By on May 7, 2007

ehponlineorg.jpg Current Corporate Average Fuel Economy (CAFE) standards dictate that U.S. automobile manufacturers must produce vehicles whose overall average achieves 27.5 mpg (for cars) and/or 22.2 mpg (for trucks). The regulation’s stated goal: “encourage” manufacturers to build more fuel-efficient vehicles and, therefore, somehow, eventually, “lead” American consumers into buying same. Yeah right.

Generally speaking, people don’t buy what’s good for them. Whether it's cigarettes or SUV’s, people buy the products they want and then rationalize their purchases afterwards (if they can be bothered). CAFE’s underlying principle– forcing manufacturers to build products people don’t want– is a very special kind of lunacy, normally reserved for “planned economies.” And it’s about as effective as it sounds.

By the same token, trying to force consumers to buy something they don’t want (for their own and the planet’s good, for example) instead of something they do want (even though some supposedly smarter person says they shouldn’t) is about as sensible as herding cats. Social pressures and “education” will only take you so far, and no further.

In practice, CAFE regs are even worse than they are in theory. Raising mpg average numbers seems noble enough– until you devil into the details. Even a brief examination shows that the manufacturers have used their political clout to rig the system.

The end result: Honda, Toyota, Nissan, etc. have all figured out how to create fuel-efficient cars that people willingly buy and drive, while the Big 2.5 ain’t got game. The CAFE regs failed to force them to do so.

Gasoline prices, however, have focused Detroit’s mind wonderfully. Thanks to pump price escalation, Detroit must now listen to the U.S. automotive market and build what it demands– or go belly-up. Again, this new reality has nothing to do with previous, existing or future CAFE legislation.

In fact, let’s imagine a CAFE-free world. With gas heading up past three bucks a gallon, it’s easy to suppose that a large number of people would voluntarily choose to abandon their luxobarges in favor of a more frugal set of wheels.

While those who can afford five dollar a gallon gas and/or depend on driving a HD truck or SUV for their livelihood would stay with their big rigs, the rest of us would transfer to rides that conserve our cash.

But what if gas prices crash? There’s an accepted legislative methodology for discouraging the consumption of products judged injurious to society: sin taxes.

Hiking up the cost of alcohol, cigarettes, gas guzzlers, etc. through taxation [supposedly] prices consumers out of the forbidden fruit market. Considering the power of addiction, it’s a policy that tends to be more revenue than results positive. But it’s about as good as it gets.

If we want to curtail sales of gas guzzlers, we should immediately abandon all federal regulations concerning fuel economy and slap on a big old federal gas tax. That, however, would hit everyone – rich and poor alike – in their wallets. The only thing politicians hate more than missing an opportunity to regulate something is getting caught with their hands in your wallet.

Instead of focusing on nit-picking laws and regulations, what about actually solving the environmental and national security problem inherent in our gas-powered society by switching to alternative fuels? You know, launch some sort of Manhattan project that changes our automotive infrastructure from oil-based fuel to corn or sawgrass 'shine?

As this website has argued before, federal alt fuel initiatives are proof positive that you can create more pollution and political turmoil and greenhouses gasses by trying NOT to use gas than you can by using it. Government interference in the E85 industry– from CAFE credits for vehicles that will never touch a drop of corn juice to federal corn subsidies– are nothing more than lipstick on a pork barrel.

While I dream of hydrogen-powered cars, I don’t want my tax dollars poured into national hydrogen research, production and distribution. If you thought the reconstruction of Iraq was riddled with corruption, can you imagine the billions that a hydrogen-power project would waste? And for what? To shift national energy consumption from pump to plant?

The free market is the answer. If E85, plug-in hybrids or hydrogen fuel cell cars pay, they play. If manufacturers want to build jumbo SUV’s in times of high fuel prices, they’ll increase SUV fuel efficiency. If they can’t, American consumers will migrate to more efficient vehicles all on their own. If not, a tax at the tap will jolly them along. If there’s no political will for that solution, so be it. Last time I looked, it wasn’t the government’s job to impose its will on the people.

In short, there’s no need to set some arbitrary limit on the fuel economy of new vehicles. It’s time for CAFE to go.

Get the latest TTAC e-Newsletter!

56 Comments on “CAFE (Corporate Average Fuel Economy) Must Die...”

  • avatar
    Alex Rashev

    I’ve always been a fan of gas tax. If you can’t afford to fill up your tank (no pun intended), walk. I’m not into paying my tax money so that the government could waste it on negating somebody else’s carbon footprint. Too bad, I get no choice.

    CAFE was useless from day 1. Trying to cure the symptoms is not the way to fight a disease, IMO.

  • avatar

    OK, first: forget about a gas tax. If the answer is raising gas prices by fiat, the question is “how do I get kicked out of US political office by a rabid lynch mob?”

    The free market is the answer. If E85, plug-in hybrids or hydrogen fuel cell cars pay, they play.

    Ha. E85 is propped up by corn megasubsidies (corporate welfare) and production isn’t scalable. Plug-in hybrids and/or hydrogen require major government investment in alternative power, because there’s no immediate (next financial quarter) profit in industry doing it. What else you got, free market dude?

    The Japanese took the CAFE regs at their face value, and built cars to the spirit of the law. Detroit looked for loopholes (and got some). If the CAFE regs hadn’t been there in the first place, no one would have bothered, not even the Japanese.

  • avatar

    I should add: I’m definitely in favor of closing the loopholes in CAFE or replacing it with a superior system. But abandoning all legislative attempts to hold corporations responsible for their products (i.e. the “free market”) is loopy. You know the ongoing issue right now with all that pet food, and some human food, being tainted with melamine? That’s your free market at work.

    It is not the government’s job to impose itself on the people (although the Cheney White House and to the post-Carter Pentagon disagree with me on that). It is absolutely the people’s job to impose their will on the government. If the people want efficient vehicles and the manufacturers aren’t complying, they can certainly demand laws to bring that about. Congress doesn’t operate in a vacuum — they are responsible to the voters back home.

