Lots of folks think implementing a gas tax would be better than CAFE to help steer consumers toward buying more fuel efficient vehicles. This, in turn, could shrink our national clown-shoe carbon footprint, reduce pollution as well as give a boost to new technologies such as electric vehicles. So why did energy secretary Stephen Chu say that the tax option is off the table (despite previously favoring the concept)? It's thought to be too difficult to get through Congress. Not only would the average American consumer be opposed but lobby groups from myriad industries would quickly mobilize against such a measure.

Perhaps a teaspoon of rebate sugar would help the medicine go down? That's what Michael Levine and Mark Roe argue in a piece published in the Financial Times:

Consider first a textbook move to get the public to accept a costly change in policy: give voters their money back through another channel. If they got a tax credit or refund for the amount of the average voter's petrol usage, they would see that they were no worse off. They could keep the money and drive less or buy a more economical car.

Not a bad idea, right? They've even discussed similar ways of dealing with commercial concerns. While some people won't accept any plan with the word "tax" attached to it, perhaps just enough could be sold on the scheme if the pain was soothed with a bit of silver salve. While the authors single out energy companies as remaining contrary...wait a sec, who really cares what they think? What we care about is what you think so, let us know.

[Source: Financial Times]
Photo by rwkvisual. Licensed under Creative Commons license 2.0.

Ford Executive Chairman Bill Ford and AutoNation CEO Mike Jackson were just two voices that spoke out in favor of a higher gas tax earlier this year. While we took the Cato Institute's Alan Reynolds to task for muddying the waters of the "Toyota-licensed hybrid Fusion", there's reason to look deeper at his argument (published in The Wall Street Journal) which maintains that a higher gas tax isn't just a good way to encourage sensible car purchases, it also stands to be helpful in saving troubled domestic automakers like General Motors. Reynolds writes:

The federal fuel tax is highest on the most efficient fuel (diesel) and below zero on the least efficient fuel (ethanol). Cars get about 30% better mileage on diesel than on gasoline, and cars running mainly on gasoline get about 30% better mileage than they would using 85% ethanol.

To stop distorting consumer choices, simply apply the same 24-cent-a-gallon federal tax to gasoline and ethanol as we do to diesel. This would add funds to the depleted federal highway trust. More importantly, it would remove an irrational tax penalty on buying diesel-powered cars -- arguably the most cost-effective way to improve mileage without reducing car size or performance.

Since GM, already on the government dole, sells (proportionally) so many large vehicles, it will need to sell more smaller or diesel-powered vehicles to offset its truck fleet and to meet upcoming CAFE standards. Reynolds doesn't think CAFE is a good idea, and claims there's a better way to make sure GM survives. Reynolds says that a higher gas tax would allow the Detroit automaker to keep building the cars it builds best ("midsize and large sedans, sports cars, pickup trucks and SUVs"). Only by upping the gas tax and totally scrapping CAFE, Reynolds says, will GM not be forced to take even more money to survive – and to pay the CAFE fines it's sure to acquire. Doing so would also allow The General to not waste "more taxpayer money on 'retooling' to produce unwanted and unprofitable subcompacts and electric cars."


[Source: Wall Street Journal]

in an op-ed piece published in the Wall Street Journal, Alan Reynolds of the Cato Institute starts by making a few decent points about fuel taxation and fuel economy rules. Unfortunately, he undermines himself with some blatant errors and misinformation. In discussing how Detroit automakers will deal with new fuel efficiency requirements, he makes the all-too-common mistake of referring to Ford's hybrid system as licensed from Toyota ("Similarly, Ford has the Toyota-licensed hybrid Fusion and will soon produce the European Ford Fiesta in Mexico").

The reality is that Ford independently developed its own hybrid system at the same time Toyota was doing its own. The basic architecture of both systems is the same and both are based on the concepts developed and patented by TRW engineers in the late 1960s. When Ford introduced the Escape Hybrid, Toyota went after the Blue Oval for infringing on its patents. Ford had patents of its own on the technology that Toyota was using. Eventually, the two companies reached a cross-licensing agreement that gives both companies the right to build their own systems. Such cross-licensing agreements are common in these kinds of cases, but Ford did not use the Toyota hybrid system. The only other company that uses Toyota's system is Nissan for its Altima hybrid, and they actually buy hardware from Toyota. We continue deconstructing Reynolds' arguments after the jump



[Source: Wall Street Journal]
Photos Copyright ©2009 Sam Abuelsamid / Weblogs, Inc.

By now you've surely noticed that gas prices have stabilized at around $2 a gallon (or less, depending on location) in the United States. That's about half of what gas cost just about one year ago, which is both a blessing and a curse, depending on how you look at it. Add Bill Ford, Executive Chairman at the automaker that bears his name, to the list of those unhappy about cheap fuel. He says:

When gasoline went to $3.50 a gallon we saw a sea change in customer behavior. Now people are turning away from more fuel-efficient vehicles and taking the bigger vehicles. I've been talking for five years now about the need for a gas tax. We have to have some predictability on fuel pricing and that price signal has to be strong enough so customers will continue buying smaller, fuel-efficient cars.

It's certainly not a popular view among many, but Ford's assertion that an artificial increase in the cost of fuel would force consumers into choosing more efficient automobiles is likely accurate. It would also make it much easier for automakers to plan future model launches, knowing that new car buyers would want to purchase a vehicle in two years that will save on their monthly fuel bills.

