What the Decline in Oil Means for Departments of Transportation

The Los Angeles Times recently published a revealing article that focuses on how California is cutting their transit project funding due to the drop in gas-tax revenue. To learn more about the breakdown of where exactly that gas-tax revenue is allocated and how, Pavia Systems has put together a short video. To summarize, when you buy a gallon of gasoline, part of the cost of that gallon is the gas tax. This consists of both a federal component and a state component. The federal tax is fixed and the state tax varies from state to state. The federal tax has stayed the same since 1993 at 18.4 cents, but its buying power has been reduced by 35%. The further drop in revenue is tied to the fact that crude oil itself has seen a significant drop over the last few years.

As key countries increase their production of oil and that supply continues to flood the market, we have seen oil drop from highs of $120 per barrel to around $30 per barrel recently. At the state level, this in turn has affected the tax rate which is tied to gas prices in some states that are indexed as a proportion. The LA times article states that just a few years ago “it was set at 18 cents a gallon…but fell to 12 cents a gallon last year and is expected to decline to 10 cents in July.” So what does this mean in terms of revenue generated from gas tax in CA? Well the article goes on to state that for “each penny” that the tax decreases it means a decrease in “$140 million a year” for state transportation projects.

California is not the only state seeing the cuts in funding to transit project, even with the passage of the historic $281 billion dollar FAST Act in the Congress at the end of 2015. Around the entire country, local municipalities and other state DOT offices are feeling the effects through tightening budgets. Under the current system, the funding to maintain our infrastructure is in serious shortfall.

So how can those agencies take control of a seemingly helpless situation like falling gas prices and squeezed funding? Well the projects they do have planned and under construction must be executed with more efficiency. Technology plays a key role in the ability to help deliver projects faster and under budget for these jobs. The metrics and stats have been field tested and proven time and time again with software solutions like HeadLight by Pavia Systems. Here are some real project savings collected on real projects throughout the United States helping the project team do more with less.

  • Drive down costs to collect and document project information
  • Inspectors on average saved 1 hour and 45 minutes every day being able to spend more time in the field instead of filing reports in the office.
  • Increase quality and usability of information collected across the agency
  • Amount of data collected increased by 275%
  • Mitigate and manage risk as stakeholders gain a real time virtual window into projects to make decisions proactively and transparently.
  • Finish road projects faster to relieve road congestion and traffic by preventing project delays
  • Prevent losses of millions in agency and taxpayer dollars every year through more efficient project delivery and fewer claims

We’ve got to define our national priorities with the understanding that to keep the American economy moving, we’ve got to invest in the assets that literally keep America moving.

One Response to “What the Decline in Oil Means for Departments of Transportation”

  1. galal amin

    We must consider today the items that used in contraction of highways like (m. c. o) and asphalt present (5. 5) in asphalt concrete
    They also decrease the cost
    Add to that the decrease cost of transport material that use in projects
    Thank you

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