  • avatar

    I’m not so sure about “the free market is the answer” as an answer. It’s proven to be pretty stupid before. The role of government is to protect the country’s interests in the long term, and those sometimes conflict with our wants in the short term. The debate on how important curtailing gas consumption is to our long-term interests hasn’t been settled yet, but if the people we elect decide it’s important enough, they have an obligation to give us the bitter pill.

    It’s like taxes, or wartime rationing. Really hard to convince people to go along with it on a voluntary basis, because we’ll all say “yeah great idea, everyone else should do it… I have a couple reasons why I shouldn’t have to myself.”

  • avatar

    Raising CAFE is always a major topic precisely when it is least needed. Spiking fuel costs make CAFE redundent. It is regretable that GM and Ford were unale to forecst higher fuel prices and apparently never had a plan in place to deal with higher fuel prices. Good going guys

  • avatar

    whitenose: But abandoning all legislative attempts to hold corporations responsible for their products (i.e. the “free market”) is loopy.

    This site is filled every week with “Deathwatch” articles that chronicle the ongoing struggle of GM, Ford and Chrysler to avoid bankruptcy. Those articles also chronicle the free market at work.

    Why are they flirting with bankruptcy? Because they don’t make products that people want.

    It sounds as though consumers are holding corporations responsible for their failure to build vehicles that they want. They are doing this in the most effective method possible – by witholding their dollars and buying products from a competitor.

    Looks like the free market is working to me.

    whitenose: You know the ongoing issue right now with all that pet food, and some human food, being tainted with melamine? That’s your free market at work.

    No, because food is already regulated. This is not a failure of the free market.

    Ask yourself – could this still have happened in a centralized, command-control economy that does not rely on supply-and-demand by consumers to determine what is produced? Absolutely – the main difference being that, since command-control economies also tend to be associated with dictatorships, the problem wouldn’t have been publicized, so more people (and pets) would have died.

    whitenose: If the people want efficient vehicles and the manufacturers aren’t complying…

    Said manufacturers will go out of business. That’s the free market at work.

    I do not see where CAFE will create a demand for fuel-efficient vehicles.

    whitenose: Congress doesn’t operate in a vacuum — they are responsible to the voters back home.

    And, if they have any brains, they will read Automotive News and The Wall Street Journal and see just exactly what vehicles people are buying (sales figures for individual vehicles are reported regularly in those publications).

    That is a pretty good indication of what voters – at least, the voters who matter, because they are putting their money where their mouths are – really want.

  • avatar

    The free market has a role to play, for sure, but the government must act. CAFE is like all multi-generational legislation: full of holes and far from the original spirit. It should go and manufacturers should be held to higher MPG via the careful use of taxes. I’m against high gas taxes because of their impact on lower-income people, but maybe high vehicle registration fees for low-mileage vehicles. Or maybe a gov-mandated horsepower limit similar to the “gentleman’s agreement” Japanese manufacturers had a few years ago. I mean, honestly, 270 HP in a front-drive family sedan? Why do you need more than 200 in a daily driver? And 200 HP is just fine for the Elise, so enthusiasts can’t really complain. Without ever-escalating power figures to compete on, automakers would have to put mileage front and center. I don’t know much about trucks, but they should get a separate set of numbers to hit.

  • avatar

    There are markets, but none of them are truly “free”. Every market has forces that seek to protect it, influence it, game it, beat it, etc. Government is just one, and sometimes represents all the above.

    As for consumers?

    “The natural effort of every individual to better his own condition
    is so powerful a principle, that it alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations”

    –Adam Smith
    in “Inquiry into the Nature and Causes of the Wealth of Nations”

  • avatar
    Paul Milenkovic

    I guess there are a couple of approaches to using government regulation to encourage saving energy. One is disclosure of efficiency ratings — refrigerators, air conditioners, furnaces, and even cars have such ratings. A second is a tax on energy – not very popular – even if you conserve, you get punished by paying more in tax unless there is a reduction in other taxes you pay. A third is some minimum standard on energy use — CAFE is one, but a certain President got slammed for opposing raising the standard on window air conditioners. The argument for raising the standard is a familiar one; the defense of not raising the standard is that it makes air conditioners more affordable and less back-breaking to hoist into the window, allowing more people to replace energy-wasting clunkers.

    Another approach is to offer some kind of Seal of Approval for products that are top-of-the-class. The Energy Star program gives such a seal for appliances; the IIHS “offset” and “side” crash ratings, once criticized by the auto industry, have come to represent a gold standard for judging especially larger luxury makes (Volvo, Lexus) where safety is part of the sales pitch, and auto makers (especially Hyundai) have set sights on improving in those non-mandatory ratings.

    I guess the advantage of some appliance ratings is that air conditioner is rated on how many kilowatt-hours are needed for each 10,000 BTU’s of cooling. No one goes around saying “you are an energy waster, you have twice the size of house” or “you are an energy waster, you leave your shades and drapes open.” The rating is on inputs and outputs, which relates directly to thermodynamics and the level of cost and engineering effort required to get a certain result. A water heater is rated on how much gas is burned for however much hot water — no one (yet) scolds you for soaking too long under the shower.

    The toilet flush standard, however, is an absolute one per commode, and I believe that 1.6 gallons per flush “is a square too far” and consumers have had all kinds of problems — perhaps a 1.8 or even 2 gallon standard would have given us much better toilets.

    As to cars, they are broadly lumped into light truck and car categories, and the car categories are split into domestic and import based on parts content formulas, and there are all kinds of games ranging from the SUV’s (having vehicles used as cars count as light trucks, including the PT Cruiser, to offset bigger SUV gas usage with the thriftier Neon platform), Canadian content to kick a car into the import category, and that whole E-85 thing.

    Don’t know; I would like to see some kind of government leadership on fuel economy, I am not eager to see higher fuel taxes if I am already driving frugal cars, the current system seems broken, and the new system of “automobile foot print” seems silly (gallons of hot water is a good measure of the utility of a water heater — is lengths times width a good measure of the usefulness of a car?)

