Methodology to Assess High Efficiency Vehicle Trends on Fuel Tax Revenue in Utah

Departments of Transportation (DOTs) face a reduction in fuel tax revenues from increasing market penetration of alternative-fuel vehicles coupled with improving mileage of new light duty vehicles. The revenue shortfall related to this trend will directly impact each State’s ability to fund their operational and maintenance responsibilities.The objective of this paper is to describe the use of the FHWA Energy and Emissions Policy Analysis Tool (EERPAT) for the purpose of scenario testing in service to projecting future transportation revenues.Motor fuel taxes are a significant revenue source in Utah, generating 27.5% of UDOT’s revenue in 2013. To inform the debate on future transportation finance, the State Legislature tasked UDOT with estimating future trends in fuel tax revenues. A key attribute of EERPAT when applied to this question is its ability to estimate future transportation conditions in an internally consistent manner – demographics, income, VMT, fleet mix, fuel choice, electric vehicle range, fuel consumption -- which are ultimately drivers of fuel tax revenues. This research tested three scenarios that vary the market penetration of alternative drive train vehicles – battery electric, plug-in hybrid, and hybrid – into the light duty vehicle fleet.Even with increasing VMT, the analysis finds that constant dollar fuel tax revenues will decline by 29% in the Base Case when compared to 2010. Moderate and High penetration would result in 19% and 25% revenue reductions from the 2040 Base Case, respectively. By incorporating a wealth of interactions EERPAT is an exceptional tool for scenario testing alternative futures affecting future fuel tax revenues.