Does Decreasing Oil Price Offer A Chance To Fix NJ Gas Tax?

Gas prices are dropping in New Jersey. Image from NJTV.

Gas prices are dropping in New Jersey. Image from NJTV.

Our local roads are in terrible shape. There are potholes everywhere, and if you suffer a blowout or automobile damage after hitting one, don’t expect the state to pay. Equally, where roads are insufficient to handle traffic volume, the New Jersey Department of Transport (NJDOTproposes sticking-plaster solutions, instead of looking for long-term infrastructure fixes. New Jersey roads are also set up for the 20th century, geared entirely towards cars with inferior provision for pedestrians or cyclists. Fixing these issues will require money and investment.

Why can New Jersey not fix and upgrade its roads? Because we are locked to an unsustainably low gas tax rate. New Jersey’s gas tax rate, which is 32.9 cents per gallon, is the second-lowest in the continental US. Only Wyoming, where people have to drive for an hour just to fill up, and Alaska, where oil gushes from the ground,  have lower gas tax rates than New Jersey. The Pennsylvania gas tax rate is 50% higher than in NJ. As the price of everything else has increased, New Jersey’s gas tax rate has stayed the same for 20 years. As a result, it doesn’t even bring in enough revenue to cover the cost of interest on loans that were taken out to pay for past road and bridge improvements.

This is completely unsustainable. NJDOT now needs a bailout from general taxation just to pay for past road-building. Yet we are still building new roads, even though we can’t pay to maintain the old ones. Car drivers are getting a government subsidy to drive, even as the region is clogged with traffic and suffers the effects of global warming. For those of us who believe we should shift transportation to alternative modes such as walking and cycling, this is infuriating. We are constantly told that there is ‘no money’ for transit, or bike and walking paths, which could get people out of their cars, yet car driving is getting a bailout!

As the US weathered the worst recession in living memory from 2007-2009, the possibility of increasing the NJ gas tax was politically impossible. Who would want to pile more misery on low- and moderate-income New Jerseyans, many of whom are entirely dependent on cars to get to work, by jacking up the price of gas? But right now, two key reasons make the time ripe for the New Jersey gas tax to move to a more reality-based rate.

First, the economy is growing again. Although the recovery has been slow, not helped by politicking in Washington DC, steady growth is now happening month on month. And just as we juiced the economy with quantitative easing during the worst of the recession, now would be a good time to gradually let some steam out with some counter-cyclical economic policy. A modest increase in gas taxes could help counter the potentially inflationary effect of federal stimulus, which is continuing even today, years after the recession officially ended.

Second, and more pertinently, the cost of gas is falling. You may have noticed it yourself at the pump, that there is a chance that gas is going to fall below the magic $3-a-gallon level for the first time in ages. This is not a mere blip. The cost of crude oil is projected to fall through 2013 and 2014, reflecting reduced demand at home and in the far east, and increased domestic supply. This will translate directly into lower gas prices. As such, if we were to increase the gas tax rate now, drivers wouldn’t even notice. Price increases through a higher tax rate would be balanced out by market-driven changes in the price of oil.

If we don’t increase the gas tax rate, then we will continue to subsidize driving and traffic. Walkability will continue to be a dream as drivers get state support to keep fueling up on artificially-cheap gas. Our roads will continue to fall apart and be a source of regional embarrassment. The option to allow gas taxes to rise, at least far enough to cover the cost of maintaining our existing roads, if not to a level that would allow measured improvement, would appear to be completely obvious.

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5 Responses to Does Decreasing Oil Price Offer A Chance To Fix NJ Gas Tax?

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