As the country moves toward more fuel-efficient cars and vehicles powered by alternative fuels, the trend eventually could require changes in the country's tax policies, industry observers say.
The Obama Administration last summer unveiled strict Corporate Average Fuel Economy, or CAFE standards, which would require each auto manufacturer's fleet of new vehicles to average 54.5 miles per gallon in 2025, up from 28.6 miles per gallon in 2011.
At the same time, industry and public policy leaders are pushing the development of natural gas and electric vehicles.
Most of the efforts are led by a desire to reduce dependence on foreign oil or to cut greenhouse emissions. A side effect is that the effort could lead to reduced gasoline tax collections, which are mostly assessed per gallon and are used primarily to fund road and bridge projects throughout the country.
“The question not being asked is: How are they going to pay to be on the road?” said Bobby Stem, executive director of the Association of Oklahoma General Contractors, a lobbying group for companies that build roads and bridges.
Gov. Mary Fallin has led an effort that now includes 22 states to encourage automakers to develop more natural gas vehicles.
Oklahoma Energy Secretary Mike Ming said the question of road taxes will need to be addressed at some point, but that it's not much of an issue today.
“The reality is that it is going to take some time just to get enough vehicles built to make a difference,” Ming said. “When that happens, I think public policymakers will say, ‘We addressed imports and national security and balance of trade. Now we need to address how we fund roads and bridges.'”
About 93 percent of the country's vehicles run on traditional gasoline and diesel. Transportation fuels represent 71 percent of the country's total oil usage.
Compressed natural gas carries the same 18.4 cents per gallon equivalent federal sales tax as gasoline.
In Oklahoma, an additional 17 cents per gallon state tax is assessed per gallon of gasoline, while the state tax on CNG is 5 cents a gallon.
Road and bridge construction in Oklahoma is funded through both the state gasoline tax and a share of the state's general revenue.
Policymakers throughout the country are beginning to look at how to update gasoline taxes.
Virginia lawmakers earlier this year moved to replace the 17.5 cents per gallon state gasoline tax with a sales tax tied to a percentage of the total price. By setting the tax as a percentage of sales rather than a flat fee, it is expected to adjust with inflation.
Another option is to replace the per-gallon tax with a use tax that charges users based on miles driven. Such a change would require new technology.
“With today's gasoline tax, we pay on the front end. With this system, you don't want to pay up front because you don't know how many miles you will drive that day,” Stem said.
While there are many options, Stem said it is likely that tax policy eventually will be changed to require alternative-fuel and fuel-efficient vehicles to pay more in taxes than they do today.
“If you want an electric car, buy it because it's better for the environment or for reduced use of foreign oil,” he said. “If you are doing it because of a cost-benefit analysis for your family, you will probably have a rude awakening in a couple of years.”
CNG advocates, however, say taxes represent only a few cents per gallon equivalent and that the real cost savings with CNG over gasoline is that the cost to recover, transport and process the fuel is much lower.
“The economics of natural gas has almost nothing to do with road use or taxes,” said Rich Kolodziej, president of advocacy group NGVAmerica. “It has everything to do with saving $1 or $2 a gallon.”
A use fee would not affect the demand for natural gas vehicles as long as it applied the same to both gasoline and natural gas, he said.