According to a new study by the American Road & Transportation Builders Association, new Corporate Average Fuel Economy Standards that mandate cars and light trucks average 54.5 mpg by 2025 will deprive federal highway projects of more than $65 billion in revenues.
That estimation is based on the fact that at-the-pump taxes levied on fuel are by law funneled to transportation projects. With mandatory CAFE fuel mileage increases, the amount of revenue collected from gas taxes will go down, which will cut into road revenues, the report says.

Of course, there are ways of circumventing that lost income, but all that will surely play out in the coming few years. In the meantime, click past the jump to see the report for yourself. Naturally, it's worth noting that the ARTBA, based in Washington, DC, is a group that represents the interests of road and construction workers.
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New Fuel Efficiency Standards = $65+ Billion in Lost Revenue for Highway & Transit Improvements Between 2017-2025, ARTBA Says

WASHINGTON, July 29, 2011 /PRNewswire-USNewswire/ -- A July 29 Obama Administration proposal to increase fuel efficiency standards for cars and light trucks to an average 54.5 miles per gallon (mpg) between 2017 and 2025 would result in the loss of more than $65 billion in federal funding for state and local highway, bridge and transit improvements, an analysis by the American Road & Transportation Builders Association (ARTBA) shows.

The impact on the nation's transportation improvement program, ARTBA President Pete Ruane says, would be like eliminating all federal highway funding for nearly two years.

"Like everyone else, we are supportive of efforts to reduce carbon emissions and improve fuel economy. However, from a public policy perspective, this is a classic case of the left hand not knowing what the right hand is doing," Ruane said. "It's irresponsible to advance such proposals without acknowledging and attempting to mitigate the adverse effect they would have on other areas of federal responsibility like making infrastructure improvements that improve safety, reduce traffic congestion, create jobs and help grow the economy."

Per gallon federal gasoline and diesel taxes collected at the pump are deposited into the federal Highway Trust Fund (HTF). By law, these excises are the primary revenue source for financing road, bridge and transit projects. The less motor fuel used by drivers, the less revenue generated for improvements financed through the HTF.

The analysis, conducted by Dr. William Buechner, a Harvard-trained economist and ARTBA vice president of economics & research, assumes the increase in fuel efficiency standards between now and 2016 will occur as required (the Obama Administration in 2010 put in place an increase from an average 28.3 to 34.1 mpg by 2016). It also assumes the mpg requirement will be phased in at five percent per year from 2017 through 2025 as proposed. The baseline for calculating revenue losses is the U.S. Treasury's February 2009 projections of HTF revenues. As new cars and light trucks are purchased in the future and old ones retired, average fuel economy will improve, reducing the 2009 forecast of gasoline sales and HTF revenues.

The HTF is already taking a revenue hit with the standards put in place in 2010, Buechner says. From fiscal years 2010-2016, he estimates that action will cost the HTF about $9 billion. Thus, if the new standards are enacted, the total loss of revenue for transportation improvements through 2025 is projected at $75 billion.

Given the nation's overwhelming infrastructure needs, Ruane said the nearly two-year overdue federal highway and transit program reauthorization bill provides a ripe opportunity for Congress and the President to identify all possible options to generate the revenues necessary to maintain and improve the system.

Established in 1902 and headquartered in the Nation's Capital, ARTBA represents the public and private sectors of the U.S. transportation design and construction industry.

The latest reports indicate that Corporate Average Fuel Economy (CAFE) standards for cars and light trucks will be increased from 34.1 miles per gallon in 2016 to a fleet-wide average of 54.5 mpg by 2025.

The table included in the linked image shows the potential impact of actual and proposed increases in CAFE standards on Highway Trust Fund (HTF) revenues during the next six-year reauthorization period and the subsequent decade.

The table assumes the required increase in CAFE standards through 2016 will occur and that the standard will be increased 5.0 percent per year from 2017 through 2025, as proposed. The baseline for calculating revenue losses is the U.S. Treasury's February 2009 projections of HTF revenues. As new cars and light trucks are purchased in the future and old ones retired, average fuel economy will improve, reducing the 2009 forecast of gasoline sales and HTF revenues by the amounts shown in the table. The baseline for computing percentage losses is total HTF revenues, which includes diesel fuel and truck tax revenues that are unchanged from the February 2009 baseline.


