the governor’s political opponents quickly pointed out that he was pushing for a 14.5-cent-per-gallon gas tax hike last year, but only as “a very, very last resort.” New Jersey’s gas tax rate is the fourth lowest in the nation.
Higher gas taxes will meet opposition at any time, but it will be even more difficult to discuss the issue if gas prices rise back to last year’s record high levels. The window of opportunity might be closing. Last week, the nationwide average price for gasoline rose for the first time in nine weeks. And that was before oil pushed above $75 a barrel this week—its highest point this year—as a plunge in the dollar convinced many investors to pump money into crude.
The national average for regular gasoline is now about $2.50 a gallon—almost 70 cents lower than a year ago. Many analysts believe oil will continue to rise this year. Goldman Sachs expects prices to rise to $85 a barrel by the end of the year.