Two Simple Data Points Show Decline in Traditional Highway Funding

When demand for a service is on the rise, but funds to pay for that service are declining, you know things aren’t going to end well unless a practical, widely accepted alternative falls into place.

That’s the storyline that falls out of the latest travel mileage and fuel consumption data reported last month by two U.S. government agencies. Decision-makers should be glad, very glad, that tolling is ready, able, and available to fill the gap.

Reuters told the story in late June by putting together two simple data points.

First, the Department of Transportation reported that driving volumes were up 1.2% in April compared to the same period last year. “Motorists have traveled 1.01 trillion miles on U.S. roads and highways this year through April, a 1.5% increase over the same stretch last year,” the news agency noted, putting the country on track to break past records for surface transportation demand.

Just like it did last year. And the year before.

Yet gasoline demand was down 2.7% for the first three months of the year, according to the Energy Information Administration, pointing to a familiar trend that has been building toward a crisis for many years: Fuel-efficient vehicles and demographics mean that gasoline demand is peaking, and will drop by 1.7 million barrels per day by 2030, according to fossil fuel industry watchers at Wood Mackenzie. All while gas prices continue to plummet in the U.S.

And that’s without factoring in the rise of electric cars that could hit price parity with regular vehicles as soon as next year.

“U.S. refiners will need to export to Southeast Asia, where strong demand growth will lead to a structural gasoline deficit,” said analyst Andrew Shepard. Which may or may not be a success strategy for refiners, but certainly won’t do anything for federal and state gas taxes that already fall short of what’s needed to maintain and upgrade the U.S. highway system.

Even as it gradually declines, the gas tax will still be an important tool in the transportation funding toolbox. But the latest USDOT and EIA data show that the toolbox itself is more important than ever.

And need we even connect the dots: While traditional highway revenue streams run into rough waters, tolling is on the rise, as both a revenue source and a proven option for reducing congestion through major corridors. A major shift is already upon us, it’s driven by necessity, and there’s every reason to expect it to continue to accelerate.

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