Act 89, the comprehensive transportation funding law the PA Chamber supported, requires the Revenue Department to adjust the liquid fuels taxes based on inflation and average wholesale prices. Because of rising prices, a recent update raises the gasoline tax in 2023 to the equivalent of 78.5 cents per gallon (up from 74.1 cents this year) and raises the diesel tax to 61.1 cents per gallon (up from 57.6 cents).

The overall cost of gasoline has been declining the past several weeks due to slower demand. Diesel prices remain elevated due to limited refinery capacity and less elastic demand by heavy trucking. Year-over-year inflation remains high but appears to be cooling off.

The upshot – gasoline tax collections, paired with federal infrastructure dollars and the legislature reducing diversions to the state police, has PennDOT on track for a record capital spending budget, which was the intent of the program. The downside is that businesses will face an increase in shipping and operational costs, and supply chain and inflationary pressures are reducing the project output even with PennDOT’s $2.7 billion budget.

These higher prices are also spurring legislative interest in making sure electric vehicles are contributing an equivalent amount, possibly through an annual mileage fee paid when drivers update mileage for their registration.