March sees sharpest drop in driving on record, states losing fuel tax revenue

March sees sharpest drop in driving on record, states losing fuel tax revenue

Ralph Hanson May 29th, 2008 Ralph Hanson By Ralph Hanson Author May 29th, 2008
  • Articles Contributed: 1801
  • Comments Posted: 0
  • Leaderboard Rank: N/A

December 31st, 1969 With fuel prices at record levels and the economy still reeling from a credit crisis, Americans have reduced the number of miles they’re driving each month in an effort to cut the fuel bill. The Department of Transportation (DOT) reported figures from March showing the steepest decline in driving levels ever recorded. Americans drove an estimated 4.3% less in March compared with a year ago, equating to a drop of 11 billion miles. The DOT called it "the sharpest yearly drop for any month" in the history of the administration, which has been keeping records since 1942, Reuters reports. The reduction in driving and subsequent drop in fuel consumption means the states, which receive billions of dollars in fuel taxes, is seeing an equally sharp decline in revenues. This revenue is typically spent on improvements and other infrastructure investments. Several states are now struggling to come up with ways to make up for the shortfall in order to pay for road maintenance and other infrastructure projects. One solution is a proposal to lease out tollroads to private companies and earn a return on the profits as well as a healthy upfront payment.
March sees sharpest drop in driving on record, states losing fuel tax revenue

March sees sharpest drop in driving on record, states losing fuel tax revenue

Enlarge Photo

With fuel prices at record levels and the economy still reeling from a credit crisis, Americans have reduced the number of miles they’re driving each month in an effort to cut the fuel bill. The Department of Transportation (DOT) reported figures from March showing the steepest decline in driving levels ever recorded.

Americans drove an estimated 4.3% less in March compared with a year ago, equating to a drop of 11 billion miles. The DOT called it "the sharpest yearly drop for any month" in the history of the administration, which has been keeping records since 1942, Reuters reports.

The reduction in driving and subsequent drop in fuel consumption means the states, which receive billions of dollars in fuel taxes, is seeing an equally sharp decline in revenues. This revenue is typically spent on improvements and other infrastructure investments.

Several states are now struggling to come up with ways to make up for the shortfall in order to pay for road maintenance and other infrastructure projects. One solution is a proposal to lease out tollroads to private companies and earn a return on the profits as well as a healthy upfront payment.

Tags: Trends

Posted in: News


Comments (6 total)

Meet the top commenters on the Leaderboard

  1. By chris #1, Posted: 5/29/2008

    makes you wonder if a drop in the tax rates might encourage more traveling thus providing more tax revenue.

    or if its even the gas prices at all. the economy is crap, and most economists are saying it hasn't been this bad since the depression. That may or may not be true but I think that statement is a little harsh, because everyone starts thinking about those old film strips of thousands of people waiting in line, waiting for their food stamps.

  2. By Gus #2, Posted: 5/29/2008

    Yeah, it's not that bad yet. For most people. I'm sure there are those at the bottom that are falling off.
    I noticed it on a recent trip to Northern California to see my parents, the freeways were more sparsely populated than I was use to, and in Southern California, that is a very rare thing to see.
    The problem is the speed. If gas rode to $10 a gallon that wouldn't be a problem over 10-15 years, but it's this overnight doubling and tripling that's catching everyone off guard.

  3. By Ara #3, Posted: 5/29/2008

    This is a good thing. The less drivers on the road, the less demand; and that will lower gas prices!

  4. By chris #4, Posted: 5/29/2008

    I concure. Although I will admit that there's nothing like a sudden spike in the operating cost of the average vehicle to force people to reevaluate their life style. We know you use your SUV for its intended purpose, but most people don't, and I have a feeling that if the prices just kept creeping up, you wouldn't see as effective of a move away from "excessive" lifestyles.

    There's two things that hurt about the situation. The first one is the economy being so bad that most people are stuck with their vehicles, and if they wanted to sell their trucks, they'd be selling at a loss,.. and the used car market (and the small new car market) is inflated right now so you're buying at a loss as well. Not to mention you're out of a job, food's costing 5% more than it did a year ago, and god knows your utility bills are hurting more than ever.

    The other problem is with the manufacturers. They can't adapt to the situation very easily. We just saw news that honda will be increasing civic production in alliston, and moving the CRV and ridgeline to a lower capacity facility, while building a new plant for the civics. These changes don't happen over night, and honda's got one of the most flexible manufacturing systems of all the large companies. The only solution in the short term for many companies is the slash and burn technique, which only gives you enough short term gains to cover the unexpected losses.

    The whole thing is going to reshape the auto industry, and I think it will do more than the 74 oil crisis. people's memory of this spike in fuel costs will not be faded as quickly as they were in the 70's. with all the talk being about global warming and some decent evidence that oil supplies are diminishing, people are going to be more and more wary of the products they buy. And I don't see the American economy being as strong as it was in the 90's, not for a decade or more. There's change in the air, and americans are going to feel it the worst.

  5. By Gus #5, Posted: 5/29/2008

    Like I said, the problem is the speed of the change.

    Maybe it will all calm down again, just like it has before...

  6. By Paul #6, Posted: 5/29/2008

    Like Gus said, the speed of change is definitely a problem. It's not very fun seeing $3.90 one morning and then it shoots up to $3.99 the next.

Post a Comment

Post anonymously
Sign In |
will stay private
your 'posted by' name will link to the URL

More from MotorAuthority

More from High Gear Media