In response to today’s editorial on the CAFE overview, reader jmo proposed a novel solution to the very idea of regulating fuel economy.
Tag: gas tax
Last week, I bought gasoline for less than $2/gallon for the first time in probably more than a decade. A tankful for my ’08 Civic (stick) cost me sixteen whole dollars and fifty-three cents.
Now two leading thinkers, one from each party, have called for taking the opportunity of low gas prices to slap a tax on petroleum—or on carbon.
You’ve heard this story before: A scorpion asks a frog to carry him across the water.
Credit our sorely missed EIC/Editor Emeritus Ed Niedermeyer for being well ahead of the curve. Back in 2011, Ed told me about how the rise of fuel efficient vehicles would create a revenue shortfall for the federal Highway Trust Fund, and that would lead the government to look at implementing all sorts of unpleasant things like a Vehicle Miles Traveled tax. Guess what Ray LaHood is proposing? You guessed it.
“Everybody uses the road and if some pay and some don’t then that’s an unfair situation that’s got to be resolved,” said Jim Whitty, manager of the Oregon Department of Transportation’s Office of Innovative Partnerships and Alternative Funding.
Ah, yes. As with any number of current governmental activities, the rationale for per-mile taxation will be fairness.
Who’s ready for some politics? With the presidential election still over 14 months away, recent Iowa straw poll winner Michelle Bachmann is upping the campaign promise ante by telling a Greenville, SC crowd
The day that the president became president gasoline was $1.79 a gallon. Look at what it is today. Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.
Without even taking a side in the muck of presidential politics, it’s plain to see how ridiculous this statement is. As Politico helpfully notes:
Bachmann didn’t detail how she would cut the price of gasoline, which is tied to the global price of oil. [Emphasis added]
Personally, I think gas should probably be taxed to a point where Americans pay about what the rest of the world does, in order to pay for the externalities of oil consumption. Most auto execs agree, arguing that America’s artificially low gas prices play hell with product planning. But even (or is that especially) if you’re a hard-core anti-tax free-market fundamentalist, Bachmann’s statement should be treated with scorn. After all, markets, not presidents, should be setting oil prices. But what’s principle (or even good practice) when compared to the need for political pandering?
General Motors CEO Dan Akerson set off something of a firestorm a few weeks ago, when he said, in response to a question about forthcoming CAFE increases:
You know what I’d rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas.
Predictably, populists and economic alarmists of all stripes took great umbrage at Akerson’s candor, questioning his leadership of GM as well as his perspective on the shaky US economy. But Akerson is not alone in his support of some form of gas-tax increase. Bob Lutz and Tom Friedman (an odd couple right there, if ever there was one) agree with him. Edmunds CEO Jeremy Anwyl defended Akerson and even suggested a $2/gallon tax earlier this year. Bill Ford and AutoNation’s Mike Jackson are of the same mind as now-retired Republican Senator George Voinovich on the issue. And yet, inside the Beltway, the subject tends to draw a chuckle and a roll of the eyes. Everyone wants it, but nobody wants it.
The average price of regular unleaded gasoline was $3.96 this week, an increase of 38 percent over the same time last year. US Senator Rand Paul (R-Kentucky) on Tuesday proposed to temporarily reduce that cost by 18.4 cent cents by suspending the federal gas tax. Under the freshman lawmaker’s plan, the highway trust fund would be replenished by reducing payments made to foreign governments.
“Let’s have a gas tax holiday,” Paul said in a floor speech. “Let’s take the money from foreign aid and let’s give it back to the American people who worked hard to earn it…. That would help people, that would lower the price of gasoline and that would be a stimulus to the economy.”
With the federal deficit balooning out of control, President Obama’s National Commission on Fiscal Responsibility and Reform has publicized its preliminary proposals, and goodness are there a lot of them. But only one of the commission’s proposals gets to the heart of this nation’s automotive future: a proposal to increase America’s gas tax. Federal fuel taxes currently stand at 18.4 cents a gallon for gasoline and 24.4 cents for diesel fuel, but the commission has proposed a 15 cent per gallon increase, to take effect starting in 2013.
CSM Worldwide seems to think so, telling Automotive News [sub] that new compacts from Ford and Chevrolet are being pushed into the market to comply with increasing fuel-efficiency and CO2 emission standards. If gas prices stay steady, CSM’s VP for Forecasting, Michael Robinet says “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards will raise incentives and lower profitability.” “It is very possible that U.S. automakers will not achieve their objectives of selling small cars at a profit,” adds CSM CEO Craig Cather. The crux of the argument is that CAFE ramp-ups to 35.5 MPG by 2016 create incentives for automakers to produce small cars without corresponding consumer demand. Luckily there’s a planned gas tax hike for that.