Gas prices are down, so is driving
Johnny Mack Morrow
Franklin County Times
The economy has hit a rough patch, and there's no doubt about it.
Yet one thing seems to be working in our favor-the price of gas has been dropping steeply.
Before the financial crisis, we were looking at $4.00 a gallon for gas.
Now the price is approaching $2.00, and hopefully it will keep dropping. Much of this reduction is due to the law of supply and demand.
When folks thought there would not be enough oil for world demand, high prices resulted, especially when speculators jumped in to further drive costs.
But with the downturn in the economy, and some changes in driving habits by many of us, then there is less demand and more supply. Prices drop.
However, prices more than likely will go up in the long run. But this last oil shock has shown Americans, and especially Alabamians, that we can make real change in the way we use oil.
Alabama had the second highest decline in the number of miles driven in August compared to last year. Alabama drivers went 482 million miles this past August, an 8.1 percent decline from August of last year. Only Florida had a larger decline, according to AAA-Alabama.
AAA officials say people are driving less because of record high gas prices seen earlier this summer and the problems in economic conditions.
For people looking for ways to save money, using less gas seems like a surefire way to do it.
However, there is another consequence to a steady decline in gas usage-there will be less money for road construction and maintenance.
Gas taxes are earmarked for roads and are the major funding stream for transportation, and that revenue will now be less than it was last year.
We don't have as high a gas tax compared to other states. Alabama's 18-cent-per-gallon rate is ranked among the 10 lowest in the nation, and it hasn't changed since 1992.
People in the U.S. pay about 47 cents on average in taxes for a gallon of gasoline, and Alabamians pay 36.4 cents per gallon, not including any local taxes.
According to federal authorities, taxes account for about 15 percent of the cost of a gallon of gasoline.
Each penny of gas tax in Alabama brings in roughly $20 million, according to state transportation officials. That money is not going as far as it used to.
In addition to the drop in gas consumption and the loss of tax revenue, the cost of road building has steadily gone up. Alabama road contractors say that the cost of resurfacing has increased more than 40 percent over the past three years. It's up to $143,000 per mile in 2008.
Petroleum is a big reason for the costs, and hopefully with the cost of crude dropping sharply, the cost of asphalt will go down as well.
Higher prices and lower revenue mean less maintenance, and delaying some very important road projects that will have a tremendous impact on the state.
Lt. Gov. Jim Folsom has been promoting a proposed four-lane highway down west Alabama that will link the Muscle Shoals area with Mobile.
Rep. Thad McClammy has been promoting a Black Belt Expressway that would cross the midsection of the state linking Montgomery to Meridian, Mississippi, and uniting I-65 to I-59 and many points west.
The last parts of Corridor X, the new I-22 linking Birmingham to Memphis, are moving toward completion.
There are ring roads proposed for north Jefferson County and south of Montgomery that will have a tremendous impact on the economy of the entire state.
These are just a few statewide projects, and there are many more locally that are important to complete.
All of these projects will be more difficult if revenue continues to drop, and there is certainly no inclination to raise gas taxes.
However, there is a growing call to invest in the national transportation infrastructure. Congress is looking at investing more in roads in the coming year as part of an economic stimulus.
That would be good for Alabama because the vast majority of highway funds come from Washington.
During the financial crisis, the federal government invested in Wall Street, while we in state government were worried about paving our local streets.
Although we are driving less, there are still a lot of roads to fix, and a lot of roads to build.
Even though it's a turbulent economic time, it may just be the right time to start tackling transportation problems.
Johnny Mack Morrow is a state representative for Franklin County. His column appears each Wednesday.