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New fuel standards could lead to higher gas prices

The White House and major U.S. carmakers have a deal in place to raise fuel efficiency to 54.5 miles per gallon by 2025. But a new report from the Congressional Budget Office says that change could mean more potholes and maybe higher gas prices.

Kai Ryssdal: You gotta figure that at some point -- maybe soon -- all those gas-guzzling SUVs out on the roads are gonna disappear. Victims of gas at $5 bucks a gallon, or maybe much more.

The cars of the future are much more likely to be fuel sippers. The White House and U.S. car makers have a deal in place to raise fuel efficiency standards to 54.5 miles per gallon by 2025. But a new report from the Congressional Budget Office today says that change could mean more potholes, or maybe higher gas prices.

Marketplace's Adriene Hill explains.


Adriene Hill: Every time you fill up your car -- one gallon, two gallons -- the price ticks up, up, up, impossibly up, you’re also filling up the Federal Highway Trust Fund. The feds collect a tax on each gallon of gas you buy. And so, if your super-cool ride of the future needs less gas...

David Gerard: If you drive the same amount and you’re getting better fuel economy then you’ll use less gas and pay less tax.

David Gerard is an economics professor at Lawrence University.

A new report from the Congressional Budget Office estimates that by 2040, we’ll collectively pay about 20 percent less in federal gas tax. Which is a problem if you’re the feds, because they use that money to fix highways, build mass transit. The feds could raise gas tax prices to make up for the shortfall.

Gerard: But raising gas taxes is not particularly popular politically.

And more taxes would cut into the savings promised by those hyper-fuel-efficient future cars.

Conundrums, conundrums. Is it time to scrap the new miles per gallon standards and resurrect the old Ford Bronco in the garage? Absolutely not, says Deron Lovaas from the Natural Resources Defense Council.

Deron Lovaas: For the past century, the most tried and true revenue tool for transporation at the state and federal level has been gas taxes and that promotes a perverse incentive to use more gasoline.

Lovaas says it's time for a new way to fund transit. One idea: paying by number of miles you drive, instead of how much gas it took you to drive them.

I’m Adriene Hill for Marketplace.

About the author

Adriene Hill is a senior multimedia reporter for the Marketplace sustainability desk, with a focus on consumer issues and the individual relationship to sustainability and the environment.
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Gas tax creates an incentive to use more gasoline?!?!? What?!?!? Not on this planet. The more you tax an activity, the less of it you'll get. You tax gas consumption, people will conserve.

And the so called conundrum of higer efficiency cars is solved by the fact that they cause less wear and tear on the roads so you NEED less money. It's only a problem if you're some bloated transportation related beurocracy that is banking on ever increasing tax dollar doing into your pockets.

The real answer here is to make the gas tax a PERCENTAGE of the fuel price instead of a fixed fee per gallon. This way, as the cost of gas moves up to follow inflation, the revenue raised in real terms will stay constant. The real villian causing highway underfunding is the Fed and the inflation it creates since we're still colling the same number of cents per gallon as we did back when that amount of money still sufficient worth.

I agree with Kevin. My fuel efficient Cooper weighs 2,500 lbs sitting at the curb. A Ford Bronco weighs 4,600, a Hummer weighs 6,600, while a typical sedan comes in at about 4,000. Lighter cars cause less wear and tear.

I agree this is a problematic piece. First, the tiny level of the current gas tax undercuts the thrust of the headline and discussion, as described by Matthew Pazizal in his comment.

Second, cars that get 54.5 mpg (or 49.6 mpg as figured in the CBO report) are likely to be lighter than current vehicles. That can have a large effect on highway wear and tear, because road damage goes by the fourth power of the axle loading. So those cars may cause the same or even less road wear per amount of gas tax paid.

Third, the concept of paying by miles is atrocious as it is currently being promoted, in Oregon and elsewhere. The road wear caused high-mileage (and electric) cars is actually negligible compared to the road wear caused by heavy trucks. The current system already includes a huge subsidy of heavy truck freight, at the expense of car drivers. Calculations shown here:
http://marketplace.designcommunity.com/viewtopic.php?f=17&t=36392

Finally, the revenue projection in CBO report appears to be based on assumptions of a more-or-less unchanging general approach to transportation over the next 30 years. Given the changes needed to address our enormous greenhouse gas pollution in the U.S., that kind of baseline assumption looks pretty ludicrous.

Marketplace might do better for us listeners with a solid critique of the CBO report, or with an exposé of the lopsidedness of the gas tax system as it stands already, than with a fluffy spinout from its head-in-the-sand conclusions.

Particularly in the "Sustainability" department.

This was a horrible segment. It's about the national gas tax, but neglected to report how much that gas tax is. The tax happens to be only 18.4 cents a gallon on gasoline. The fed could easily compensate for their 20% revenue loss in 2040 by raising the gasoline tax by a measly 3.7 cents. I am sure that 3.7 cents will not be a very significant gasoline increase for the drivers of 2040. The fact is that this segment was a waste of time because it provided nothing of value, proof being that it omitted the most critical piece of data it could have informed listeners: that the gas tax is 18.4 cents, because that very fact would make the arguments within the segment meaningless. I expect much more from public media.

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