Why the Highway Trust Fund is running out of money, in 5 graphs

The economics of building and repairing the nation's highways is relatively simple. You drive a car. You buy gas for that car. A portion of what you pay for the gas is directed to the federal Highway Trust Fund. That money goes (mostly) toward highway work.

This system worked reasonably well for a long time as a way of having people pay their share of the costs of upkeep. It no longer does. The Obama administration now estimates that the fund could go broke as soon as August, which could put at risk as many as 700,000 jobs.

Wonkblog spoke with Rep. Earl Blumenauer (D-Ore.) about his proposal to remedy the situation over the long term. But how did the problem reach this crisis point in the first place?

There are a number of factors at play.

1. The gas tax hasn't been increased in two decades

The Congressional Research Service put together a good history of the Highway Trust Fund in 2012 (as the government was debating whether an extension or an increase was warranted). Partly as a deficit reduction measure, the gas tax was increased at the beginning of the Clinton administration to about 18 cents per gallon. Eventually, the money that was going to the deficit went back into the Highway Trust Fund.


Ever since, the amount of the tax has stayed flat. Even as the price of gasoline has increased (graph via GasBuddy.com) ...

18-cents

... And even as the buying power of those 18 cents has decreased. (The graph below converts from the 1995 value to 2013 dollars, but you get the point.)

2. Cars are more fuel efficient

At the same time, the amount of gas used by American vehicles has dropped. This is what the average fuel efficiency of a passenger car has done since 1980, via the Department of Transportation.

eff

That's in part because cars are getting more efficient, and it's in part because people are buying smaller cars.

By 2025, that efficiency should increase rapidly, given the 2012 rule mandating 54.5 miles-per-gallon for cars and light-duty trucks by that year.

3. States are buying less gasoline

In part due to increased efficiency, the amount of gas people buy is down almost 4 percent since prior to the recession. Here's the net change in each state between 2007 and 2012. The redder the state, the bigger the drop in gasoline usage. (North Dakota saw a big increase in gas used, largely due to the surge in its population that stemmed from -- wait for it -- increased oil and gas drilling.)

Less gas being bought means less money headed to the fund.

4. People are driving less

But it's not only because of increased fuel efficiency that less gas is being purchased. People are also driving less. Or, at least, the amount that people drive hasn't increased at its pre-recession rate.

miles

Drive less and you buy less gas. And again, the fund gets less money.

Blumenauer's proposal, as articulated to Wonkblog, is one that's been echoed in other states as the American automotive fleet transitions to more hybrids and more efficient vehicles: Tax miles driven, not gas used. That has its own problems, as the last graph above shows. And it's a longer-term answer to what President Obama argues is a very, very short-term problem.

Philip Bump writes about politics for The Fix. He previously wrote for The Wire, the news blog of The Atlantic magazine. He has contributed to The Daily Beast, The Atlantic, The Daily, and the Huffington Post. Philip is based in New York City.
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