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Supply Chain Graphic of the Week: Effective Federal Highway Tax Revenues Continue to Fall

Despite Continued Rise in Vehicle Miles Travelled, Federal Fuel Tax Revenues are Down Since 2003

 

Jan. 4, 2019

 

 

There is general consensus that US logistics infrastructure overall and the US highway system specifically are badly in need of additional investment just to maintain current performane, let alone expand capacity and reduce ever worsening congestion.

 

That was certainly among the findings in a new research report on the subject from the National Academy of Sciences, which was charged by Congress with doing that analysis.

 

The new report from the NAS has a number of great charts, including the one below, which shows revenues from federal gas taxes coming into the system in contant 2003 dollars, meaning taking out the effects of inflation.

 

Federal US Fuel Tax Revenues in 2003 Dollars

 

 

Source: Renewing the National Commitment to the Interstate Highway
System from the National Academy of Sciences

 

As can be seen, despite significant growth in vehicle miles travelled since 2003, which drives both congestion and the need for highway maintenance,  fuel tax revenues have actually declined since 2003, down about $10 billion when measured in constant dollars.

 

What's going on? Well of course federal taxes on gasoline and diesel fuel have not risen since the early 1990s. while cars and trucks continue to achieve much better mileage rates, which of course means they use less purchased fuel per mile driven.

 

The report also says current spending on federal highways is about $21 billion – and virtually all of that on maintaining the current system, not adding capacity. Even at the low end of the report's projections for growth in VMT, it estimates about $46 billion in annual spending is required, more than double current levels.

 

At the top end of the scenarios, a whopping $69 billion will be needed, with a great increase in spending to add lane miles just to keep current congestion levels the same.


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