Global oil prices have risen to their highest levels since 2022 following the escalation of the US-Israeli war with Iran. (Photo by Dan Kitwood/Getty Images)
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Gas prices are no longer rising as quickly as they were a few weeks ago, but they remain much higher than they were last summer — fueling the gas tax debate.
AAA put it national average for regular gasoline to $4.26 a gallon on June 3, up from $4.46 a week earlier. Still, that’s more than a dollar above last year’s average of $3.14. For drivers, the distinction between crude prices, refining costs and taxes may matter less than the number at the pump. For lawmakers, it matters a lot.
Efforts to lower pump prices by temporarily lowering gas taxes have resurfaced in Washington and several states, but the federal push remains unresolved. President Donald Trump has advocated a pause in the federal fuel tax, and lawmakers from both parties have filed bills to temporarily suspend the tax, including proposals tied to increased fuel prices following unrest in the Middle East. But the idea still needs approval from Congress and faces the same objections that have stalled gas tax breaks, which include a multibillion-dollar hit to the Highway Trust Fund (HTF). The Penn Wharton Budget Model is appreciated that a four-month federal shutdown from June 1 to October 1 would cost the treasury about $11.5 billion. The Bipartisan Policy Center, a Washington, DC-based think tank that promotes cooperation between the Republican and Democratic parties; assessed separately that a five-month moratorium would reduce gas tax revenue by about $17 billion, or 46 percent of the fund’s projected fiscal year 2026 gas and diesel tax revenue.
This potential drop in revenue matters. HTF finances are increasingly strained because collections have failed to keep pace with infrastructure needs and changing driving habits. That’s made the gas tax debate about more than pump prices — it’s also a fight over how to fund roads, bridges and other transportation projects.
The gas tax and what it is used for
The fight over the gas tax isn’t new – it’s been around for almost 100 years. President Herbert Hoover signed the Revenue Act of 1932, authorizing the first federal gasoline tax—one cent per gallon, at a time when natural gas averaged about ten cents per gallon. It was not intended for roads or highways and was intended to help plug a hole in the general fund during the Depression. It worked so well that Congress raised the tax the next year to 1.5 cents per gallon. But as the economy struggled, Congress returned it to one cent in 1934, only to raise it again in 1940 and make it permanent in 1941. The Korean War brought another increase, to two cents a gallon, and the postwar highway boom brought another: the Highway Revenue Act of 1956 increased revenue and taxes for the first time in three minutes. A “temporary” increase to four cents followed in 1959 and lasted 24 years.
The modern gas tax took shape in the 1980s and 1990s. President Ronald Reagan signed the largest tax increase in history at the time, raising it to nine cents per gallon in 1983, with a small surcharge added later for leaking underground storage tanks. In 1990, President George HW Bush signed another five-cent increase, raising the tax to 14 cents per gallon, although some of that revenue went to deficit reduction rather than transportation. President Bill Clinton added another 4.3 cents in 1993, also aimed at reducing the deficit, before Congress redirected that money back to the HTF in 1997. The federal gas tax has remained at 18.4 cents per gallon since 1993 – and is not adjusted for inflation – despite his repeated appeals.
Financial concerns
David Lieberman, senior director of government relations at Bentley Systems, an infrastructure engineering software company based in Exton, Pennsylvania, says the federal gas tax is the primary source of revenue for HTF, which traditionally funds federal highway and transit programs. But there are cracks in the system, including a shift to more fuel-efficient and electric vehicles.
Today’s cars and trucks, he explains, are much more economical (or all-electric) than they were thirty years ago. As a result, the gas tax has lost significant purchasing power and no longer covers the true cost of maintaining our infrastructure. The HTF has required repeated transfers from the Treasury’s general fund to stay afloat. While the gas tax remains fundamental on paper, in reality its direct purchasing power for new infrastructure has been steadily declining for decades. Suspending the natural gas tax, he notes, is not the path to sustainability.
When you take that much capital out of the system, you will stop new projects and create enormous uncertainty for state departments of transportation that rely on federal funding to plan multi-year bridge repairs and highway maintenance. States rely on regular federal funding, and Lieberman notes that “predictability is just as important as the total dollar amount.” Major infrastructure projects, such as replacing a crumbling bridge, require years of planning, engineering and phased construction. If temporary suspensions become a recurring policy tool, that predictability is eroded. From a technology and engineering perspective, he says, “uncertainty is the enemy of efficiency.”
It’s not just the big fixes that could be at risk. When funding is in doubt, companies are reluctant to invest in advanced digital tools, such as digital twins (virtual copies) and artificial intelligence optimization, that could reduce the life-cycle costs of these assets. Making any reduction permanent without a replacement revenue source would be worse, Lieberman says.
A possible solution?
So, is there a possible solution? Perhaps. Lieberman says infrastructure remains one of the few truly bipartisan issues in Washington, because a crumbling bridge or a congested freeway affects voters regardless of their political affiliation.
The US has more than 623,000 bridges with an average age of about 47, according to the American Society of Civil Engineers, and many are approaching—or have already exceeded—the 50-year lifespan they were designed for. ASCE’s 2025 report found that nearly half of U.S. bridges are only in “fair” condition and 6.8% in “poor” condition, while ARTBA estimates that about one in three U.S. bridges still needs major repair or replacement. This makes any reduction in HTF revenue particularly fraught: the system is aging faster than policymakers have agreed on how to pay for it.
Those kinds of numbers played a role in the Bipartisan Infrastructure Act of 2021 signed by President Biden. The law, which expires on September 30, 2026, increased federal funding for roads, bridges, transit, rail and other infrastructure. Now, Congress has already begun work on a successor, the bipartisan House bill — the BUILD America 250 Act — which has already cleared the House Transportation and Infrastructure Committee. The renewal debate reveals the same pressure points surrounding the gas tax itself: the HTF is strained, fuel tax revenue isn’t keeping pace, and lawmakers are considering whether drivers of electric and hybrid vehicles will have to pay new fees to support the system (the bill contains a proposal that would impose fees on those vehicles).
Lieberman, however, is optimistic, noting that while high gas prices and inflation will make the financing mechanisms particularly contentious, the underlying need for a bill is widely recognized. He expects reauthorization, but says the conversation will likely turn to how to pay for it without relying so heavily on what he calls an “antiquated” gas tax. He also expects a greater focus on using technology to more effectively deploy federal dollars.
The public, he explains, often views infrastructure costs solely through the lens of initial construction. What they fail to see, however, is that most of the cost of an asset is incurred during its life cycle. “Maintaining a bridge for 75 years is significantly more expensive than building one,” he says.
People also underestimate the cost of doing nothing, he says. Allowing a road to downgrade from “fair” to “poor” condition doesn’t just mean a rougher ride. it also means that the final repair will cost exponentially more.
Technology, including modeling, can help companies address some of these problems sooner. “If we can give government owners a live digital copy of their infrastructure, they can predict exactly when a bridge needs maintenance before it becomes a critical, extremely expensive emergency,” he says. This design would allow the government to stop treating infrastructure as a one-time cost and start treating it as a dynamic asset. For Lieberman, that’s the bigger point: when infrastructure dollars are scarce, using them smarter is as important as finding more of them.
