Diesel Fuel Taxes Going Up?

There was a time when diesel fuel was cheaper than gasoline, but that has all changed, and it’s about to change once again.
Diesel has become more expensive than gas, and that all but eliminates the savings from diesel’s generally higher efficiency over gasoline.


Diesel fuel is what the world uses now. When I started trucking, diesel was 20 cents a gallon cheaper than gasoline. But it’s been on a steady climb since the late 1980s.

Diesel fuel was once a less-expensive alternative to gasoline, but the roles have reversed in recent years.

“Diesel vehicles are 30% to 35% more fuel efficient than gasoline-powered vehicles,” said Marsh. “Right now, though, any gains you scoop up with better mileage, you lose on the pump price.”

The problem is due to increased worldwide demand, particularly in China and India, plus bitter cold weather and an improving global economy, which demands more diesel fuel. Petroleum representatives say it affects everything shipped by truck or rail and taxes are going up.

In 2005, the relationship between the two fuels changed and diesel prices have remained higher than gasoline prices ever since. The price difference peaked in 2008, but then fell sharply during the recession. But beginning in mid-2009, diesel fuel prices have exceeded gasoline prices. The last time gasoline sold for more than diesel was in August of 2009. As of June 24, 2014, regular grade gasoline sold for $3.70 per gallon, 22 cents less than diesel at $3.92 per gallon.

Well, the price is likely to go up even further. Legislatures in several states are trying to increase the tax on all diesel fuels.

At a recent press conference in Fresno, CA, truckers, farmers and business leaders gathered at a to push for a delay in a new gas tax that would boost the cost of diesel fuel by an 12 to 40 cents per gallon, potentially putting small trucking firms and family farms out of business.

The California Air Resources Board approved the regulations for a new hidden gas tax tied to the California-specific carbon market. Beginning Jan. 1, 2015, fuel providers must buy “allowances” to continue to sell gasoline in the state. They would, in turn, pass the cost increases on to the truckers and farmers.

Even worse, the regulators intend to allow third-party traders to participate in the market for profit.

I think one of the worst parts of this tax is the lack of awareness. The government has the responsibility to let the public know when they will take another grab at their income.

Meanwhile, in Idaho, the Idaho Trucking Association’s says Idaho’s 25-cent-per-gallon gas tax may be hiked 6 cents a gallon. The Idaho House Transportation Committee, to implement it over the next three years. The goal of the added tax is to take on an estimated $262 million annual backlog of road and bridge projects.

Gov. C.L. “Butch” Otter has already said highway funding probably isn’t a 2014 issue, but Idaho Transportation Department director Brian Ness said Thursday he hopes to get the roads-funding conversation started — and this trucking bill could help.

The trucking industry is backing a new plan to raise fuel taxes to replenish a sagging Highway Trust Fund but urged lawmakers to keep working on a long-term solution to fix America’s roads and transit systems.

Memphis-based FedEx Corp. and rival, United Parcel Service said they back a bipartisan plan by Sens. Bob Corker, R-Tennessee, and Chris Murphy, D-Connecticut, to raise fuel taxes 12 cents a gallon over the next two years. UPS and FedEX log a combined 3 billion miles a year on US highways.

FedEx believes that the nation’s infrastructure is in need of critical upgrades and modernization. Failure to make these investments will continue to hamper our global competitiveness and lead to continued wasteful use of fuel by vehicles stuck in traffic jams.

It’s a bipartisan common sense proposal. We’ve long supported a user fee-funded transportation bill. In the end, what we need is a long term bill that will enhance American competitiveness.
Most states are highly dependent on federal taxes for infrastructure upgrades and maintenance. Tennessee, for example, derives more than half it’s funding from federal fuel taxes. In the current fiscal year, federal fuel taxes are providing $965 million of a $1.8 billion budget.

The Corker-Murphy plan would raise the 18.4 cents-a-gallon federal gas tax and 24.4 cents-a-gallon diesel tax in two annual hikes of six cents each, and then index the taxes to keep pace with inflation. The federal taxes haven’t increased in 21 years. The new taxes would be offset by tax breaks elsewhere, such as extending a state and local sales tax deduction that expired this year.

And in New Hampshire, Senate Transportation Chairman Jim Rausch says he will work to reduce maximum truck weights if his bill to bump the tax by 4 cents a gallon fails.

Rausch says he isn’t threatening the industry for opposing a tax increase. He says his goal is to maintain New Hampshire roads but without more money to maintain them, something else has to be done and lowering weights is one option.

New Hampshire Motor Transport Association President Bob Sculley says the industry will not drop its opposition to the proposed tax hike and believes lowering the weights would be retaliation.

Regardless of your view of these increases, your view at the pump is going to change once again. If you oppose these proposals, contact your nearest trucking industry representative and make your feelings known. Otherwise, get ready to see the taxes going up for your fuel.


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By |2014-07-25T12:16:36+00:00July 25th, 2014|Truck Stop|0 Comments

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