If natural-gas cars hit the road, who pays the gas taxes?

August 26, 2012|Dan Hartzell | The Road Warrior

Q: Regarding the Aug. 2 Morning Call article about vehicles fueled by natural gas, maybe I've been missing something, but how do users of alternatively powered vehicles pay road-use taxes equivalent to the state and federal gasoline taxes the rest of us pay at the pump?

— Marion H. Campbell, Bethlehem




Pennsylvania maps a similar course, applying an energy-equivalency formula, and the state charges a total of 31.2 cents per gallon for gasoline — the sum of the "straight" 12-cent "liquid fuels" tax and the oil-company franchise tax of 19.2 cents per gallon.

More popular in Europe and South America, CNG cars have yet to hit the American showroom floor in significant numbers, though the Aug. 2 story you cite, Marion, indicated that the steep decline in natural-gas prices could be fueling a surge in sales. A CNG-fueled version of the Honda Civic has been sold since 1998, with about 1,000 of them hitting the highway each year before a recent increase, according to Honda officials. By comparison, hundreds of thousands of gasoline-fueled Civics leave showrooms annually.

Natural gas has been making inroads in the commercial and business markets (trash trucks, transit buses, fleet vehicles), and those users also pay the BTU-based equivalent of the 18.4-cent-per-gallon federal excise tax on gasoline, Kolodziej said.

Proponents of CNG vehicles have high hopes for the future of the technology in the passenger-car market, though they face some speed-bumps in the marketplace. The most jarring of them could be posed by the "chicken and egg" conundrum: Consumers are reluctant to spring for costly CNG cars because fueling stations are so few, and station development suffers from engine hesitation due to the shortage of potential customers.

But maybe that's beginning to change, too. As my colleague Marion Callahan reported in June, Lehigh Gas Co. of Allentown has applied for permits to develop a retail CNG "pump" for the public at its gasoline station at 1825 Route 309 in South Whitehall Township. If that plan stays in gear, Lehigh Gas could be blazing a local trail, investing in what would be the first such public retail station in our region (the nearest being in Phoenixville, Montgomery County, more than 30 miles away). If market traffic flows in the right direction, this could prove a wise investment.

Actually, I was surprised to find that the government charges "gas taxes" on alternative-fuel cars. The "tax-free" feature would be part of the allure of new models powered by substances other than gasoline, and various tax incentives have been offered to help promote sales of these gas-savers. At the same time, I understand the need for steady revenue traffic to build and maintain our roads and bridges.

If electric cars and other alt-fuel vehicles increase their market share, and road-construction revenue continues its downhill path, we could fall even farther behind in repairing and replacing our deteriorating roads and, particularly, bridges. This revenue stream, chiefly funded by gasoline taxes, already has been slowed by declining gasoline sales from the rough-road economy and government-mandated mileage standards. Here in Pennsylvania, home to more structurally deficient bridges than any other state, a shortfall in anticipated revenue from state Act 44 has further fogged the roadwork-funding windshield. Political leaders already are struggling to find ways to stem the leakage from the tax-revenue tank, and to raise new money to repair deteriorating bridges and roads.

Raising the gas-tax rates, an unpopular option, would help in the short run, but for the longer journey, most experts believe that other revenue sources need to be found, said Joe Gurinko, chief transportation planner for the Lehigh Valley Planning Commission.

"The idea is that even if Congress or the states would increase the gas tax, that's more of a short-term measure" because the declining rate of gas usage is expected to continue, Gurinko said. "The longer-term measure has to be another way to fund the highway system."

Among many ideas being discussed are the "vehicle miles traveled" tax, greater use of tolling, "variable tolling" in which motorists would be charged more for using popular roads during peak-traffic periods (a form of "congestion pricing"), and steeper license, registration and other vehicle fees, Gurinko said.

Gov. Tom Corbett's Transportation Funding Advisory Commission last year recommended a variety of measures, including more tolling and hikes in vehicle registration and other fees, but few if any of them have been enacted.

I turned onto an interesting little road while researching this topic, Marion. According to the "Highway History" link on the Federal Highway Administration's "Highway History" website, the gas tax first was imposed in 1932, at a penny per gallon. It went to 1.5 cents in 1941, two cents in '51, three in '56, four in 1959, nine cents in 1982, 9.1 cents in '86, 14.1 cents in 1990, and it was raised to the current 18.4 cents per gallon in 1993.


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