  • avatar

    Since legislating desired outcomes is such a good idea (NOT), Congress should also take up the fight against obesity here in the US. Each citizen is allowed to weigh 3lbs for every inch of height. If you are 6 foot tall, you can weigh up to 219 lbs! Seems reasonable. Its all for the good of society. We all want a healthier society, right? If you are over the weight, you pay higher tax rates to offset your increased health cost to society.

  • avatar

    Large vehicles should run on Diesel. More efficient and gobs of torque. The problem is, the enviromental types block the sale of Diesel vehicles in this country that Europe and Asia use everyday. 5000 lb vehicles should be using diesels, not gasoline. Imagine a semi running on gasoline, if the enviros had their way it would because then it would have catylitic converters, and O2 sensors, and all that other stuff to reduce the emmissions down to water vapor and CO2. It would also get 3 miles to the gallon instead of 8 and not be able to haul it’s own self.

    We are caught between government trying to do several things at once: clean the air, reduce consumption, regulate the market, and make everyone happy. It fails miserably on all counts. Then the external factors of environmental groups, big business, and even consumers are opposed to each other with differnet goals as well.

    We are going to end up with expensive fuel, rationed fuel, or no fuel. Take your pick.

  • avatar

    If we assume that the desire and technology and facilities are available today, does any one know how much E-85 we can produce in this country, without sacrificing our need to feed ourselves, too. We only have so much arable land. Is there enough to meet the requirements?

  • avatar

    All the sin tax has done is guarantee the the children of some parents will eat bologna instead of hamburger because daddy had to buy another carton.

  • avatar
    Alex Rashev

    That’s too bad, maybe the kids will hate their daddy and will be a bit more inclined NOT to feed him in his elder years.

    By the way, I don’t think a gas tax will be all that bad for the poor people. $3 for each gallon of gas sold will cover plenty of tax credits for the poor, but hard-working people, for disabled, etc. Naturally, it’s gonna be a pain for welfare suckers, but then it’s their fault anyway. IMO it’s actually a great way to distribute wealth between the rich, the poor, the responsible and the wasteful, all in one shot.

  • avatar

    Overall annual US petroleum demand has increased every year, despite 8 years of steadily increasing prices.
    In short, petroleum usage is largely inelastic and increasing despite years of prevailing market forces to the contrary.
    Market forces alone do not drive demand.

  • avatar

    Slightly off topic, this just in…..
    “Detroit’s Darkest Hour
    The collapse of pickup truck sales undermines the industry’s chances of survival, says Fortune’s Alex Taylor.”

  • avatar

    Here is another idea that doesn’t involve taxing gas…

    Tax vehicles with large engines. Let’s say at 20% of MSRP price. Example tax scheme:

    1. This tax does not apply to vehicles with 2.5L enginers or less (rationale: 2.5L is just fine for a mid-sized car, van or a small SUV).

    2. The tax grows progressiveley from 0% to 20% of MSRP price as the engine size grows from 2.5L or 3.0L.

    3. No tax or a different tax scheme might be allowed for _trucks_ (not SUVs) that are used for business purposes.

  • avatar

    CAFE is a great piece of legislation for attracting both votes and money.

    Any movement in either absolute or relative CAFE numbers for cars/trucks can mean hundreds of million for automakers, so they will happily spend a fraction of that to educate their elected public servants about their concerns over a round of golf. And come fundraising time, thank him/her for taking time to listen.
    It then allows one group of said servants to mop up the ‘pro environment’ vote, and another the ‘pro business/America/ I’ll show those treehuggers’ vote, both without risking their relationship to above mentioned benefactors. Now, with properly placed school districts and zoning laws, plus a bit of redistricting, there should be no need for one group of politicians to negatively effect the campaigns of the other.

    As a second order effect, making automakers’ profitability more dependent on legislation will shift their internal balance of power away from engineers and towards legal / managerial / political / buerocratic types. Observing this, talented engineering side people will leave for greener pastures, making the effect self reinforcing. At the limit, the automaker is left incabable of engineering solutions to anything at all, instead beeing fully dependent on the operators of its politial-industrial interface to stay afloat.

    All in all a wonderful outcome for all CAFE’s stakeholders.

    And pretty much noone else.

  • avatar

    I’m wary of “for business purposes” – it seems half the full sized SUVs out there have been written off as “business expenses” and the rest of us are footing the bill.

    If we want to encourage small businesses, just give the owners tax breaks totally unrelated to vehicles. Businesses should pay their share of gas tax too.

    Unfortunately these debates will never end, because we all have different goals in mind.

  • avatar
    Terry Parkhurst

    Pushing CAFE gives people who need to look as if they are doing something, something to do. In a sense maybe it doesn’t matter if the price of gas goes up slowly. There are indeed people pushing an alternative.

    Look at

    Then too, if you follow the money, the fact that BP which used to call itself “British Petroleum” is now investing heavily into hydrogen almost preordains that a hydrogen economy will replace petroleum; although it will take 10 to 15 years.

    More importantly, as long as Iran continues to try to hold the world hostage with escalating pricing, CAFE will remain an afterthought to the American consumer. With gas at about $6 a gallon in England and it hitting $3.50 in the States, the shift to more fuel efficient vehicles is going to continue – at least with people who commute daily.

  • avatar

    fallout11: Despite rising gasoline prices, the inflation adjusted peak price for a gallon of gasoline was hit in March 1981, when it sold for $3.25 per gallon (adjusted in today’s dollars).

    Note that the one chart shows that demand for both oil and gasoline FELL in the early 1980s.

    We may have finally surpassed that peak (I don’t know), but the reason rising gasoline prices haven’t yet dramatically affected sales of trucks and SUVs is because gasoline has still been relatively cheap by historic standards.

  • avatar

    Here, Here…CAFE has been a failure the whole time and the only reason why high mileage cars even sold b/c there was a market for them regardless. CAFE has always been the cart leading the horse (bassackwards).

    Until we can have a viable alternative energy solution we need to alter demand and not supply. Set a Federal Gas Tax and pour the money into the research. Earmark all funds to road congestion & public transporation improvements and into researching alternative fuels. Also make it tax break beneficial to companies to induce more telecommuters (take away the reason to drive to work and you’ll cut down on lunch breaks and starbux runs).

  • avatar

    Points for Stuki.