[Source: Green Wombat]

Recently, the government in the UK decided to raise its fuel duty by 2.12p per liter. While a gas tax increase is rarely popular, this small rise isn't that difficult to overcome, according to the Institute of Advanced Motorists. The idea is that a mild change in driving habits can more than make up for the additional cost of fuel.

You've likely heard many of the IAM's suggestions, such as removing excess weight from the car's trunk and keeping the tires properly inflated, but they are good reminders in any case. Other common sense tidbits include accelerating at a less frenetic pace and obeying the posted speed limits.

Other less common measures can include removing roof racks, reversing into parking spots and driving with less than a full tank of fuel. Of course, it's not always practical to make these kinds of adjustments, but it's always a good idea to keep them in mind.

[Source: Channel 4]

Slapping a few dimes' worth of tax onto each gallon of gas we buy at the pump hasn't been the most popular idea in Washington. Sure, some elected representatives have called for a higher gas tax in the past, but more often than not the idea dies on the vine. There is a chance that things will be different now that one of the biggest opponents to a gas tax increase, General Motors (through CEO Rick Wagoner), has given the idea a sort of blessing. Wagoner said yesterday that a federal gas tax that sets a price floor of $4 a gallon is "worthy of consideration." Something tells me that GM saw the interest in the Chevy Volt grow like mad during last year's gas price spike, and wouldn't mind a rise in gas prices before the Volt hits dealerships at the end of 2010. GM spokesman Greg Martin told the Washington Times that:


Since it'd be a bad idea to raise prices fast, talking about a higher gas tax now means there's plenty of time to reach $4 a gallon again before the Volt's real debut.


[Source: Washington Times]

For years, the federal gas tax has funded the development, repair and improvement of our nation's highways, but for the last few years, there has been an ongoing debate about whether it's a better idea to tax drivers based on the number of miles traveled or to continue taxing the purchase of fuel.

One problem with taxing fuel is that the government is mandating that our fleet of vehicles get better fuel mileage each year, so tax revenues naturally go down in the process. If each vehicle was taxed based on miles driven, the money brought in would theoretically equal the amount of damage being done to road surfaces. Problems with the mileage-based tax come up when discussing how best to track a driver's habits. Plus, some believe that drivers of fuel efficient vehicles, which are likely to do less damage to their surroundings, should be rewarded by paying less in taxes than drivers of heavier, thirstier vehicles.

Newly appointed Transportation Secretary Ray LaHood (R) says that there isn't enough money being collected to keep up with the required maintenance on roadways, but increasing taxes in a recession is a non-starter. Instead, he's considering instituting a mileage-based tax; a decision could be made as early as this week.

[Source: Detroit Free Press]

In the next 20 years, the Commonwealth of Massachusetts will need to fund a $15 to $19 million gap to maintain its transit system. Since there's no such a thing as a free lunch, Governor Deval Patrick (D) is currently suggesting an increase in the fuel tax of $0.19 per gallon to raise the money. This would means that the total tax paid on gasoline in the state will be $0.609 per gallon, while the tax on diesel would be $0.669 per gallon. End result: a rollback on a proposed Massachusetts Turnpike toll increase, no fare increase on the Boston public transit system (among other benefits) and making Massachusetts the state with one with the highest gasoline taxes in the U.S. and the fourth highest tax on diesel (right behind Hawaii, New York and Connecticut). Gov. Patrick has also proposed to move registration fees upward for large, gas-guzzling vehicles with the so-called "Hummer Tax."

[Source: Green Car Congress]

Massachusetts Governor Deval Patrick (D) is said to be considering adjusting registration fees skyward for large, gas-guzzling vehicles while discounting the same for fuel-saving models. The controversial legislation has earned the nickname "Hummer Tax" since it is rather obviously geared towards large SUVs like those sold by GM's struggling HUMMER division.

Opponents to the plan warn that the charges could have a disproportionately large impact on large families and small business owners that rely on large vehicles to perform their daily routines. On the other hand, proponents for the legislation highlight the fact that it's technology neutral, meaning that any vehicle that manages to save fuel over its competitors would qualify for the savings, regardless of what kind of fuel or technology is being used.

There are also movements within the current Massachusetts administration that hope to raise the state's gas tax or increase the price of tolls. One problem with a gas tax increase is that the move towards more fuel efficient vehicles would lower the amount of income the state is taking in, so an alternative plan would tax drivers based on mileage driven.



Massachusetts is also considering raising the state's fuel tax.

[Source: The Boston Globe]

Executives of large companies by and large tend to skew toward the more conservative side of the political spectrum and generally eschew increased taxes on anything. However, a growing handful (see here) seems to be coming to the same realization of late, a realization that completely escapes most politicians: cheap gas is bad for America, especially if we want the country to move to more efficient, lower emitting vehicles.

The latest to jump on the increased gas tax bandwagon is Mike Jackson, CEO of AutoNation. AutoNation is the largest dealer group in the country with 311 franchises at 239 locations and 25,000 employees. Jackson realizes that simply mandating more efficient vehicles through either fuel economy or emissions rules without stimulating demand for those vehicles will leave his stores with a lot of stock that customers don't necessarily want to buy.

People tend to think of efficiency in relation with current fuel prices. When prices are low, they buy less efficient vehicles. Jackson is promoting an extra $1/gallon tax phased in over five years. The problem is, will any politician put their neck on the line to support higher fuel prices?

[Source: Automotive News - sub. req'd]