AS predicted, ODOT sees drop in gas tax revenue due to more efficient cars, less use of high-priced gas

SALEM, Ore. (KTVZ) – Oregon Department of economists have long predicted gas tax revenue would decline as Oregonians purchase more efficient vehicles and use less gas to travel. That decline is officially here, officials said Friday, as motor fuels tax revenue is down 2.2% for 2026, compared to the first nine months of 2025​.

“Reduced fuel consumption is worth celebrating, because it means cleaner air for Oregonians,” said Travis Brouwer, deputy director of ODOT. “However, our transportation system still depends on gas tax revenue to function. Transportation agencies at the city, county and state level across Oregon will now have fewer dollars to maintain and improve the transportation system. With inflation rising, each of those dollars will buy less.”

Experts had predicted a decline in gas tax revenue would begin this year. The scale and pace of that decline has been increased by a nationwide spike in gas prices. Fuel prices are significantly higher across the country this year, particularly since the war in Iran began this spring. 

Gas consumption in Oregon peaked in 2018 and has been declining slowly ever since. That’s because Oregonians have increasingly purchased efficient and electric vehicles. There are more than 140,000 plug-in and electric vehicles registered in Oregon. The average car in Oregon now gets over 25 miles per gallon, compared to 21 miles per gallon in 2016, a 20 percent increase in fuel efficiency in just 10 years.

In recent years, gas tax revenue had continued to go up, even as gas consumption declined, because the Oregon Legislature put in place a series of two-cent gas tax increases for 2020, 2022 and 2024. Those gas tax increases were less than inflation during that time.

There are no more scheduled gas tax increases, and the state gas tax will remain flat at $.40 per gallon unless action is taken by the Legislature. With gas consumption declining, it’s likely that gas tax revenue peaked in 2025, while inflation continues to drive up costs.

"With funding from the gas tax declining for maintaining and operating the transportation system, travelers will experience rougher roads, more delays, more closures, and less reliable travel across the state," ODOT said.

To learn more about transportation funding in Oregon and efforts to put state and local transportation agencies on a sustainable funding path, visit ODOT’s funding page.