    I think the free market vs. government discussion here is not really relevant unless you try to take an objective look at what the market would look like without CAFE.

    Let’s say that GM and Ford stopped worrying about mileage tomorrow. How would their products change? I can imagine that they would have not built many of their economy models in the US market at all (they lose money on them). That would have sent more business to Honda and Toyota. Honda and Toyota would have then used much of the extra profit for figure out how to build even better mileage cars (because they are good at that).

    Yes, there is a place for government. No, circumventing market forces is not usually the place of government. I would argue that average fuel economy of all cars in the US would be HIGHER if we did not have CAFE.

    All we achieved was reducing profits for the entire industry and insured that LESS R&D was spent on more efficient engines.

  • avatar
    Jeff Waingrow

    Seems to me a number of straw men have been set up here. Still, there remains one fundamental problem: The will of the people, as expressed by the vehicles they choose to purchase, would seem to be democracy in action. But what if the people are wrong, or selfish or ill-informed? Should they be made to get what’s “good” for them? This is a real philosophical conundrum that perhaps only enlightened political leadership can help resolve.

  • avatar

    CAFE has had one good effect for those of us who like to drive efficient cars: it has essentially forced automakers (especially the domestics) to subsidize our car purchases. It is at least partially responsible for the incredibly big difference in cost of ownership between, say, a Focus and an Explorer. The wider that gap in cost of ownership, the more people are likely to be swayed by the value proposition of the small, efficient car. So I would argue that CAFE has had at least a tangential effect on consumer behavior. Maybe not enough of an effect to make it worth it, but CAFE’s management of supply does affect consumers’ demand to some extent.

    I agree with the posters who are calling for a fairly steep federal gas tax, with the money earmarked for research and mass transit. Because, let’s face it, gas prices are going to rise one way or another in the next couple of decades. Our extra money can either go overseas to suppliers of crude (not always the regimes we’d like to see well financed for diplomatic, national security, and human-rights reasons) or it can stay here at home to benefit us. And a higher gas tax right now would have the effect of driving down demand, which should help keep crude oil prices stable and (relatively) low, so we wouldn’t get hit with a double price-increase whammy.

  • avatar

    You know, launch some sort of Manhattan project that changes our automotive infrastructure from oil-based fuel to corn or sawgrass ‘shine?
    How about electricity? There could be some sort of Manhattan Project that would provide a way to generate practically limitless electricity at competitive rates for the foreseeable future. And as a bonus, it could be working 60 years ago and actually called, you know, the Manhattan Project.

  • avatar

    Another problem with CAFE: it doesn’t even target the problem! CAFE addresses (poorly) the fuel efficiency of a vehicle. The problem is fuel consumption, which is related to many other factors: how much the vehicle is driven, how quickly it is driven, vehicle running condition, extra weight carried around, etc.

    Also, every time I hear about people not achieving the EPA mileage ratings (which are already significantly reduced from the test numbers) I shake my head. Instead of the government watering down the ratings, drivers should step up to the plate and learn how to drive efficiently.

  • avatar

    Altering the price of gasoline is the only rational solution. A tax on engine displacement? But what if I drive very few miles? I take the train to work and fill my car about once every month or 6 weeks. Even if I drove a Hummer (I don’t) I’d use less gas than the guy in the Corolla who commutes 100 miles a day.

    A tax isn’t the only way to alter the price of gas. The issue here is known as financial externalities. The market is excellent at pushing as many costs as possible into the externality category.

    An externality is the cost of producing something that is not reflected in its price. What this means is that when you buy something, you pay less than the true cost of the good. The difference between the actual cost and the true cost is compensated for elsewhere – and you usually end up paying that difference as well, but indirectly.

    Example: gas is about $3.30/gal where I live. But the true cost of that gallon would have to include its share of the subsidies given to the oil companies, any environmental costs that I’ll have to pay for down the road, the health care I subsidize for people who breathe smog, any military spending that we use to protect the oilfields, the cost of providing ambulance services to people who get into accidents, etc.

    These are all external costs that are not included in the $3.30 at the pump. I already pay all of these costs – they come out of my paycheck as state and federal taxes every week. So, the true cost of that $3.30 gallon of gas might be more like $5 or $6. If gas was actually priced at it’s true value – $6 at the pump in this example – people wouldn’t need any more incentive to change their behavior. No arguing over semantics.

    The government should increase the tax on gas to the point where the gas tax revenue covers the costs associated with driving. That way everybody pays according to their use. Don’t use any gas? Then you don’t pay. Use a lot of gas? Then you pay a lot.

    But that’s not good for the quarterly balance sheet. It would be good in the long run, but I don’t have to tell anybody at TTAC that most US company’s definition of the long run is “this fiscal year”.

    Likewise for the politicians. Long term to them means “until next election”.

  • avatar

    Fuel economy roughly doubled following the intro of CAFE. On the other hand, the loopholes gave us SUVs. Are we better off now than we would have been without cafe? Once you factor in the loopholes and unintended consequences, it’s hard to say. (I haven’t yet looked at the Stanford study someone ref’d in comments on RF’s article on this subject, the one that said a gas tax wouild have been far more effedcctive, but it’s hi on my list to do.

  • avatar

    The missing bit in this discussion is advertising. All of the talk about people buying what they want is forgetting that what people want can be greatly influenced by advertising.

    One thing that CAFE standards do is effect how manufacturers market their vehicles. If X manufacturer needs to sell so many fuel efficient cars to meet the standards they are going to put more advertising dollars into said fuel efficient car. This makes the car more desirable to the public because of the advertising for it. This is how CAFE standards can actually increase demand for fuel efficient cars without consumers even knowing, so it’s not like somebody was forced into a car they didn’t want. Would people really want the cars they do now if it had not been for all of the $$ spent on advertising the SUV genre? Most of it showing the vehicles being used in ways they never will.

