February 5, 2021 | Vol. 71, No. 3
Dear PEI Member:
Policy makers aren’t talking much about this important question. But they should.
Motor fuel taxes fund most highway construction and maintenance. Oregon imposed the first such tax in 1919. Colorado, New Mexico and North Dakota followed later that year. By 1929, all states in the Union had some sort of gas tax. The federal motor fuel tax was added in 1932.
These taxes are based on the premise that people who use highways should pay for them. The more gas a driver requires, the greater the tax he or she pays. Incorporating the tax into retail fuel transactions makes collection easy.
However, motor fuel taxes have fallen short of highway expenditures in recent years. Since 2008, Congress has had to prop up the federal Highway Trust Fund with $140 billion from general tax revenue. The Congressional Budget Office forecasts another $134 billion of general revenue will be required during the next 10 years. Accelerating electric vehicle (EV) sales could widen the gap.
So, what to do?
Increasing the federal fuel tax (18.4 cents for gasoline and 24.4 cents for diesel) is one option. To meet today’s needs, a 12.6 cent boost would be required, with future annual increases indexed to inflation, according to an August 2020 Tax Foundation report.
In his recent confirmation hearing, Secretary of Transportation Pete Buttigieg seemed open to a fuel tax increase when he said “all options need to be on the table.”
Within hours, a Buttigieg spokesman qualified that statement by telling reporters that a “variety of options need to be on the table to ensure we can invest in our highways and create jobs, but increasing the gas tax is not among them.”
Congress has been equally reluctant to raise the fuel tax; the current motor fuel tax rates have remained unchanged since 1993.
“Transportation infrastructure investment around here has always been an area for bipartisan cooperation,” said Sen. John Thune, R-S.D. “The other thing that enjoys bipartisan popularity … is not paying for it.”
The most equitable solution would be to phase out the gas tax and phase in a vehicle miles traveled (VMT) tax for all vehicles—whether liquid-fueled, electric or using any other power source.
A VMT tax has four advantages.
by e-mail to the editor, Rick Long at firstname.lastname@example.org
The VMT challenges are just as real, including:
The transition. Shifting from one highway funding model to another would require a long lead time. Some analysts have suggested starting with a VMT focused on commercial vehicles and EVs — the easiest vehicles to track.
Tax collection. Collecting VMT taxes would be more complicated than today’s motor fuel taxes. Options include:
Privacy. Consumers are increasingly comfortable sharing personal information through mobile phones, tablets and other devices, but giving the government real-time location data could be a harder sell. Using third parties for this task might help. So would regulations restricting data use and requiring data deletion. A VMT pilot project in Oregon, for example, requires deletion of data within 30 days.
It won’t be easy. But now is the time to start the VMT discussion.
ELECTRIC VEHICLES ADVANCE
In addition, General Motors (GM) on Jan. 28 announced its intention to stop making internal combustion engine (ICE) vehicles by 2035.
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ALTERNATIVE FUELS NEWS
Navistar and GM announced a partnership to sell hydrogen-powered heavy-duty trucks. A third partner, OneH2, will provide fueling solutions by trucking hydrogen to terminals or through small hydrogen generation units. Navistar said the trucks will go more than 500 miles on a single charge and can be refueled in less than 15 minutes. Trucking company J.B. Hunt will launch a pilot program to test the trucks in late 2022. More
California will need 1.5 million EV chargers by 2030 to meet Gov. Gavin Newsom’s order that only new zero-emission vehicles be sold in the state by 2035, according to a California Energy Commission report. That’s three times the 500,000 charging stations President Biden has promised nationwide by 2030. More
A peer-reviewed scientific report found that ethanol’s greenhouse gas (GHG) emissions are 46% lower than those from gasoline. The lead researcher for Carbon intensity of corn ethanol in the United States: state of the science was David MacIntosh, adjunct professor of environmental health at Harvard’s T.H. Chan School of Public Health.
Some 750 Total-branded retail fueling stations now sell E85 in France, up from some 500 in 2019. The expansion makes Total the largest E85 marketer in the country. More
India plans nationwide 20% ethanol blending by 2025, five years earlier than the government’s original plan. The goal is to reduce India’s reliance on imported oil, which accounts for 83% of the nation’s fuel supply.
Dover completed the acquisition of Innovative Control Systems, Inc. (ICS). Headquartered in Bethlehem, Pennsylvania, ICS provides car wash controllers, payment terminals, point-of-sale and wash-site management software solutions.
Leighton O’Brien announced two hires. Angela Wisdom is executive vice president of the company’s Data Analytics Solutions division. She joins Leighton O’Brien from Insite360, where she was senior director of sales and marketing. The company also named Kiran Maharaj business development manager, responsible for Leighton O’Brien’s operations in Africa. Maharaj previously held management and data analytics roles at TSG Group and Fairbanks South Africa.
Matrix Capital Markets Group Inc. advised R.M. Parks Inc. on the sale of its U.S. wholesale petroleum distribution assets to PacWest Energy LLC, a joint venture of Jackson Energy and Shell Oil Products. Matrix also advised Pester Marketing Co. dba Alta Convenience on its sale to a joint venture of Fortress Investment Group and a Phillips 66 subsidiary.
Morrison Bros. Co. launched a new, easier-to-navigate website with diagrams, installation instructions and product videos. See www.morbros.com.
Performance Ink named Mike Long and Associates the winner of the company’s 2020 Manufacturer’s Representative Total Sales and Top Growth Percentage awards.
Pump & Meter Service Inc. acquired Rochester Petroleum Equipment of Rochester, Minnesota.
Rhode Island service provider. Rhode Island Hydraulics Co. Inc., 1500 TenRod Road, North Kingstown, RI 02852, applied for service and construction division membership. Christopher Swanson is president of the company, which was established in 1983. Rhode Island Hydraulics Co. Inc. provides UST and AST removal, installation, maintenance and service. Sponsored for PEI membership by John Nolan, John W. Kennedy Co. Petroleum & Industrial Equip., East Providence, Rhode Island. www.rhodeislandhydraulics.com
Mexican sign installer. Imagen Corporativa Gasolinera S.A. de C.V., Privada de los Industriales No. 110, Querétaro 76116, Mexico, applied for service and construction division membership. Sergio Jarero Espinosa is director of the company, which was established in 1999. It develops and manages gas station signage projects. Sponsored for PEI membership by Victor Garduño Demeneghi, Alvic, Mexico City, Mexico. www.imagencorporativagasolinera.com.mx
Michigan manufacturer. Jomar Valve, 7243 Miller Drive, Warren, MI 48092, applied for manufacturer division membership. Noah Dinger is vice president of sales for the organization, which was established in 1966. Jomar Valve manufactures petroleum equipment valves, which are sold primarily through distributors. Sponsored for PEI membership by Bart A. Scowley, Shields, Harper & Co. Inc., Martinez, California. www.jomarvalve.com
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The TulsaLetter is published two or three times each month by the Petroleum Equipment Institute. Richard C. Long, Editor. Opinions expressed are the opinions of the Editor.