EFFECTS OF A $0.25 FEDERAL GAS TAX INCREASE ON U.S. ECONOMY, FUEL USE, FLEET COMPOSITION

The document analyzes a proposed $0.25 per gallon federal gas tax increase, finding it would generate approximately $1.1 trillion in revenue through 2050 and reduce total fuel consumption by over 1.3 billion barrels. The tax would incentivize the adoption of electric vehicles, adding roughly 2.5 million additional EVs to U.S. roads by 2050. Additionally, the report notes that a $0.25 gas tax is equivalent to a carbon tax of $25 to $29 per ton, which exceeds the record high allowance auction prices of the California-Quebec and Regional Greenhouse Gas Initiative cap-and-trade systems.

• A federal gas tax increase of $0.25 per gallon, phased in at $0.05 per year starting in 2021, would generate $50 billion in annual government revenue by 2025 and approximately $1.1 trillion in total revenue through 2050.
• The tax would increase the number of electric vehicles (EVs) on U.S. roads by approximately 2.5 million by 2050, with annual EV sales increasing by about 210,000 per year by that date.
• The proposed tax would reduce total fuel consumption by more than 1.3 billion barrels through 2050, consisting of nearly one billion barrels of gasoline and nearly 400 million barrels of diesel.
• A $0.25 gas tax is equivalent to a carbon tax of $29 per ton for gasoline and $25 per ton for diesel, both of which are higher than the record high allowance auction prices of the Regional Greenhouse Gas Initiative ($7.50 per ton) and the California-Quebec cap-and-trade system ($17.87 per ton).

APA

ORVIS, R., & MAHAJAN, M. (2020). EFFECTS OF A $0.25 FEDERAL GAS TAX INCREASE ON U.S. ECONOMY, FUEL USE, FLEET COMPOSITION. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Effects-of-a-0.25-Federal-Gas-Tax_April-2020-Update.pdf

Chicago

ORVIS, ROBBIE, and MEGAN MAHAJAN. EFFECTS OF A $0.25 FEDERAL GAS TAX INCREASE ON U.S. ECONOMY, FUEL USE, FLEET COMPOSITION. Energy Innovation, 2020. https://energyinnovation.org/wp-content/uploads/Effects-of-a-0.25-Federal-Gas-Tax_April-2020-Update.pdf.

Wikipedia

{{cite report |last1=ORVIS |first1=ROBBIE |last2=MAHAJAN |first2=MEGAN |title=EFFECTS OF A $0.25 FEDERAL GAS TAX INCREASE ON U.S. ECONOMY, FUEL USE, FLEET COMPOSITION |publisher=Energy Innovation |date=April 2020 |url=https://energyinnovation.org/wp-content/uploads/Effects-of-a-0.25-Federal-Gas-Tax_April-2020-Update.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{orvis2020effects, author = {ORVIS, ROBBIE and MAHAJAN, MEGAN}, title = {{EFFECTS OF A \$0.25 FEDERAL GAS TAX INCREASE ON U.S. ECONOMY, FUEL USE, FLEET COMPOSITION}}, institution = {Energy Innovation}, year = {2020}, month = apr, url = {https://energyinnovation.org/wp-content/uploads/Effects-of-a-0.25-Federal-Gas-Tax_April-2020-Update.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }