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Gas Taxes Increase as Driving Decreases

As the fuel-efficient vehicle industry grows, the need to fill up on gas decreases. If fewer drivers are visiting the pumps, gas taxes aren’t getting paid. Without gas taxes, states aren’t able to use the money to fix the roads and improve public transportation.

The biggest issue is although vehicles aren’t using as much gas, they still cause the same amount of road damage. Fuel efficiency doesn’t magically make a vehicle less “destructive” as it cruises along the highway. How do states recoup the money lost due to fewer gas purchases? It’s fairly simple, although unpopular. They increase gas taxes.

States Increase Gas Taxes

Thirteen U.S. states have increased their gas taxes as of July 1, 2019. This increase appears to be the current “solution” to supplement the loss in gas tax revenue caused by fewer people driving. The money has to come from somewhere, so the simplest—although certainly not the most ideal—solution, is to require more money from gas purchases.

The state of Illinois invoked the largest increase by raising its gas tax by $0.19 per gallon—a 52% increase. Ohio came in second increasing its gas tax by approximately $0.10 per gallon. Those in California are truly suffering as the state increased it’s already high gas tax by 10% making it the highest rate in the nation.

Although Illinois, Ohio, and California saw the highest increase in gas taxes, not all states will feel or even notice the impact of the increase. For example, Michigan only raised its taxes by $0.01 per gallon.

What This Means For Drivers

Tom Kloza, who is in charge of energy analysis with the Oil Price Information Service says, “I don’t ever recall these many states raising gas taxes on the same day.” He continues, “Most drivers are paying less for gas than they were a year ago at this time. We’re going to see that start to change pretty quickly.”

It will be interesting to see if driving habits change during the summer months when gas prices are already at their peak. With vacations set and trips planned out, gas is in high demand during the summer.

The state gas tax increase is imposed upon the product, not necessarily the customer. So what does this mean? Well, more than likely, the gas station owners will pass along the increase to the customer. It is doubtful that the owners will eat any of the cost especially since drivers absolutely need their gas.

The Future of Fuel-Efficiency

If states are bent on continuing to increase gas taxes, will fuel-efficient vehicles actually save customers money? Drivers may save money by filling up less, but it won’t mean much when they have to spend more than usual when they actually do visit the pump. It’s a cycle that may not break until biofuels take over.

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