The highway infrastructure debate

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We need to solve the problem of improving our transportation system. Highway congestion is hurting our economy – to the tune of an estimated 4 billion wasted hours and 5 billion gallons of wasted fuel every year.” –Steve Russell, chairman and CEO, Celadon Group Inc., from testimony before Congress last week

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So many different factors are now intersecting, often unpleasantly, within the highway infrastructure debate these days.

For starters, we’ve all long known that the U.S. highway network – roads and bridges alike – is crumbling due to its age plus heavier amounts of car and truck traffic considered within its original design parameters.

Next up: congestion. Traffic volumes, especially in and around major urban centers, is leading to wasted time and fuel, and freight delays are definitely a key part of this issue.

The latest accelerant to the problem – one we’ve unfortunately faced previously, just over two years ago – deals with a sudden spike in the cost of oil, and thus transportation fuels. The unrest in Libyan is being blamed for a steep rise in oil prices to over $103 per barrel at one point this week, despite enough oil production capacity available to cover the gap created by Libya’s troubles.

Fuel prices are already on the march, with gasoline up 12 cents this week alone and diesel hard on its heels. "This will definitely be the most expensive February ever," noted Tom Kloza, chief oil analyst at the Oil Price Information Service (OPIS).

Finally, the kicker: our nation is dead broke. Flat out on empty. The national debt is now approaching $15 trillion with the Obama administration and Republicans controlling the House of Representatives haggling over a measly $60-plus billion in government spending cuts.

On top of that, fuel tax increases championed by the trucking industry (yes, you heard that right) designed to pay for highway infrastructure improvements are pretty much D.O.A. as a way to increase monies to get roadways and bridges back in the condition they need to be.

“The Republican House leadership has already announced its intent to limit the future surface transportation budget authority to tax revenues deposited into the Highway Trust Fund,” noted C. Kenneth Orski, a public policy consultant and 30-year veteran transportation expert in a recent briefing he compiled.

“So where will the additional money come from to fund the proposed Fiscal Year 2012 surface transportation program of $107 billion, or the six-year surface transportation bill amounting to $556 billion?” he asked rhetorically. “The tax revenues generated by the gas tax are estimated to total $36.8 billion in FY 2012 and $230 billion over the next six years according to the latest projections of the Congressional Budget Office. How does the President propose to bridge the $70 billion funding shortfall in FY 2012 and the $326 billion shortfall over the life of the next reauthorization?”

That’s why many truckers believe raising fuel taxes – which hits them smack dab in the wallet – is the only surefire way to generate the cash needed for road and bridge improvements, much less expansion of the U.S. highway system.

[Gov. Bill Graves, president and CEO of the American Trucking Associations, brought up this very point in a speech he gave earlier this month.]

“Currently, the U.S. spends just 2% of its gross domestic product [GDP] on highways,” Steve Russell, chairman and CEO of Celadon Group Inc. said in testimony before the House Transportation and Infrastructure Committee recently, lagging behind the 5% typically spent in Europe and the 9% being spent by China.

“The most effective and equitable way to raise the necessary funds for highway improvements is by raising the fuel tax,” he stressed. “Currently, the federal gasoline tax is 18.4 cents a gallon and the diesel tax is 24.4 cents and neither has been raised since 1993. If those rates had been adjusted just 3% a year to adjust for inflation over the past 18 years the tax rates would be 31 cents a gallon for gasoline and 42 cents for diesel.”

Those increased rates, Russell said, could generate an additional $25 billion a year for improving existing highways, increasing capacity and relieving congestion on the roads and bridges that trucks use to haul roughly 70% of the nation’s freight.

“On funding, if we have to pick our poison, raising diesel taxes is the fairest way to generate more revenue and it is certainly preferable to tolling,” added Dick Coyle, president of Devine Intermodal, in remarks before the same committee.

Now, are higher taxes the only way to gain the funds necessary to rehabilitate and expand our highway infrastructure? Certainly, stopping the flow of Highway Trust Fund monies to pay for bicycle and walking paths is another way to regain precious dollars for roadwork. But will it be enough to pay for what we need to maintain the efficient flow of goods (and people) within our country, as well as connect both to global travel lanes, in the future?

That’s a much tougher question; but one that’ll need an answer soon.

What's Trucks at Work?

Trucks at Work: Sean Kilcarr comments on trends affecting the many different strata of the trucking industry.

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