The cheap oil dividend

Whether one observed Christmas or Hanukkah — or any other seasonal festivity — there was a nice little gift included for the drivers of this nation. Gasoline prices, in case anyone hasn't noticed, are down, way down. The average price of a gallon of unleaded in Maryland by Christmas week was in the neighborhood of $2.53, according to AAA, and there were some stations in the Baltimore area selling it for as little as $2.22.

One year ago, average gasoline prices were about $1 per gallon higher, which means a typical fill-up is saving drivers $15-$20 a pop. That's a significant dividend, and government officials are predicting the trend will continue in 2015, making cheaper gas an unexpected economic stimulus that translates into hundreds of dollars per household.


Not every community emerges as a winner in this development. Oil-driven economies in places like Texas, North Dakota and Alaska are taking a hit. It's also a problem if it causes Americans to shed their Priuses and return to their gas-guzzling, greenhouse-gas-spewing ways.

But for the most part, it's good news. Lower gas prices likely helped fuel rapid third quarter U.S. economic growth, a 5 percent boost in the gross domestic product which was the best recorded in 11 years. They are also one reason why the stock market performed so well in the last quarter, the Dow topping the 18,000 mark for the first time on Dec. 23.


Such bargain gasoline prices offer a tremendous opportunity for this country to boost neglected transportation infrastructure, which has fallen embarrassingly behind countries like China. The failure of Congress to adjust the federal gasoline tax to account for inflation — it hasn't been touched since 1993 and remains frozen at 18.4 cents per gallon — has contributed to the decay of the nation's once-enviable system of roads, bridges, airports, ports and public transportation.

Congress has in recent years tried to supplement transportation spending with other tax dollars, but with the federal government running a budget deficit, that amounts to borrowing money from China to finance spending that used to be self-sustaining. Why saddle future generations with the cost of neglected infrastructure?

Oh, we know the usual objections. Americans hate to pay more at the pump, and the tax is regressive as rich or poor pay it the same. But even if Congress doubled the tax tomorrow (and no one is proposing such a sudden increase), motorists could scarcely tell the difference given how far prices have tumbled of late. In return, badly-needed investments could be made in roads and rails that would create thousands of new construction jobs and ensure that the U.S. could remain competitive in the global market.

Might raising the price of oil reduce demand? We can only hope. Again, that might not be music to the ears of petroleum companies or their workers, but promoting energy efficiency, reducing the worst effects of climate change and weaning the U.S. from its dependence on foreign oil are all significant benefits that would be attached to raising the gas tax.

How bad is U.S. transportation infrastructure right now? One report estimates the nation needs to spend at least $740 billion over the next six years to meet current demands. That's substantially more than the $83 billion the U.S. spends annually on roads and bridges today, according to the "2015 Bottom Line" report released earlier this month by the American Association of State Highway and Transportation Officials.

If there's a way to achieve that investment without raising the gas tax (or creating a broader carbon tax that would have a similar effect), we'd be glad to hear it. But there isn't any serious alternative on the table. Meanwhile, motorists are getting stuck in traffic, and 70,000 U.S. bridges are considered structurally deficient with one 22-mile stretch of Interstate 95 in Philadelphia reporting 15 such spans with the cost to replace them pegged at $7 billion.

One thing is certain. Eventually, gas prices will rise, and members of Congress will be even more fearful of addressing this growing problem. If the gas tax had simply been allowed to rise with inflation, it would be at least 30 cents today. What would 12 cents a gallon mean to drivers right now? There'd only be 88 cents a gallon ahead of last year instead of that full dollar, but the future of the nation's economy would look considerably brighter.