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US Should Hike Gas Tax to Fund Highways, Safeguard Oil Assets

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The US government should raise taxes on fuel consumption to fund highway construction rather than tap into the Strategic Petroleum Reserve (SPR), experts told Sputnik.

WASHINGTON (Sputnik) — On July 30, the US Senate passed a measure to provide three months of funding to the nearly insolvent Highway Trust Fund (HTF) just 11 days after a separate proposal was introduced to pay for road construction by selling assets from the SPR.

“In general, selling assets, such as oil reserves, is not a sound way to fund a continuing program like highways,” former Director of the White House Office of Management and Budget Alice Rivlin told Sputnik. “An increase in the gas tax is probably the best bet.”

Rivlin, who is currently the Director of the Health Policy Center at the Brookings Institution, explained that the gasoline tax has not been raised in 22 years and, since gas prices are so low, it might be a good time to add a levy to it.

Lower Oil Prices Contribute to US GDP Growth – White House
Over the long run, however, Rivlin argued the gasoline tax has been declining as a source of revenue because cars have become more fuel efficient.

“I would favor moving to a more stable use tax, such as a tax on vehicle miles travelled, possibly with an extra charge for using very congested highways at peak times,” she added.

Brown University Professor Jeff Colgan told Sputnik that selling US oil reserves to fund the Highway Trust Fund is “fiscally irresponsible.”

“Congress should instead modestly raise the gasoline tax to ensure that the users of highways pay for it themselves,” Colgan proposed.

Congress has refused to raise the federal gasoline tax since 1993, Colgan noted, leaving the HTF insolvent.

"With the recent fall in oil prices, few drivers would even notice a modest increase in the gasoline tax,” Colgan claimed.

In response to the high cost of US shale, Saudi Arabia has been selling its massive stockpile of crude oil at rock-bottom prices. - Sputnik International
US Administration Proposes to Sell Oil From Strategic Reserve
On July 21, Senate Republicans released a proposal to sell 101 million barrels of crude oil from the SPR in 2018-2025 to collect $9 billion for road and rail projects.

The Highway Trust Fund (HTF) was established in 1956 as a “user-supported” means for financing federal construction of highways. The HTF currently receives most of its revenue from fuel taxes and fines.

The HTF is expected to become insolvent by the end of the summer, according to the Department of Transportation.

The SPR is maintained by the US Department of Energy. With capacity to hold up to 727 million barrels of oil, SPR is currently the largest emergency supply of crude oil in the world.

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