    Another thing CAFE can change is the way that R&D money is spent by manufacturers. If company X has to sell more fuel efficient cars to meet CAFE they are likely to spend more money on R&D for said car to make it more competitive. Not only will this make the car more competitive in it’s class, but in the whole automotive spear as well. A lot of consumers would be willing to go from one segment of car to another (say compact to subcompact, or small SUV to mid-size car) if they would be getting more value for money. Putting more R&D dollars into fuel sipping cars would make them more competitive with other classes of vehicles. Again, this would drive consumer choice in a fuel efficient direction without forcing consumers into anything they didn’t want.

    While I agree that they way CAFE is implemented is pathetic (E85 loophole especially) I don’t think it is necessarily a bad thing. With some tweaks to the system it could really do a lot of long term good for our country and our planet.

    The problem with gas taxes (though I do think they are a good idea) is that they are harder on low income households. The tax would be a flat thing based effectively how many miles you drive a year. A person with a 100k a year income who has to drive 12k a year will probably not even notice, where as the person with a 30k a year income who commutes to the tune of 20k miles a year (who probably already drives an Aveo or a Geo Metro) will be hit extremely hard. Maybe people should be able to write a portion of the taxes off based on how many miles they have to drive for work?

    As far as the gas guzzler tax is concerned, I think it should apply to every vehicle sold, bar none. If you really do need your truck for business purposes than you should be able to write off the tax amount when you file your BUSINESS tax return, and only if the truck is actually business property. The other uses that the exempt vehicles are “needed” for are luxuries. You don’t “need” to tow your giant boat around, so you should have to pay the tax for the impact that behavior has. You don’t “need” to have 7 kids so should you get tax break because you forced yourself to need a van? And you especially don’t “need” enormous ground clearance and 4wd to commute to the office, so you should pay the price for that luxury.

    Sorry for the novel guys :)

  • avatar

    I look at it this way: cars do two things. They get you from point A to point B, and they get you laid. Americans are eager to show that they are wealthy enough to have a car that not only works, but makes them look cool doing so.

    The problem is that the things that make you look cool (quick engine, tow rating, ability to climb mountains) also consume a lot of gas. The key would be to make saving gas more prestigious. That’s why most Priuses are sold – buyers think they look cool in them (at least for their demographic).

    I therefore would propose a gas-saver TAX of $5,000 per vehicle that gets better than 25 MPG. Then, people who drive Civics and Aveos will seem prestigious, increasing sales and reducing petroleum use.

  • avatar

    SUVs aren’t “bad for you”, though.

    They might be a choice some people don’t like, but they’re not inherently dangerous ala smoking, nor are they addictive.

    Anyone that can afford the increased fuel bill (which, with a small SUV may well be just notional) isn’t doing something “bad for them” by buying one.

    Contra many people, I don’t see any problem here to be solved, let alone by government fiat or even “encouragement”.

    (When I see that, I think, “pour le encouragement des autres” ala Voltaire, but maybe that’s just me.)

  • avatar

    Wow, if I just read this site and didn’t drive around all over the US, and check the monthly auto sales statistics, I’d think the best selling vehicle classes in the US were compacts and subcompacts. Those silly Big 2.5 product planners, US car buyers have been clamoring for compact and subcompact cars for years, they just refused to make any. Instead, they forced consumers, against their will to shell out 40K-70K for Yukaburbahoes, Silverado’s and Escalades. If they’d just made a better Cobalt, those silly Americans would have gladly bought one instead of that Tahoe. They should just make a Cobalt with 4WD and an 8000 pound tow rating and they’d crush ToyHon. Speaking of Honda, check out the abysmal fuel economy the RDX gets in the latest Autoweek Autofile.

    The idea that American doesn’t want large cars, trucks and SUV’s is simply a fantasy of many readers and writers on this site. Obviously, with gas prices high, the B and C classes have grown, but they are still small. How many people do you know who are going to buy a small, cramped, noisy, less safe car that doesn’t fit their life style needs? It doesn’t help that most mid-size cars get pretty good mileage, so why take the comfort/utility/safety hit for a few MPG? In the SUV market, I know several people very disappointed in their crossovers efficiency. A friend of mine recently said “If I knew my FX35 would only get about 2 MPG better than my Yukon, and have a terrible 4WD system, I’d have gotten another Yukon.” Here in Maine, people actually use their 4WD systems, and the old truck based systems are way better than the newer systems on most of the cross-dressers.

    I’m also shocked, absolutely shocked, that a brilliant company like Toyota could possibly introduce their biggest, baddest fuel sucking vehicle into this gas price spike. Did they hire some big 2.5 product planner to time this introduction?

    The predictions on this site 1.5 years ago had the full size SUV segment basically gone by now. What are all of the TTAC writers and readers excuses for the relative strength of the full size SUV market? Sure it has shrunk significantly, but rumors of its death have been greatly exaggerated.

  • avatar

    May 7th, 2007 at 3:35 pm
    Overall annual US petroleum demand has increased every year, despite 8 years of steadily increasing prices.
    In short, petroleum usage is largely inelastic and increasing despite years of prevailing market forces to the contrary.
    Market forces alone do not drive demand.

    Gas was, and still is, so cheap higher prices have not caused a drop in demand yet. Gas is still so cheap; it may take $5 or $6/gal, or maybe even $8 or $10 per gallon to truly cause a reduction in demand.

    If you really NEED a full size Pick up or SUV, and drive it 15K miles per year, look at the math of owning a subcompact for 14K per year and a used truck for the1k miles of towing you do. Gas is going to have to get far more expensive for the depreciation/insurance/maintenance expense of 2 vehicles versus one to make up for a few thousand dollars in annual gasoline costs. And I haven’t even considered the comfort/safety/satisfaction difference between an F150 and a Yaris. Unless you are going to drive a fully depreciated, unreliable beater truck, you can’t make the math work.

  • avatar

    Airglow: This website never said full-sized SUV's would disappear. We just predicted– and then chronicled– the precipitous decline in their sales (particularly as it corresponded to rising gas prices). The facts are unequivocal: sales of large SUV's have tumbled in the last 1.5 years, and they show no signs of recovery. The Big 2.5 themselves admit this, and have done so since Hurricane Katrina. [A snapshot: In '06, sales of the Ford Explorer fell 25.3% from the previous year.] Discounting pickups (who sales are now tumbling), the best selling vehicles in America last year (from number one down) were the Toyota Camry, Toyota Corolla, Honda Accord, Honda Civic, Chevrolet Impala, Chevrolet Cobalt and Nissan Altima. No SUV's made the top 10. Again, SUV's will not die. But the public has gravitated towards into smaller, more frugal (if only "incrementally") CUV's. CAFE or no CAFE, the public shows no signs of returning to fuel thirsty full-size SUV's. To come to any other conclusion is, at best, wishful thinking.

