Blog: Three Ways to Outsmart the Next Gas Tax Hike

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You Pay What You Drive. Are we paying too much or not enough?

We have already established, both through using brain power and real data, that the California gas tax is typically between $0.02 and $0.04 per vehicle mile traveled (VMT). And technically, these aren’t taxes imposed on the consumer. Like tariffs, these excise taxes are levied on manufacturers or retailers first. And they could absorb those 80 cents per gallon, as they are usually not itemized. Just kidding – just like tariffs, they are pushed all the way through to the consumer, and refiners are keeping their profit.

But then there are also a few added fees and costs that supposedly lead to “greener fuel”, fewer GHG emissions, and cleaner air (at least that is what the plan tells us). According to California’s Energy Commission, the current extra environmental and regulatory fees add up to approximately $1.27 per gallon. Adding in the CARBOB cost, some increase due to inflation or tariffs and rounding it up, let’s just pretend for 2026 that the number was $1.50.

Which patriotic Californian doesn’t happily pay the infrastructure taxes or environmental fees to have the pleasure of burning cleaner fuels and breathing cleaner air?
But for those unpatriotic few who don’t want to pay their fair share towards our beautiful car-centric infrastructure and “cleaner transportation”, there are quite a few tricks to get around it.

AAA and the Vehicle Miles Traveled

According to AAA, each mile driven costs the average American with an average-sized car an average amount of 72 cents. In our not-so-average Bay Area, that number can balloon quickly towards 120 cents and more.

The reason AAA uses $0.72 per mile is that we purchase gasoline on a per-gallon basis, insurance annually, a car lease for 36 months, and cover repairs and maintenance at various intervals. Some of these costs are fixed, while others are variable. All of them are Direct costs to the driver, with only a hint of indirect cost (or Externalities) here and there.

All these costs come together once we start moving the car. In many plans, the act of driving is called vehicle miles traveled or VMT.

So let’s say the price for one gallon of gasoline was $5, including the $1.50 charitable contributions to our country, our state, and our local jurisdictions.

Here are three surefire ways to reduce the Gasoline Excise Taxes and Fees.

Suggestion No. 1: Size Does Matter!

As do miles per gallon. There are tremendous tax savings to be had by buying and driving smaller, economical vehicles with lower mileage.

Cost per VMT	Cost per Gallon	Chevy Suburban (~10 MPG)	Toyota Camry (~25 MPG)	Honda Civic (~40 MPG)	Toyota Prius (~60 MPG)
Infrastructure Fees	$0.80	$0.08	$0.03	$0.02	$0.01
Environmental Programs	$0.70	$0.07	$0.03	$0.02	$0.01
Total for Both Programs	$1.50 per gallon	15 cents per mile	6 cents per mile	4 cents per mile	2 cents per mile

A small, economical car only pays 2 cents per mile towards CA infrastructure – and therefore cheats Caltrans out of money for more glorious highway widenings.
A large and wasteful car sends a more patriotic 8 cents per mile to Sacramento and Washington, DC, for infrastructure.
A small, economical car driven by someone who wants to save the world can achieve this with just 2 cents per mile.
A large and wasteful car will be burdened with 7 cents per mile in environmental fees, which is the idea behind these fees.

Now, if we all drove a car like the VW XL1 with 260 mpg, we would be paying almost nothing. Caltrans sure wouldn’t like that.

Suggestion No. 2: Think before You Drive

And coming back to the new transportation currency of California: Vehicle Miles Traveled (VMT) …

Cost per year and VMT	CA Taxes and Fees	Jeep Wrangler (~10 MPG)	Subaru Legacy (~25 MPG)	Mazda 3 (~40 MPG)	Hyundai Elantra (~60 MPG)
10,000 miles	$1.50	$1,500	$600	$375	$250
15,000 miles	$1.50	$2,250	$900	$563	$375
20,000 miles	$1.50	$3,000	$1,200	$750	$500

I’m not sure who can drive 20,000 miles per year in an old Jeep Wrangler with little to no suspension. But if anyone did, they would pay ca. $3,000 per year for all the CA extras. In contrast, someone who chooses one of the small, economical hybrids and only drives a reasonable 10,000 miles per year pays just 10% of that.

Looking at it this way, another rather obvious way of avoiding the gasoline excise tax and CA’s environmental extras is by combining trips and driving less overall. If the gasoline excise tax is considered a regressive tax, then the good news is that any driver can benefit from avoiding those taxes even more so by driving less.

The miles not driven or traveled don’t incur any gasoline fees or taxes.

Suggestion No. 3: Drive Less, Move More

We have established that the point of an excise tax is to avoid many of the indirect costs associated with fossil fuels that are currently suffered by society as a whole. One of the most damaging side effects of driving is how our lives have become so sedentary and unhealthy. We have fewer and fewer reasons to move it seems. We are addicted to convenience. The Western world has become too lazy.

“One-third of the global population aged 15 years and older engages in insufficient physical activities, which affects health.” [PubMed]

Research on urban travel patterns has shown that …

20% of all trips are below 1 mile (or walking distance)
50% of all trips are below 3 miles (or biking distance)
50% of commute trips and 75% of shopping trips are under 5 miles (or e-Bike distance)

And while these trips are all in walking or biking distance, convenience leads many – who could use more Light Physical Activity (LPA) – to drive instead.

“If you want to join a movement – then move” [Zarathustra]

During the pandemic, San Mateo County mandated that people stay within a 5-mile radius of their home. Essentially, our politicians acknowledged that if people organized their lives more effectively, every basic need (jobs, schools, doctors, hospitals, shopping, restaurants, and entertainment) could be fulfilled within a 5-mile radius.

Unfortunately, the County Board of Supervisors then forgot to draw the right conclusion from that newfound insight. They refused to do their homework. They never started to provide the safer walking and biking infrastructure required for this. If they had done so, many people could have transitioned from driving to LPA, enjoying all the associated benefits.

And since the gasoline excise tax is seen as a very regressive tax and a higher punishment for low-income families, providing that safer infrastructure for these 50-70% short-distance trips should have been a top priority for our equity warriors on the Board of Supervisors.

These savings mean even more to low-income families than to some principled and tax-averse Libertarian.

Conclusion

Let’s face it, there is little evidence that people really care too much about the gas tax, at least not enough to do anything about it.

If people were really so bothered about the outrageously-over-the-top-yearly-gas-tax-hike, why are drivers …

… keep buying these bigger trucks and SUVs with below-average mileage?
… making even the most minor errands and shortest trips by car?
… are enraged if anyone dares to suggest walking or bike a little more and for their own good?

Critical thinking suggests that these outrage articles about “tax hikes” are mostly pushed by lobbyists and industry friends, not necessarily by consumers themselves. Consumers are making their choice when they buy based on size, acceleration, and horsepower instead of MPG.

More Information

AAA: Driving Cost Calculator
Elias: California energy panel should limit oil refiners’ margins
Energy.CA.gov: California Petroleum Market
Energy.CA.gov: It’s in the gross margins
PubMed: Sedentary Lifestyle: Overview of Updated Evidence of Potential Health Risks
Caltrans: CA Road Charge Pilot

Editor’s Note: The views and opinions expressed in all blog posts are those of the authors and do not necessarily reflect those of the Redwood City Pulse or its staff.