Obama proposes highway bill

US President Barack Obama will be proposing a 6 year highway bill which will set the policies for surface transportation over the coming decade. He will propose the bill this year. Many believe this policy is in response to the current situation of steadily rising oil prices and the so-called “knock-on” effect such elevated prices are expected to have on the economy.  People are anticipating that the goal of the proposed bill would be to obtain support from Congress to repair the country’s roads. They are also anticipating that the bill would address such issues as increasing safety measures, improving freight logistics, addressing congestion problems and generating transportation jobs. However, many Americans are unaware about the generation of funding for these projects.

The fund will be generated from the people. Every time someone fills their car’s gas tank, he or she has to pay a certain amount of money towards our transportation goals. It is estimated that the average car owner pays 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel for the Highway Trust Fund. This fund helps the government to build roads and various other projects all over the country which help people travel with ease from one place to another, like going to school or work, and then coming back home. This helps the government create a successful commerce system within the states. The excise tax is not charged to the cost of fuel and is not a variable amount. Thus, the more diesel and gasoline consumed in America, the more revenues will be allocated for roads.

Energy consumption in America is mainly driven by the ability to hold the cost of fuel at a rate which is affordable for the people. It’s fairly easy to understand that when the price of gas rises, market forces come into action and the demand for gas decreases. This causes, among other things, a lesser amount of money going into the Highway Trust Fund. By ensuring affordable energy for consumers, not only is a decent standard of living more available, but also a more stable and reliable source of funding for the highways in America.

Well we all know that it is difficult to improve the trust of the public in the Highway Trust Fund. It would help if the American people can be made to understand the use of the fuel tax, how it is allocated from roads, as this would increase public support for this tax. In return, the main goal of the fund is to ensure the people that they will also be benefited by it.

However, the proposal made by President Obama is different, as it addresses such issues as increasing the taxes on the oil industry. His highway bill has some questionable aspects to it. For example, it is unknown whether such a policy could, in the long term, bring stability to oil prices so crucial to the modern economy. Questions are raised as to what benefits taxpayers will see by promoting government spending which includes a $53 billion proposal on High Speed Rail. This tax would raise the price of fuel, which will further hurt the owner of the gas pumps and the people of America alike.

- Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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