REAL-WORLD consequences often overwhelm the utopian schemes of government planners. President Barack Obama's mileage-standard edict provides another example.
During the second presidential debate, Obama bragged that his administration had “doubled fuel efficiency standards on cars.” This means, he said, “that in the middle of the next decade, any car you buy, you're going to end up going twice as far on a gallon of gas.”
We've previously noted significant trade-offs in vehicle construction and safety may be required to meet the 54.5 miles-per-gallon average envisioned by Obama. But there are also other problems.
Should fuel mileage double, fuel tax revenue could be cut in half — and the federal government already struggles to pay the tab for transportation. The federal gas tax is 18.4 cents a gallon and generates $37 billion. But the government spends about $52 billion annually on transportation projects, creating a $15 billion budget hole usually covered by raiding the general revenue fund.
Now some transportation officials are urging that the fuel tax be increased as part of the “fiscal cliff” negotiations, noting the tax has lost a third of its buying power since it was last raised in 1993. A 1-cent increase in the federal gas tax would produce around $1.8 billion; a gasoline tax increase of about 9 cents per gallon might be required to close the current gap.
An Oklahoma Tax Commission report indicates roughly 1.8 billion gallons of gasoline were sold in Oklahoma in fiscal year 2012. An extra 9-cents-per-gallon federal tax would therefore increase Oklahomans' fuel costs by about $169.4 million annually.
But if Obama's fuel standards actually cut consumption by half, the fuel tax might need to be hiked by a far greater amount to cover federal road costs. Money saved by greater fuel efficiency could be lost in part to significantly higher fuel taxes. Furthermore, better fuel efficiency won't necessarily lower fuel consumption. Typically when efficiency increases, people tend to drive more. So consumption could still rise along with fuel taxes.
Obama's promotion of alternative energy also threatens basic transportation infrastructure. Bobby Stem, executive director of the Association of Oklahoma General Contractors, recently noted some alternative-fuel vehicles actually weigh more than gas-fueled cars, creating more wear and tear on roads — yet those drivers pay little or nothing in fuel tax to support road repair.
That's true at the federal and state level. In Oklahoma, gasoline and diesel fuels are taxed at 17 cents and 14 cents per gallon, respectively, but compressed natural gas for cars is taxed at just 5 cents per gallon of gas equivalent; there is no similar tax for electric cars. Those of us driving a gas-powered car are paying more to subsidize plug-in drivers who use the same roads.
We're not among those supporting a fuel tax increase. Too often, federal lawmakers have diverted money from roads and bridges to questionable “transportation” projects such as walking trails. But there's no doubt roads require money, and the fuel tax is the main funding source today.
Obama touts fuel standards and alternative energy as a panacea for consumers, but both have the potential to foster deteriorating roads. Ignoring that reality benefits no one. The president should be up front with the public and explain how he'd resolve that challenge.