Changing consumer preferences may have a future effect on transportation revenue. The most significant change would be the effect of more fuel-efficient vehicles on gas tax revenue. Although hybrid vehicles and alternatively fueled cars have many desirable characteristics-such as reduced emissions and lessened fuel expenses for consumers-from the tax collection perspective, they potentially could affect the amount of transportation revenue available for states. Simply put, if consumers use less gasoline because their cars are more fuel efficient or use alternative fuels, the state will collect less money from gasoline excise taxes.
The full effects of hybrid vehicles and alternatively fueled vehicles are unknown, although hybrid vehicle sales are growing rapidly in the United States. According to hybridcars.com, U.S. hybrid sales to private and fleet owners have generally doubled every year since 2000, with more than 205,000 vehicles sold in 2005. If gasoline prices remain high, many analysts predict that hybrid sales will continue to grow. ABI Research predicts that sales of hybrid vehicles will account for 10 percent of the 2 million midsize vehicles sold annually in the United States by 2006 and will account for 5 percent to 6 percent of all cars sold in the United States by 2010.11 J.D. Power predicts 400,000 hybrid sales in the United States by 2007, and Oak Ridge Labs predicts that 1.2 million hybrids will be sold in the United States market by 2008.12
Despite the dramatic growth in hybrid sales, hybrid vehicles still account for a small percentage of the overall motor vehicle fleet. According to the FHWA, U.S. motor vehicle registrations topped 231 million in 2003.13 New car sales for 2005 were expected to be approximately 17 million vehicles, meaning that hybrids would account for about 1 percent of all U.S. car sales. The small overall numbers of hybrids could limit their affect on gas tax revenue.
In addition to hybrid vehicles and alternatively fueled vehicles, slower travel growth and fuel consumption also may affect transportation revenue. Although the number of vehicle miles traveled by motorists continues to grow, it is no longer growing fast enough to cover the loss in purchasing power of the gas tax.
The effects of changing consumer preferences on transportation revenue is uncertain. According to the FHWA, in 2003, 11 states and the District of Columbia taxed less gasoline than they did in 2002.14 Three states had no changes in the volume of gasoline taxed in 2003 compared with 2002, and 36 states taxed greater volumes of gasoline.