United States Department of Transportation
i
Impact of high efficiency vehicles on future fuel tax revenues in Utah.
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2015-05-01
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Abstract:The Utah Department of Transportation Research Division has analyzed the potential impact of
high-efficiency motor vehicles on future State of Utah motor fuel tax revenues used to construct and maintain the
highway network. High-efficiency motor vehicle use (including electric, hybrid, CNG, and other alternative fuel
vehicles) is on the rise in Utah. New light duty vehicles with standard gasoline-powered engines are more efficient
to comply with adopted Corporate Average Fuel Economy (CAFE) standards. As the motor vehicle fleet in Utah
becomes more efficient, using less gasoline per mile traveled, there is a potential for a significant slowing in the
growth, or a reduction, of revenue from this source.
This research project developed three scenarios for understanding how a variety of factors could combine
to affect future fuel tax revenues in Utah. The time horizon of the analysis is 2040. To estimate the effect of high
efficiency vehicles on future fuel tax revenues, the FHWA Energy and Emissions Reduction Policy (EERPAT)
Analysis Tool was used. EERPAT was parameterized and calibrated to 2010 conditions in Utah, and used to
estimate future transportation conditions such as VMT, fleet mix, fuel choice, fuel consumption, and fuel tax
revenues.
Future demographic, travel, and income projections, obtained from State of Utah data sources, were used as
inputs to the analysis. Key driving assumptions include: 1) future fuel efficiency of heavy duty vehicles; 2) future
market penetration of CNG for heavy duty vehicles; 3) future market penetration of alternative drive train vehicles –
battery electric, plug-in hybrid, and hybrid – into the light duty vehicle fleet; and, 4) future motor fuel tax rates.
The analysis shows that, even with a growing population and increasing VMT, total fuel tax revenues are
projected to decline by 29% in constant 2015 dollars when compared to 2010. Assuming very modest penetration of
alternative drive train vehicles (hybrid, plug-in hybrid, battery electric) in the Base Case (<1%/year), total revenues
decline due to higher efficiency of light duty vehicles, high penetration of CNG in the heavy-duty vehicle fleet, and
erosion of the purchasing power of the gasoline tax (0.245 in 2015$) due to inflation.
Assuming moderate to aggressive penetration of alternative drive train vehicles in the future, overall fuel
tax revenues decline even further. A moderate penetration of alternative drive train vehicles would result in a further
19% reduction from the 2040 Base Case (or, a 42% decline in constant dollar fuel tax revenues compared to 2010);
an aggressive penetration of alternative drive train vehicles would result in a further 25% reduction in fuel tax
revenues from the 2040 Base Case (or, a 47% decline in constant dollar fuel tax revenues compared to 2010).
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