Last summer the Administration proposed raising fuel efficiency standards to 54.5 mpg by 2025. Automakers signed on to these new CAFE standards and will need to offer consumers additional electric vehicles, hybrids and other technologies to meet these standards. As Gloria Bergquist from the Alliance of Automobile Manufacturers points out, “There are always policy trade-offs for CAFE standards.”
Currently the Treasury collects an excise tax of 18.4 cents on every gallon of gas sold to consumers at the pump and 24.4 cents for diesel fuel. In addition most states collect a gas tax with California the highest at 7.25%. The tax revenue collected by the U.S. Treasury goes into the Highway Trust Fund which is then spent by Congress by way of a bi-annual Transportation Appropriation Bill.
Estimates are that the gas tax would need to be increased by 5 cents per gallon to make up for the shortfall.