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A Sensible Recommendation? Yes, In Fact
At the close of the Audi Mileage Marathon we talked about last week, Audi of America’s Executive Vice President Johan de Nysschen took a moment between results announcements and meet-and-greets with a few Hollywood celebrities to make a plea to the political structure. Mr. de Nysschen called for a lowering of diesel tax. Good, lowering taxes I like, though for a racing fan like myself, I was more impressed with Audi American Le Mans Series and Le Mans drivers Tom Kristensen, Allan McNish, and Dindo Capello than Mario Lopez or Brooke Burke. But that’s just me, and I digress.

de Nysschen with Burke and Lopez

Kristensen, McNish, and Capello

I’ve known that diesel is taxed differently than gasoline fuel, and that it impacts the viability of diesel from state to state. Lowering taxes sounds good, and I thought this column would be simple. “Yeah! That’s a brilliant idea,” and I’m done. I had just spent three awesome driving days in a fantastically comfortable Q7. The Q7 was a brilliant companion, as was my co-driver, Road & Track photographer John Lamm. The torque pulled us anywhere and gave all the power we needed, even enough for a few miles at 108MPH.

My steed on this journey, lucky number 7. Nope, not 108MPH in this photo, but I am driving here.
So, I came back to the office to check a few facts. Seemed it’d be easy to pull a few numbers and tell you all that diesel is taxed too high and the answer is obvious. As often the case, it isn’t that simple. Turns out lowering diesel taxes is only one part of the equation.
Gasoline Taxed Lower; Variations in State Taxes Extreme
On average, gasoline is taxed at 48.4 cents and diesel at 53.6 cents. That number includes the standard Federal taxes of 18.4 cents on gasoline and 24.4 cents on diesel. On a state level, California taxes gasoline the highest, adding 48.7 cents to Uncle Sam’s share. Excepting Alaska’s temporary moratorium on state fuel taxes, Wyoming gasoline tax is cheapest, only taking 14 cents for themselves.
State taxes for diesel are also higher than gasoline, with California again the greediest state. California demands another 52 cents per gallon from diesel drivers; Oklahoma and Wyoming are tied the least taxing, looking for 14 cents from diesel buyers. Actually, not counting Alaska’s temporary drop of all fuel taxes, Wyoming is the only state in the union that has chosen to tax gasoline and diesel at the same rate.
In taxing diesel higher than gasoline, we penalize consumers for choosing the more efficient powerplant. Audi’s call for lower diesel tax is to one degree or another to benefit their potential customers, but they back diesel as strongly as they do because they believe in the solution on a corporate level, just as Toyota took hybrids to heart.

In looking at this information, I’d make an amendment to Mr. de Nysschen’s request: Tax both fuels at the same rate, lowering diesel to the same level as gasoline. That is the real key ending the current penalty for choosing a powerplant that uses less fuel to go the same distance, and entirely appropriate with today’s clean diesels no longer guilty of excessive pollution.
Getting taxes equal will also help consumers make a more informed choice about which solution is better for their real-world driving lives, letting the American market really decide which fuel they prefer. In my leg of the trip, our Q7 saw and average of 27mpg, without hypermiling or special effort to maximize efficiency, evidenced by my triple-digit dash. We also had the truck loaded with three and four people and tons of luggage on board as well (didn’t I mention a photographer? They don’t travel light, but neither was I, being on the road for eight days. A typical seven-passenger SUV sees a combined real-world consumption around 18mpg.
For choosing the vehicle that could save you 9 mpg, you’re penalized a minimum of 6 cents per gallon by the Federal government and a maximum of 52 cents per gallon by liberal California. Does that really make sense?
Consistency in state-to-state taxation would be useful here, too, but that would require states to agree and that just isn’t part of our makeup. The states could lead the charge, and probably make changes faster, by adjusting their structures so gasoline and diesel are taxed the same at the state level. Eventually, the Federal government would catch up.