Year of Publication

2012

College

Martin School of Public Policy and Administration

Executive Summary

This paper utilizes several models to gauge the annual impact of state gasoline taxes and pump prices on the vehicle miles traveled in the United States. Regression models in first differences were used to analyze annual changes in the variables. The models indicate that annual increases in pump prices correspond to significant decreases in mileage, while state fuel taxes do not significantly impact mileage. With local, state, and federal taxation only composing 12 percent of the pump price of fuel, the impact of changes to these taxes are diminished. This suggests that if policymakers choose to adopt a policy of mileage reduction to combat road and environmental damage, and benefit energy security, current fuel taxation methods alone will likely be unsuccessful in achieving a reduction in the highway mileage of the American fleet given current pump pricing. With the Highway Trust Fund being consistently underfinanced, and a funding formula tied to declining mileage, a policy response is due and further research should be considered to analyze the outcomes of this anticipated policy reform.

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