Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: https://read.dmtmag.com/i/455137
PULSE February 2015 | Overdrive | 7 By Max Heine Editorial director mheine@randallreilly.com O ur industry roundly rapped President Obama for not giving the nation's infrastructure needs more than a passing nod during his State of the Union address last month. "By simply bringing the topic up without details, President Obama missed an opportu- nity to underscore the critical role our highway system plays in our economic well-being," said Bill Graves, president and CEO of the American Trucking Associations. "Now is the time, with the Highway Trust Fund set to go bankrupt in May, to show vision and leadership and, most impor- tantly, find funding to keep that from happening." The Obama administration continues to miss a related opportunity for highway funding that predates his speech to the nation: the unforeseen bargain-basement prices for fuel. With gasoline at $2.04 per gallon and diesel at $2.87 in late January, and the economy steadily rebounding from the recession, the political climate for an increase in the federal fuel tax is better than it's been in many years. Congress wimped out again last year and injected the Highway Trust Fund with only enough money to make it through May. Expen- ditures still exceed receipts by $15 billion a year. The crisis has been anticipated for years, giv- en the flawed funding basis for highways. The federal motor fuels tax, 18.4 cents per gallon for gasoline and 24.3 cents for diesel, hasn't changed since 1993. Considering the in- flation over those two decades, as well as cars and trucks becoming more fuel-efficient, the real value of gasoline's 1993 tax level has dwindled by about a third. Long-term readers know all too well what else has transpired over those years: gridlock in more cities, urban interstates go- ing without the extra lanes they need, and highways everywhere in pitiful states of disrepair. Meanwhile, trucking-related fees and regulatory costs have soared, and four-wheelers have gotten a relatively free ride on highway-related expenses other than fuel. One obvious solution is to raise federal fuel taxes and index them to inflation. This would provide a much-needed infusion for the short-term and the stabil- ity of small increases long-term. Not only do current low fuel prices make a tax increase more palatable than normal, polls have shown that even before the fuel price plunge, the public supported a small fuel tax increase to improve roads. Let's hope Congress and the president act on this op- portunity before it passes. Some commenters wondered whether rates on domestic freight would see any impact whatsoev- er, as "Mexican carriers cannot make point-to- point deliveries within the United States," noted Edward Smith at Overdri- veOnline.com. "They will be able to deliver freight from Mexico and load up freight going to Mexico. So it will have no effect on rates for domestic freight." Others weren't con- vinced, particularly in regard to markets along the border. "The loads that we have been picking up at border towns like Laredo, Texas, will be gone, as the Mexican companies will now be allowed to truck those products [from Mexico] anyplace in the U.S.," wrote one anony- mous commenter. "The freight that took us to such border towns will now be hauled by the Mexican companies at a cut rate so that they can get back to Mexico." Frankie Lobito urged calm. "Be real!" he wrote. "Big Mexican companies are not inter- ested in hauling in the U.S. They have enough with their business in Mexico. And they don't have to deal with all the regulations, breakdowns, the language and so on. And the small companies don't really have the resources to afford such things. So don't panic. This is politics as usual." A chance to fix highway funding Unusually low fuel prices since late 2014 have created an opportunity to stop the erosion of highways' federal tax base. 1-7-13 1-6-14 1-26-15 $4.00 $3.00 $2.00 $4.25 $3.25 $2.25 $3.75 $2.75 $3.50 $2.50 U.S. Energy Information Administration DIESEL PRICES GASOLINE PRICES