  • avatar

    “You know, launch some sort of Manhattan project that changes our automotive infrastructure from oil-based fuel to corn or sawgrass ’shine?”

    The problem with that is the Manhattan Project had a single narrowly defined goal: to use Hahn’s recent discovery of fission to develop a weapon.

    If you gathered 100 “experts” and asked them what personal transport will look like in 50 years you would get 100 different answers, and they would all be wrong.

    Look at the ideas already receiving private investment: ethanol, biodiesel, biobutanol, LNG, BEV, PHEV, hydrogen, liquid nitrogen, compressed air, etc, not to mention all of the nonsense.

    If there were a single obvious choice I would support such an effort, but none has taken the torch as of yet.

  • avatar

    I don’t believe that what we ended up with as CAFE regulations have done much good over the long run… the loopholes that allowed the big-ass-trucks and porky SUVs to drive through made it a sick joke. The new scheme sounds like it will cause a similar set of responses from the industry: look for the new loopholes and drive right through them. So, fine in principle, corrupted, bastardized and generally horrid in execution.

    Showing my age here… that measly 50 cent gas tax hike proposed by presidential candidate John Anderson back in the 80’s seems positively quaint to me now. IMHO, it was a good idea then and it still is. But then and now, the biggest roadblock/deal-breaker is that people are wary of more fuel taxes because they think the revenue will just disappear like sand down a rat hole… there are many sordid examples in our history of taxation and appropriations that bear this response out.

    Fuel taxes to repair our rotting transport infrastructure, to wean us from petroleum, to fund energy research and development to ensure our ability to transport ourselves and our stuff around in the future? Preferably without killing ourselves and our planet? Great idea.

    Fuel taxes sent away to a general fund, to corporate subsidies, to provide tax breaks for the rich, slopped into a feeding trough reserved for the snouts of those with sufficient political clout? I’ll pass.

    Then there’s paying for that pesky war… but I digress.

    I’m not against coughing up for a fuel tax, but I want to get what I pay for. Don’t tell me the revenue is collected for one thing and then go and spend it somewhere else.

    That said, it kills me when people will piss and moan about paying for something that will benefit us all, but won’t blink an eye paying a private corporation that will benefit no one but its stockholders.

    But, I am a simple man. What the hell do I know.

    What I do know, as fuel prices continue to escalate, the answer for a lot of folks in North America will be two vehicles: a small, highly efficient vehicle for personal transport and commuting and a larger vehicle for hauling bigger stuff as needed. I set myself up this way years ago.

    My daily driver is a Tercel hatchback (the Poor Man’s Civic); 30 MPG around town, 40 highway. It always does what I ask of it and can haul a week’s worth of groceries and a pal all at once. For 95% of my personal business, it is perfectly adequate.

    My hauler is a ’91 Ford Econoline, 300 Six, 4 speed auto. Gets an honest 20 MPG on the highway, as has gotten as high as 25 MPG. It’ll haul 3/4 of a ton of stuff without breaking a sweat, can haul 4X8 sheets of plywood flat and has earned me many cases of beer when my friends needed to yard home a sofa or move across town. And it makes a nice camper to boot, with high ground clearance for those backroads that I like to drive on.

    The gas savings I get with the Tercel more than makes up for the extra cost of the Econoline’s insurance and upkeep.


  • avatar

    We’ve been told that Science and the people believe in global warming and want to do something about it. If so, they will support large gas taxes like they have in Europe and Japan. This would be the honest political approach.

    Gas taxes are regressive, but so is CAFE as it increases the cost of cars markedly. And this shows up in used cars bought by the poor as well. But with a gas tax you will get 10-100 times the benefit as measured by CO2 reduction per dollar spent by the consumer. So at least the poor will get more benefits of lower CO2.

    If absolutely necessary to get the tax, I would not rule out increased welfare or other kickback to the poor.

    The free market is very efficient in general. Or actually, prices are efficient at allocating scarce resources. But sometimes the prices to individuals do not properly reflect the “social cost” to others. This social cost might be the smell from smokestacks, polluted lakes, an eyesore on the skyline. Global warming is one such social cost. It just is not in the price of oil, where the price is a function of pumping cost, transportation and a risk premium for all the wars and such.

    A tax is a very effective way to reduce the total negative social impact because the mechanism is already in place. In this case the gas stations just have to modify one constant in their computer program, the tax, and the money flows to the feds. Then the slightly modified free market (higher prices) takes over and people find a billion ways to save money by reducing gas consumption. Buying a new fuel efficient car is just one of them — the only target of CAFE. More likely, customers will modify their outrageous driving habits… and don’t tell me people have to drive 15000-25000 per car per year. They’ll find a way to reduce. Maybe they will move closer to work, carpool, combine trips, walk, bike, and so on. They won’t even be thinking about CO2 reduction. Self preservation, and cost optimization under the influence of the revised higher price of gas will do the trick. This a revised form of Adam Smith’s invisible hand for the fans of economics.

    Actually, a carbon tax on fossil fuel would be even more effective in reducing CO2. This would prevent people from adapting to gas prices and creating CO2 anyway. For instance moving from gasoline to say plug-in hybrids, which get their fuel from coal fired plants. Again, unintended consequences could be avoided.

  • avatar
    John Williams

    Hiking up the cost of alcohol, cigarettes, gas guzzlers, etc. through taxation [supposedly] prices consumers out of the forbidden fruit market.

    Which in turn, makes the black market that much more appealing, since the underground bazaar prices said sinful items well within the reach of the consumer (and makes a killing, too).

