Supply Chain News / Risk & Compliance / Ground
Green Matters

Fuel Economy Standards will Cost Highways Billions

September 5, 2012

The American Road and Transportation Builders Association (ARTBA) said Thursday that higher gas mileage requirements for cars enacted this week by the Obama administration will make less fuel tax money available to pay for construction projects.

The Washington, D.C.-based ARBTA said the administration's proposal to require cars to get 54.5 miles per gallon in 2025 will cost the highway trust fund, which traditionally pays for a large portion of road and transit projects, $71 billion. The new emission rules were finalized by the departments of transportation and environmental protection earlier this week.

The EPA and the National Highway Traffic Safety Administration brought the first-ever fuel economy standards for heavy trucks in 2011, calling for a 20 percent improvement during model years 2014-2018. The agency is reportedly working on another round of standards for heavy vehicles manufactured beyond 2018.

Truckers are concerned that the boost in fuel economy will also boost the cost of equipment. The shortfall for the Highway Trust Fund would be a double whammy as lawmakers look to replace the funding that is lost from fuel taxes.

The federal gas tax, which has been 18.4 cents per gallon since the early 1990s, currently generates about $35 billion per year. The recently approved $105 billion highway bill spent more than $50 billion annually, which transportation advocates argue is barely enough to maintain the existing road and transit systems.

The Obama administration has argued that the stricter mileage rules will save drivers about $1.7 trillion in fuel costs and reduce oil consumption by 12 billion barrels through 2025.

Lawmakers already used a package of tax loopholes and fee increases to provide the cover than $10 billion shortfall in gas tax revenue in the current transportation bill, which is set to expire in 2014.

Advocates and observers say Congress will likely have to consider other revenue sources for transportation funding, with or without higher mileage standards.

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