Texas A&M’s TTI says alternative fuel vehicles to hit gas taxes hard

In Texas, Alternative Fuel Technology adoption could affect long-term state fuel tax revenues with Alternative Fuel Vehicles (AFVs) accounting for 13 percent of the domestic passenger fleet and 11 percent of the commercial fleet by 2040, according to a new study from Texas A&M’s Transport Technology Institute’s Transportation Policy Research Center.

Alternative Fuel Technology development trends involve five fuel sources: electricity; natural gas; ethanol; propane; and hydrogen fuel cells. Ethanol and compressed natural gas (CNG) are both taxed by the state at a per-gallon rate, but can be more fuel efficient, producing less revenue on a per-vehicle basis compared to their petroleum fuel-based counterparts. Electric vehicles basically operate for free on Texas roadways after sales and registration fees, meaning the state is unable to collect a “gas tax” from electric vehicle roadway consumers.

In assessing the implications of AFV forecasts on the State’s fuel tax revenues, researchers updated the Transportation Revenue Estimator and Needs Determination System (TRENDS) to estimate long-term transportation funding and spending. Research findings suggest that, starting in 2015, Texas could be missing out on $24 million a year in fuel tax revenue due to the consumption of fuels other than gasoline and diesel fuel. By 2035, revenue lost from vehicle owners not paying any fuel tax was estimated to approach $200 million a year.