The Surprisingly Violent Story Of How The Trucking Industry Killed Fair Prices For Great Diesel Cars
There are lots of reasons to love diesel cars: They offer a ton of torque and excellent fuel economy, and they're not as dirty and loud like they once were - we were thrilled with the latest diesel Audis.
But the fact remains that in the U.S., diesel is more expensive than the gasoline that powers nearly all our passenger vehicles - and that's an obstacle to growing its popularity.
Why is that the case, when the reverse is true in Europe?
The difference dates back to a bitter conflict between President Ronald Reagan, Congress, and the trucking industry, and unfortunately it's not going anywhere.
Reagan's Role
Entering office in 1981, Reagan soon recognized the need to increase funding for the country's highway system: Four thousand miles of highway needed resurfacing and 23,000 bridges needed repair or replacement.
That need gave birth to the Surface Transportation Assistance Act (STAA) of 1982. Because trucks cause more damage to roads than passenger cars, the bill included a higher user tax on heavy trucks, along with a $.05 per gallon increase on gasoline and diesel taxes. At the time, the two fuels were taxed equally.
That fee was significant. According to a December 1982 New York Times article, a trucking industry official said fees for each truck could jump from $1,700 to $2,300 annually.
That fear was confirmed in a 1984 report from the Government Accountability Office (GAO), which estimated taxes on very heavy trucks (70,000 pounds and up) would jump from $1,506 to $1,742, or from $1.40 to $1.56 per mile driven.
And at least a quarter of that would have to be paid at the start of the fiscal year, adding an extra financial burden.
The powerful American Trucking Associations (ATA) was "appalled" by the proposal, according to a detailed account of the legislative battle by Richard Weingroff, an information liaison specialist at the Federal Highway Administration.
ATA President Bennett C. Whitlock, Jr. "talked to quite a few senators," he told the Washington Post at the time. "We're asking them to vote against the conference report and to start over again in the next session of Congress in establishing new truck-use fees."
But the ATA lost its battle, and Reagan signed the bill into law on January 6, 1983, saying "as this bill becomes law, America ends a period of decline in her vast and world-famous transportation system."
The heavy truck fees were supposed to take effect in July 1984. They never did.
A Tax Is Born
After losing the battle in the legislature, the trucking industry kept up its vocal opposition. Two days after the bill became law, the Washington Post ran a story calling the truck lobby "one of the best-financed and strongest interest groups on Capitol Hill."
The article noted that the ATA's political action committee gave nearly $300,000 to 398 congressional candidates during the 1982 elections.
Rep. James J. Howard (D-NJ) told The Post he saw the ATA's loss as "an aberration due to fact there was a tremendous push for a jobs bill and a huge highway and transit bill."
In late January, the issue became violent. Despite opposition from the ATA and other industry groups, the Independent Truckers Association led a strike by drivers around the country, The New York Times reported.
In addition to striking, opponents of the fee began attacking drivers who continued on their routes. One trucker, George Franklin Capps of North Carolina, was shot through the neck by a sniper and killed while driving. Seven other North Carolina drivers were shot at, according to The New York Times.
California trucker Howard N. Adams was shot in the chest and lived, and a 14-year-old girl was riding in a car in near Pittsburgh when she was hit in the head with a brick that was apparently thrown at a truck from an overpass.
The strike did not last long and was never widespread, but the violence it kicked up highlighted the passion among truckers over the use fees.
It didn't take long for popular opinion to shift against the use fee. The month the bill became law, the Department of Transportation signaled it would be willing to see the truck fees replaced with an increased tax on diesel, the fuel used by large trucks and few passenger cars.
By February of the next year, the New York Times was referring to the "highly unpopular truck-tax legislation passed in 1982," and Secretary of Transportation Elizabeth Dole put forward a plan to reduce the fee and increase the tax rate on diesel.
The idea behind taxing diesel is that it's used by all trucks, but few passenger cars. That way, trucks still pay their fair share, in accordance with how much time they spend on the road - and they're not hit with large fees they must pay up front.
In 1984, Reagan signed the Deficit Reduction Act (raising taxes by $50 billion) into law, sharply cutting the use fee and raising the tax on diesel from $.09/gallon to $.14/gallon. A report from the Joint Committee on Taxation explained the rationale:
"Higher rates scheduled to take effect under the Highway Revenue Act of 1982 would have imposed a large tax on trucking operations which did not necessarily relate to the amount of business they might do, and that an alternative form of highway excise taxation should be devised which is more definitely correlated with the use of trucks. Therefore, Congress decided to substitute a high diesel fuel tax for a lower use tax."
Where We Are Now
The 1984 law included a tax credit to help out owners of diesel-powered light vehicles. That tax credit no longer exists, though you do get a break if you buy diesel for use on a farm, a nonprofit educational organization, or an aircraft museum.
And while it's possible that kind of credit could be reinstated, there are more calls for raising fuel taxes than lowering them - even from the trucking lobby.
The diesel tax is a fair way to account for the impact trucks have on the road, Darrin Roth, director of highway operations at the American Trucking Associations, said in an interview. "We think it should be even higher than it is."
"It's clear," he said, "that there isn't enough money going into highways" for necessary repairs and expansions, both of which help truckers.
Stephen Comstock, tax policy manager at the American Petroleum Institute, said he is "starting to see strong interest" in the idea of bumping up taxes. Former Secretary of Transportation Ray LaHood called on Congress to raise the gas tax earlier this month.
America's transportation infrastructure used to the best in the world, but is now "way down the list," he said at an event hosted by Mobility Lab.
"You've got to have a big pot of money. We don't have it now."
If those taxes do go up, there's no reason to believe they would suddenly be equaled.
Future Options
There are other ways to get more funding to the Highway Trust Fund. Oregon has looked at taxation based on vehicle miles, Comstock said, but that's considerably more complicated than just taxing fuel.
Virginia abolished its gasoline tax (the federal tax still applies), but compensated with a sales tax hike, according to The Washington Post.
And what about going back to the original idea of creating a fee for trucks and taxing gasoline and diesel equally?
"We wouldn't be in favor of that," Roth, of the American Trucking Associations, said.
Considering ATA's past success - and that it contributed $724,500 to federal candidates in the 2012 elections, according to Bloomberg - it would probably get its way.
Sorry, automakers. That diesel tax isn't going anywhere.