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Feds Consider Gas Tax Hike Even With Low Prices

Low demand has authorities worried about decreased revenue

January 2, 2009

When gasoline prices soared past $3 a gallon, consumers started driving less. Now that prices are well below $2 a gallon, it would make sense that consumption would rise. But that hasn't happened.

With lower gas prices failing to spur demand, prices have continued to fall. That's not only been bad for OPEC, but bad for federal and state governments, who depend on the gasoline tax for revenue. And its spurred serious talk of raising the federal gasoline tax.

The National Commission on Surface Transportation Infrastructure Financing will reportedly recommend raising the tax when it issues a report at the end of January. The Associated Press quotes sources as saying the 15-member commission will suggest increasing the tax from its current 18.4 cents a gallon to 24.4 cents.

Money raised by the gasoline tax is supposed to be earmarked for road and bridge construction and maintenance, though it hasn't always been exclusively used that way in the past. With Congress and the incoming administration planning a major infrastructure expansion as a means of stimulating the economy, backers of a gas tax hike say now is a good time to enact it.

Currently, gasoline prices are at their lowest point in more than four years. Motorists hitting the road this weekend will find a nationwide average price of $1.626 a gallon for regular unleaded. That's down from $1.803 a month ago and $3.052 a year ago, according to AAA.

The average price is over $2 a gallon in only two states — Alaska, where it's $2.521 a gallon, and Hawaii, at $2.304.

The cheapest gas in the nation can be found in Wyoming, where the statewide average is $1.434 a gallon.

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