Gonzo Gasoline

Since 10/1/93, the federal gasoline tax has been 18.4 cents/gallon (24.4 cents/gallon on diesel). Gross gas tax revenues are about $45 billion/year with 60%, or $27 billion coming from gasoline ($18 billion from diesel). Thus, each penny of the gasoline tax raises $1.5 billion/year. Therefore, the $2/gallon rise in the average price of gasoline (ignoring diesel) is equivalent to a tax of $300 billion on households, or 1.2% of GDP!