The National Academies

NCHRP 19-26 [Pending]

Modernizing Fuel Tax Revenue Forecasting

  Project Data
Funds: $450,000
Contract Time: 30 months
Staff Responsibility: Patrick Zelinski


State departments of transportation (DOTs) are facing funding challenges because state and federal fuel tax revenues are changing and becoming harder to accurately forecast. One of the factors responsible for changes is improvements in vehicle fuel economy. For example, there are increases to the National Highway Traffic Safety Administration (NHTSA)’s Corporate Average Fuel Economy (CAFE) standards, fleet economy changes, electric and alternative fuel vehicles, and changes in vehicle miles traveled (VMT). Some state legislation has inadvertently decreased fuel revenues as a side effect. For instance, more than a dozen states have adopted regulations through legislation or other government actions to rapidly scale down emissions of light-duty passenger cars, pickup trucks, and sport utility vehicles and require an increased number of zero-emission vehicles to meet air quality and climate change emissions goals.

Six separate excise taxes are imposed to finance the federal Highway Trust Fund (HTF) program. Three of these taxes are imposed on highway motor fuels (gasoline, diesel fuel and kerosene, and alternative fuels) and generate the majority of the revenues dedicated to the HTF. The FHWA’s Highway Revenue Forecasting Model (HRFM) provides projections for a 20-year time horizon for HTF and new revenue sources. The model uses VMT and fuel economy projections, as well as changes in composition of vehicles over the forecasting period. The fuel efficiency projection incorporates anticipated penetration of fuel-efficient vehicles, including electric vehicles (EVs). The model provides revenue projections, contribution of the 21 different vehicle classes to revenues, and costs (tax burdens) to households by income group and other demographics. Outputs from this model are primarily used for conducting highway cost allocation (HCA) studies (https://www.fhwa.dot.gov/policy/hcas/final/).

Research is needed to help state DOTs develop improved models to accurately forecast motor fuel transportation revenue in the near and long term for operational and planning needs. Further, these forecasts are necessary to quantify and understand potential shortfalls in revenue that need to be replaced by alternative sources of revenue.


The objective of this research is to develop a method and model(s) to help states forecast motor fuel transportation revenues in light of increased fuel efficiency and alternative fuels.


PHASE I—Planning 

Task 1. Conduct a literature review of relevant research and the current state of practice for forecasting motor fuel transportation revenues. The review shall include published and unpublished research conducted by U.S. and international public- and private-sector organizations.

Task 2. Synthesize the literature review to identify the knowledge gaps and opportunities related to forecasting motor fuel transportation revenues. These gaps should be addressed in this project or in the recommended future research, as budget permits.

Task 3. Identify and review data sources and methods available at state DOTs and federal repositories for forecasting motor fuel transportation revenues. Synthesize the results.

Task 4. Propose a method and model(s) (henceforth “model(s)”) to achieve the research objective based on Task 3, to be fully developed in Phase II. 

Inputs may include the following: 

  • Vehicle type,
  • Fuel economy,
  • Vehicle survival rate,
  • VMT,
  • Travel behavior (e.g., percentages of people commuting and other modes of transportation such as ride-hailing, car-sharing, and micromobility options),
  • Vehicle ownership, and
  • Other appropriate data as identified.

Outputs may include the following:

  • Vehicles with active registration by fuel type;
  • Fuel consumption;
  • Potential revenue gap or surplus analysis;
  • Revenue by vehicle class, type, fuel, and fuel efficiency;
  • Annual forecasts with varying trends for up to 30 years; and
  • Appropriate analyses (e.g., trends and risk) of the forecasting results.

At a minimum, model(s) must:

  • Include light vehicles (and potentially medium and heavy),
  • Have standard outputs for states,
  • Include the ability to forecast fuel tax revenues,
  • Allow states to perform a gap analysis,
  • Be piloted with at least one state DOT in each AASHTO region, and
  • Include a federal model based on aggregate data.

The model(s) could be customizable at the state and federal levels to reflect variations in specifications such as fuel use in specific states and regions.   

Task 5. Propose a tool for the model(s). If web-based, the tool shall conform to the Cooperative Research Program (CRP) WebResources.

Task 6. Prepare Interim Report No. 1 to document Tasks 1 through 5 and provide an updated work plan for the reminder of the research. 


PHASE II—Method Development

Task 7. Execute the method developed in Tasks 4 and 5, including the pilots, according to the approved Interim Report No. 1. 

Task 8. Conduct a peer exchange with the states who participated in the pilots and the NCHRP panel members.

Task 9. Demonstrate the model(s) and tools to other state DOTs. 

Task 10. Prepare Interim Report No. 2 to document Tasks 7 through 9. This interim report shall incorporate revisions based on the feedback provided during the peer exchange and demonstration and an updated work plan for Phase III.


PHASE III—Final Deliverables

Task 11. Prepare final deliverables, including: (1) final model(s), (2) final tool, (3) a conduct of research report that documents the entire research effort and includes an executive summary that will be useful to practitioners and stakeholders, (4) a technical memorandum titled “Implementation of Research Findings and Products” that includes plans for future model deployment, and (5) materials for a webinar that presents the research findings and conclusions, to be delivered after the end of the project.


STATUS: Proposals have been received in response to the RFP.  The project panel will meet to select a contractor to perform the work.

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