    That said, the general dynamics of your average American roadway, which consists of spread-out, road-friendly towns and cities that render public transport useless, and wide, bone-straight highways, plus the general American attitude towards small cars, precludes Americans from suddenly giving up their normal choices of ride anytime soon, even if a flat tax on fuel was presented as an incentive. One can’t simply drop a federal fuel tax of…say…50% of the normal cost of fuel ($2.81, including the local and state taxes) overnight without oil barrels being hurled into Boston Harbor in retaliation. So it has to be done gradually over the course of 5 to 10 years, which within that time, any number of things could change to make the whole idea of fuel taxes and CARB moot.

    Displacement tax? Automakers will moan and groan about creating new engines specially for the new tax brackets, and they won’t be all that sterling in quality or performance, either.

    Forcing people and companies to do right by their fellow man and customers only prompts them to be within the minimal amount of compliance as possible, then no more. Here’s a solution: drop the CARB requirements. Watch GM take this as a signal to drop the ball on fuel economy, only to get drop-kicked in the bojangles by consumers who didn’t expect and frankly hate seeing the actual mileage on their SUV/CUVs crater from 15 to 5.5mpg. GM either listens to their customers or ends up being at the mercy of Geely, Geery, Gerly or whatever that Chinese automaker is called. Either that, or people willingly accept the lowered fuel economy and take it in the shorts at the pumps.

  • avatar

    I see some people defending CAFE laws, but nobody seems to think the existing CAFE laws are useful.

    So let me ask CAFE supporters: how would you “fix” CAFE?

    Remember the laws have to really work, have to be enforceable etc.

  • avatar

    Someone mentioned BP upthread. As a good indicator of where the energy industry is going, have a look at their website. The new logo is no accident, of course – supposed to make you think of the sun and plants – but they lead with the environment, and hide the business.

    Meanwhile, back at the ranch. Unless you’re a carpenter, plumber, electrician or in one of the trades needing haul, you don’t need a pick-up. It’s finally dawned on people, so pick-up sales are crashing.
    It’s a simple problem really: I need to build 8 million cars next year. I’m dependent upon the collective will of the mass market. Should I appeal to its rational or irrational desires in order to ensure longevity for my company?

    Big BUZZER if you answered irrational. That’s for smaller brands/companies to pursue. Yes – rational is boring, but so is the mass market. And a behemoth manufacturer such as GM went loco with the big trucks, thinking people would remain loco no matter what.

    So – what should GM do? Probably the only recourse left to them is to shout out for Superman to do his “spin the earth back” trick and then start over. Since Time keeps on ticking, the only other recourse left to GM is to face the music and stop pretending they can legislate themselves into profits. (If that’s what CAFE is supposed to achieve …) I mean, “we now have a law saying gas guzzlers aren’t gas guzzlers, so we’ll just go on building gas guzzlers” — is that what it’s supposed to “achieve”?

    The collective will of the market doesn’t care about the fine print – and they don’t need pick-ups, clearly demonstrated by how those sales are developing.

  • avatar

    year 2020. most of american car manufacturers have died.( chrysler sells leather jackets with dodge logos though). so do other hardware maufacturers. boeing is pushing up daisies, so do kodak and so do hp. so do IBM and so do mack , freightliner and h. davidson, and motorola along apple.most americans drive japanese luxury sedeans, korean trucks or midsize sedans or chinese econo- boxes. in- yan is everywhere. so do diesels. so the unbelievable idle vibrations and stench is ubiquitous, for cheaper cars won`t have soot filters.gas prices have hit 6 dollars a gallon. gillete has introduced a new gillette fusion shaver x with 20 blades( still no any movements). so do McDonalds with 20 fold flip -flop burger. zippo introduces new gas saving lighter,which consumes 2/3 of regular lighters. timex is doomed, but Time is full with japan-korean car ads. with huge mpg tables. wall mart enlarges all- american car -janitor sales dpt with wax carnauba and fender- wipes .mitsu and mazda add up new luxury divisions. so does huyndai. caterpillar gets major downsizing, so do lockheed martin .japanese start building for US army new cargo plane. 3m introduces new post -it paper with cyanacrylate glue. wrigley`s introduces new joint development with colgate- a chewing gum in a tube.recoton units folfed in, whirlpool sold. dell turns to service business only selling `unbelievable solutins to corporate customers`. hybrids proliferate, hydrogen becomes nation- bankrupts after unsuccessful launches of new products with easy use , one -button-all programs.( they also tried to build cd players and cameras, but because they had movements inside, they had to give up)…….

  • avatar

    CAFE standards are useless. Because they are government mandates, they always lag market behavior by a large margin.

    Consider the current market. Large SUV’s are sitting on lots not because the government mandated anything, but because market forces reacted efficiently. It took less than a year for the market to abandon these behemoths. Meanwhile, the gov’t is just now getting around to debating CAFE. I imagine that they’ll come out with revised CAFE standards about the time gas drops to $1.50/gallon again.

    You really want to solve the “energy crisis”?

    1) Build 500 new nuclear power plants so that our electricity is generated 100% from nuclear. Then maybe your plug-in hybrid will be really helping the environment, versus just moving the pollution from your tailpipe to the electric company’s.

    2) Open ANWR, oil shale fields, and offshore drilling to increase domestic supplies of oil.

    3) Add a 5 cent/gal tax on gas, increasing 5 sents per year until it hits 50 cents a gallon. That money goes to a consortium to develop alternative fuels, with the patents resulting going into a trust that repays the investment. When it’s all repaid, then the patents revert back to the consortium participants. (Just a thought).

    Right now, ethanol is simply not a player. It’s less energy rich than gasoline, as Car and Driver found out when their test Tahoe returned about 20-25% lower fuel economy on E85 than regular gas. It requires huge subsidies to even be considered, and that cannot go on forever.

    Hydrogen? Right now it generating and using hydrogen in fuel cells uses more energy than it creates.

    Finally, there’s the big issue we haven’t discussed. That’s distribution.