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  • 44 Comments
      • 3 Years Ago
      [blocked]
      ALafya
      • 3 Years Ago
      So $65B is only a small fraction of what the US will pay for foreign oil ...
      lne937s
      • 3 Years Ago
      Just remember that gas tax revenue covers a fraction of Federal infrastructure spending. So it is more important to look at total impact on revenues. The majority of the price of a gallon of gas leaves out economy. The trade is largely one-way, leading to petroleum being the majority of our trade deficit. If $2 per gallon is leaving our economy, it is no longer being spent on things within our economy. If you figure that 20% of our GDP ends up as federal taxes, that gallon of gasoline cost us $.40 in federal tax revenue. However, if that money is being spent on a purchase within our economy, the seller then takes that money and becomes a consumer, spending it on something else.... creating a multiplier effect. Now, some people may take that greater efficiency and drive more, consuming the same amount of gasoline, paying the same amount of gasoline tax... but greater mobility tends to correlate with higher economic output, so we are still better off than if we left efficiency lower. And there are costs to taxpayers from consuming gasoline that also need to be taken into consideration, like security operations, pollution, etc. Needless to say, the benefit to our economy and tax base of increasing efficiency far outweigh the $0.184 in tax we get from each gallon of gas. If we need money for infrastructure, we can either raise the gas tax further or use more of general revenue to pay for it.
      fefifofum
      • 3 Years Ago
      Just raise taxes at the pump, problem solved.
      Jim R
      • 3 Years Ago
      Lost revenue? We can't have that! You know what that means boys and girls..brace yourselves for a hike in gas taxes! By the time they're through you'll be PRAYING for $4/gallon gas. Between these insane standards and the inevitable tax hike that will follow, this will be the end of the affordable performance car.
        Hazdaz
        • 3 Years Ago
        @Jim R
        Oh yeah, those *INSANE* standards that pretty much every automaker (except VW) has no issues with... yeah, THOSE "insane" standards. Typical clueless sky-is-falling mumbo jumbo that has been proven time and again to be utter nonsense. The gas tax SHOULD be raised. Too many people out there getting a damn free-ride. Maybe if the price of gas actually reflected the true cost of being addicted to oil, it would be easier to get folks to be more responsible with our resources. Instead, we have a bunch of free-loaders that think a gallon of gas actually costs anywhere close to $4/gallon - that prices doesn't include TRILLIONS of taxpayer dollars that go to protecting our oil interested in the Middle East. It also doesn't include BILLIONS of dollars of corporate welfare to the oil industry, nor does it include healthy and environmental costs associated with the use of gas/oil. Grow up and realize that *GOSH* things cost money. That road, that bridge and all the infrastructure that makes modern society work depends on things to get built, repairs and replaced.
          • 3 Years Ago
          @Hazdaz
          [blocked]
      stickshiftn69
      • 3 Years Ago
      why doesnt America just wake the f-uck up and drill for our own crude oil that is right here under our own land these retards are trying to squeeze so much MPG out of an engine block that the brand new modern engines are making all kinds of noise, making knocking normal .... how long do you expect these engines that get a bajillion miles per gallon to last ???? if you make the car get 50 MPG ... there is NO WAY that the engine block will last a long time or even run efficiently after 15,000 miles we are trying to squeeze WAY too much out of our engine blocks... people are going to end up taking t he money that they "saved" on gas, and spend it on repairs for these crazy,advanced, electronic bullsh!t and costly piston, valve, and rocker arm repairs because engines are going to be stressed and screaming for mercy so many modern "fuel saving" engines nowadays make all kinds of noises, go in for electronic and regulatory repairs all the time ... people are spending so much on repairs ... if we are having these problems now , just imagine what is going to happen to engines in 2025 with these bullsh!t standards
      rex
      • 3 Years Ago
      Man we are lost. The Gov has people here so conditioned to the Gov's right to your money. Gov needs more money and das here say just raise taxes. The Dems love this conditioned response. Why not look for solutions like cutting fat and bridges to no where. How about better ways to do things? For the das here, the gas tax is very a regressive tax. Go ahead and look up regressive tax. For one the gas tax cuts deeper into the lower income population for several reasons. And the das here want to just raise taxes, give gov more money (they handle it so well), punish someone that drives something they do not agree with and call anyone that wants smaller gov a tb'er. I pray that this thread is not a true cross section of the general population.
        samagon0
        • 3 Years Ago
        @rex
        you're right, we need to cut bridges to no where, like that bridge on i35 that was cut. if not through taxation, how do roads get funded? I for one am not a fan of pot holes on any roads I travel, local roads, state highways, or federal highways. the costs to maintain just the federal and state far outpace the current tax. it's been a long time since the gasoline tax was raised, and it needs another hike of about double the current federal level.
          • 3 Years Ago
          @samagon0
          [blocked]
          Think Free
          • 3 Years Ago
          @samagon0
          how about outsourcing road work to more private comnpanies without political conections?
        delsolo1
        • 3 Years Ago
        @rex
        Rex Sell our highway system to corporations and convert them to toll roads. Conservatives inform me that big business would never take its customers to the cleaners.
      tenspeeder
      • 3 Years Ago
      I'd rather see taxes raised than toll booths added just about everywhere
        Jim R
        • 3 Years Ago
        @tenspeeder
        I'd rather see them not raise taxes at all and stop wasting so much money by hiring lazy union contractors.
      • 3 Years Ago
      [blocked]
        mylexicon
        • 3 Years Ago
        These challenges of creating an equitable fuel excise tax have been going on forever. I'm not a fan of the current president, but I'm not silly enough to suppose this started with him. Excise tax revenues have been falling for a long time as states tax up the price of gasoline, and as the price of oil rises. This is a variation of a very old theme. State vs. Federal. Excise vs. Usage. Optimal tax vs. Equitable tax vs. Sumptuary tax. And so on and so forth until you are nauseous and questioning the meaning of life.
      Ultra
      • 3 Years Ago
      Some study. They should all be fired. By 2025 gas prices will be well above $20/gallon so tax revenue will NOT be down, it will be UP big time.
        lne937s
        • 3 Years Ago
        @Ultra
        Gas is taxed on a per gallon basis. If gas price goes up, gas taxes do not. Gas tax has been going down as a percentage of what's paid at the pump for a long time now.
          • 3 Years Ago
          @lne937s
          [blocked]
      • 3 Years Ago
      [blocked]
        • 3 Years Ago
        [blocked]
        2 Wheeled Menace
        • 3 Years Ago
        1) the majority of the oil we have is not economically feasible to extract in the first place 2) public transport actually reduces city and state transportation budgets; know why? + less emergency services needed due to less crashes + less road maintenance needed + less health problems due to smog and particulates + can often avoid very expensive infrastructure changes needed to implement more highways + runs on domestic fuel sources if we're talking about natural gas or electric We have an excellent electric light rail system here in Portland, those trains are packed half the time, and nobody complains about it's cost here. If you have a *good* public transport system, it is so much better than more roads.
      • 3 Years Ago
      [blocked]
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