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Texas tax collections point to surging fuel demand: Kemp

LONDON (Reuters) – Consumption of gasoline and diesel in Texas is growing faster than at any time since the financial crisis, as an improving economy and lower fuel prices encourage more use of cars and trucks on the state’s roads.

Receipts of motor fuel taxes in January 2015 were 9 percent higher than the same month in 2014, according to the Texas Comptroller of Public Accounts.

Texas collected almost $288 million in motor fuel taxes last month compared with $264 million in January 2014, according to the comptroller’s monthly Revenue Watch report (http://link.reuters.com/heg24w).

Tax rates have not changed so the revenue rise is directly attributable to increased sales volumes.

Motor fuel taxes must be paid to the comptroller by the 25th day of the month after which they are collected by suppliers and distributors, so the January receipts are for gasoline and diesel sold in December.

By the end of last year, year-over-year collections – and by extension gasoline and diesel sales – were growing at the fastest for more than a decade.

For the last five fiscal years, motor fuel tax collections have generally increased by around 2 percent year over year.

In July 2014, before the plunge in oil prices began, fuel tax receipts were up just 2 percent compared with July 2013, in line with the five-year trend.

Once gasoline and diesel prices started to fall, however, monthly vehicle fuel sales began to pick up significantly.

According to the federal Energy Information Administration, Texas consumed 35.6 million gallons of gasoline and 20.1 million gallons of diesel every day in 2013, which was 10 percent and 13 percent of fuel consumption nationwide.

The state is the biggest consumer of diesel, and second biggest consumer of gasoline, after California, in the Union.

If the increase in driving and fuel consumption is replicated nationwide, and sustained for the rest of 2015, the United States could be on course for the largest annual increase in oil demand since at least 2004.

(Editing by David Evans)

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