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Independent Idahoans still driving, despite gas prices

Two conversation topics traditionally generate a lot of discussion, but no solutions – weather and taxes. Add to that list the price of gas.

Projections don't miss by much

Doug Benzon has been forecasting gas tax revenue so long, his predictions rank alongside fine quartz watches and tide charts for accuracy. He usually projects two years in advance as part of the legislative budget process.

The most recent report indicates that revenue collections through March are two-tenths of a percent below his forecast while special fuels are two tenths of a percent above his projection. His forecast was made when Idaho was in the throes of an economic downturn and long before the current explosion of gas prices.

Those figures represent fuel sales through February.

Benzon monitors revenue on a monthly basis, but doesn’t become too alarmed about the results, because the department’s budget is based on annual sales.

Transportation department revenue forecaster Doug Benzon follows the phenomenon from a unique vantage point. Revenue from fuel sales (including gas and special fuels such as diesel) is a staple for funding the Highway Distribution Account and many of ITD’s construction projects. At the same time, Benzon’s annual forecasts are only marginally connected to the record-setting prices.

ITD derives its Highway Distribution Account revenues and construction funds from a fixed gas tax that does not fluctuate with price. The department collects 25 cents for every gallon sold, whether the pump price is $1.59 per gallon, or $1.95 per gallon. Those taxes account for 50 percent of the Highway Distribution Account revenue. Special fuels account for 19 percent, car registrations produce 16 percent of the revenue and commercial truck registrations 13 percent. Miscellaneous sources account for the remaining 2 percent.

The price of gas has a bearing on transportation department revenue only if it reaches a level that forces motorists to curtail driving. And, at least through March, that hadn’t happened yet, said Benzon.

What he sees in Idaho is a portrait of paradox.

Gas prices are rising rapidly, and motorists grouse every time they visit a gas station. Yet overall traffic counts are higher than last year. People continue to drive, despite prices that are on the brink of $2 per gallon.

Benzon reports that fuel consumption through March was about 1.2 percent higher than for a similar period last year. Basically, a little better than “flat,” he says. Memory is still fresh when the increase was nearly 7 percent from 1998 to 1999, an economic boom period.

Idahoans are driving more efficient vehicles than in the past, but they haven’t given up their love affair with large, thirsty sport utility vehicles and pick-up trucks. That may speak more to the Idaho lifestyle than anything else. Idaho is a rural state, with limited public transportation options in metropolitan areas and very limited alternatives beyond.

Consequently, passenger vehicles are critical to overcoming Idaho’s open spaces and remain a factor in sustained consumption. Driving is necessary for jobs, shopping, medical appointments, school… Even recreation is viewed as a necessity rather than a luxury.

“Research shows that there will be a magical point when people make major changes,” Benzon said.

We just haven’t reached that point yet.

Idaho drivers hit a significant plateau in 1979-80 when the price of gas broke through the $1 ceiling. Fuel sales plummeted by 90 million gallons per year for the next three years, which had a profound impact on ITD’s budget. It took 14-15 years for fuel sales to return to their pre-1979 level.

“Eventually, if consumers change their driving habits, we will notice another impact on the department. When we get to that point, revenues will begin to fall, which will have an impact on maintenance, construction and programs.”

Idaho’s rapid population growth has accounted for a steady, but slow, increase in fuel consumption, providing a soft buffer from recent price increases.

Much of the population growth has come in the form of young consumers – probably families with two wage earners, at least two relatively new vehicles (often including an SUV), and a new home in subdivisions that are removed from the work place. Commuting to work is an accepted standard. And more likely than not, the commute is solo – one person per vehicle.

Commuter vans, car pools and other forms of alternative transportation are becoming more viable and visible options, but thus far, they haven’t converted drivers en masse from a preference for independence.

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