WASHINGTON, D.C. -- There are a few familiar items in the Trump administration's recently announced infrastructure plan and its proposed 2019 budget that would affect the fuel retail business—think selling oil from the nation's supply reserves, expanding interstate tolling and rest-stop commercialization. At the same time, an idea that did not make the official proposals is still being kept alive by the White House: increasing the federal gasoline tax.
Here is a rundown of the more notable proposals and initial reactions from the fueling industry.
Petroleum Supply Reserve sell-off
As part of his budget proposal for the fiscal year starting Oct. 1, 2018, President Donald Trump has revived his proposal to sell off half the Strategic Petroleum Reserve (SPR) and the U.S. Northeast Gasoline Supply Reserve (NGSR) in his 2018 budget. He first did so in May 2017, arguing it would help cut federal spending.
The U.S. government created the SPR in 1975 to cushion the fuel market against supply disruptions. The Obama administration formed the NGSR in 2012 after Hurricane Sandy to protect the fuel supply in New York and New Jersey from disruption.
The proposal would involve selling half of the SPR’s 688 million barrels of oil and the entire 1 million barrels in the NGSR, effectively “de-establishing” it. “The NGSR has not been utilized and has issues surrounding cost efficiency and operational functionality,” the budget stated. It also said that the reserve’s leased commercial storage contracts expire in early fiscal 2019.
Assuming Congress approves the reserve sales, the gasoline market would probably not be affected significantly, Robert Campbell, head of oil products markets for New York-based Energy Aspects, told Reuters. However, the Northeast’s fuel market would be exposed if another hurricane or other disaster hit.
“If we were to get in a situation where we once again have refinery closures on the East Coast, it would be a much more vulnerable market,” Campbell told Reuters.
The president’s infrastructure proposal calls for $1.5 trillion in spending over 10 years, with $200 billion coming from the federal government and the rest made up by the states and private/public partnerships. One tool the administration is again proposing to help states raise money: Let them toll existing interstates.
This idea is rejected by many industry groups, including the Alliance for Toll-Free Interstates (ATFI), a Richmond, Va.-based group with members including NACS, SIGMA and NATSO.
“Tolls are a wildly inefficient tax, sacrificing money that could go toward construction to corporate profits and administrative costs,” said Stephanie Kane, spokesperson for ATFI, in a statement. “In addition to the diversion onto secondary roads, which causes congestion and public-safety issues, tolls will do unimaginable harm to businesses, as shipping and manufacturing prices skyrocket to account for these new costs.”
“Interstate tolls cost the government significantly more to administer and enforce than the existing motor-fuels tax,” said Lisa Mullings, president and CEO of the truckstop and travel-center association NATSO, Alexandria, Va. “Why would anyone fail to support an increase in the fuel tax and, at the same time, work to create another type of tax (such as toll roads) that costs more to collect than the fuel tax?”
Only rest areas built before 1960 can sell fuel and food, while those built after this date can offer only vending. In its infrastructure plan, the White House has again proposed allowing the commercialization of more rest areas—in other words, allowing more to sell fuel and food—and would require the revenues to be reinvested in their local corridor’s infrastructure. States would not be able to charge fees for essential services such as restrooms or water.
NATSO argued that this move would hurt the growth of businesses at the interstate exits, citing that counties with commercial rest areas have 56% fewer restaurants, c-stores and truckstops. There are almost 97,000 gas stations, restaurants and truck-service operators within a quarter-mile of interstate highways.
“Commercialization allows the government to hand-pick one company to operate exclusively at the state rest areas; this company behaves as a monopoly simply by virtue of its location on the highway shoulder or median,” Mullings said.
Paige Anderson, director of government relations for NACS, Alexandria, Va., said in a statement that the association opposed both rest-stop commercialization and increased interstate tolling on federal highways.
“NACS and its members strongly support increased investments in our nation’s infrastructure, especially in the transportation system," she said. "But we don’t believe that infrastructure planning should involve sacrificing the investments of small businesses located along interstate highways and the thousands of jobs they create."
The current lack of commercialization has fostered diverse and "competitively priced" retail food and fuel offerings, Anderson said, and pointed to studies that found prices at commercialized rest stops can be 30% higher or more.
What is not mentioned in Trump's infrastructure plan or proposed budget is an increase to the federal excise tax on gasoline, which has been 18.4 cents per gallon (CPG) since 1993. However, this does not mean that the White House is against the idea.
Earlier reporting suggested that Trump was open to supporting an increase in the federal gas tax. And in January, the U.S. Chamber of Commerce presented its proposal to raise the gas tax by 25 CPG over five years to help fund infrastructure improvements.
Most recently, at a White House press conference Feb. 13, Secretary of Transportation Elaine Chao confirmed that "everything is on the table," after being asked if President Trump agreed with the U.S. Chamber of Commerce’s proposal.
"The gas tax has an adverse impact, a very regressive impact, on the most vulnerable within our society, those who depend on jobs, who are hourly workers," she said. "So these are tough decisions, which is why, once again, we need to start the dialogue with the Congress, and so that we can address these issues on this very important point."
And on Feb. 14, sources told Axios that Trump had endorsed a 25-CPG increase to the gas tax and was open to other ways to help pay for infrastructure during a White House meeting with senior administration officials and legislators.
NATSO supports increasing the 18.4-CPG federal gas tax to help fund the federal infrastructure.
Chao also said Congress should examine how to keep afloat the Highway Trust Fund, which pays for improvements to the federal highway system and is fed by revenues from federal fuel taxes.
"The Highway Trust Fund does need to be addressed because, every year, more money goes out of it than receipts are received," she said, and pointed to estimates that the fund would run out of money in 2021 unless Congress finds additional revenue. "So we, in conjunction with the Congress, have got to address this issue."