    Right now we have a gasoline distribution system that’s efficient, cheap, and reliable. Unfortunately, you can’t pump ethanol through the pipes. Or hydrogen. Any alternative fuel will require a worldwide distribution network to be built from scratch. Right now, you can get gasoline pretty much anytime you want it. Switch to alternatives, and how do you refuel your hydrogen fuel cell hybrid in the middle of nowhere? You could be up to your axles in water, but without the tech to crack the molecules to extract hydrogen, you’re just wet.

    The simple fact is we’ll be dependent on oil-based fuels for the foreseeable future. I think the market will more efficiently allocate it than the gov’t.

    And if you want to say, “You don’t NEED a Tahoe, you can’t have one.”, then who decides? On what basis? No thanks, I think I’ll skip the tyranny.

    Or do you like your Trabant?

  • avatar

    Uh, driver behavior will have a bigger impact (and an immediate one) on fuel consumption than anything else. Very few posts seemed to mention that most people drive like merde (French for brown material). Ask any non-gearhead friend when was the last time they checked the air pressure in their tires or emptied their trunk/back seat of all the weight they’re needlessly hauling around.

    How about running all errands at once rather than one at a time? How about poor driving habits such as accelerating toward a red light, no coasting (foot on either gas or brake at all times), driving parking lots looking for the ABSOLUTE closest spot to the door, etc?

    Getting better mileage isn’t that hard to do, but for most, we’re just too damn lazy (but never too lazy to bitch!!)

  • avatar

    There seems to be a correlation with those saying we should either stick a fork in CAFE or perform open heart surgery on it, and those that say we should increase the gas tax.

    I suppose optimism trumps naivety here. When has the gov’t instituted alleged earmarked taxes and not raided those “earmarked” funds for other uses? You folks are putting a lot of faith in gov’t that has shown disdain for voter wishes. Careful what you ask for….

  • avatar

    And if you want to say, “You don’t NEED a Tahoe, you can’t have one.”, then who decides? On what basis? No thanks, I think I’ll skip the tyranny.

    There will still be a market for the Tahoe in this country because there are some drivers that would be hard-pressed to fit into a vehicle that’s smaller…

  • avatar

    I’m tired of hearing the drivel about how “the free market is the answer” to all our ills.

    How well has the “free market” worked for controlling pollution and global warming? Access to medical care? Access to higher education? How well has it solved the drug problem? Crime? Poverty?

    When the administration creates $100,000 tax deductions for vehicles that weigh over 2 tons, but cuts deductions for hybrids; when the administration cuts royalties for oil production on PUBLIC land; when the administration cuts funds for public transportation but provides big tax breaks to energy companies to produce oil, but few incentives to produce anything else, (except corn-based ethanol): Then you know what you can do with your “free market.”

    The only thing close to a free market that exists in this country is what you get from the exchanges. That is why Americans should be permitted to trade in carbon credits just as Europeans do.

    Any civilized society has laws and rules. For example, there is the one about not poisoning thy neighbor’s well.

  • avatar

    carlos.negros “I’m tired of hearing the drivel about how “the free market is the answer” to all our ills.

    How well has the “free market” worked for controlling pollution and global warming? Access to medical care? Access to higher education? How well has it solved the drug problem? Crime? Poverty?”

    My response is that Russia and China are the counter to your argument. The pollution is worse. The US is still the desired destination for higher education. It is desirable and yes it costs money. You want poverty look at any of the failed socialist paradises. The free market may not provide cheap medical care or higher education because “we” demand a high quality education and medical care. We can have universal medical coverage but it would be Canadian or British style rationed medical care,

  • avatar

    Replying to carlos.negros:
    I’m tired of hearing the drivel about how “the free market is the answer” to all our ills.

    How well has the “free market” worked for controlling pollution and global warming? Access to medical care? Access to higher education? How well has it solved the drug problem? Crime? Poverty?

    Pollution and global warming are caused by the lack of a free market. Suppose the government only collect flat taxes on oil/coal and let the free market works its own way, we would be much better off. Greener lifestyles (such as public transit, fuel cell, solar/wind-power) will not look so pricy when the price of oil truly reflect its real cost—$300/barrel or $15/gallon gas, if you count all the wars the US fought to grab the resource.

    Same goes with other problems.

    Medical care? Discard all the government program. Assign a flat health insurance allowance to each person. Insurance companies will fight for the business. If you are rich, you are free to pay more for a higher tier of service (i.e. you have free broadcast TV, then cable TV, then pay per view). You know, here in Canada, you are not allowed to pay for a better service.

    Crime and drug? Easy. Fire all those fat police officers. Offer the budget to private companies and let them do the job. The police service now is very much the same as pre-1982-AT&T or GM service. Let their be competition, let there be Sprint/Toyota. Don’t trust a private police? No problem. We will have no less than 10 police companies, they will counter-balance each other out.

    Every social problem that I can think of is caused by too many government control (to protect a certain interest group).

  • avatar

    carlos.negros: When the administration creates $100,000 tax deductions for vehicles that weigh over 2 tons, but cuts deductions for hybrids; when the administration cuts royalties for oil production on PUBLIC land; when the administration cuts funds for public transportation but provides big tax breaks to energy companies to produce oil, but few incentives to produce anything else, (except corn-based ethanol): Then you know what you can do with your “free market.”

    Not one of the examples you highlighted is the free market in action. Instead, it is the government giving out favors to the politically powerful, or well connected. Which is the polar opposite of the free market, and how it works.

  • avatar

    geeber wrote:
    “Not one of the examples you highlighted is the free market in action. Instead, it is the government giving out favors to the politically powerful, or well connected. Which is the polar opposite of the free market, and how it works.”

    That was my point, exactly. The term “free market” does not mean competition in this country. It means giving no-bid contracts to cronies.

    Whenever anyone attacks this so-called free market, the comeback is always to compare the U.S. with China or Russia. Well, Russia is no longer communist, and it was never truly socialist. We can see what the free market reforms have broght to the Russians. Many feel they were better off before.

    Why not compare the U.S. to the first world? Compare us to the EEC. Is there more or less poverty in France than the U.S.? Which county has more people without access to medicine or higher education? Sure, the U.S. has some great universites, but they cost more than the average salary of middle-class families!
    We are slipping behind in every measure. Our life expectancy is less, our health is worse, our public transportation is worse than most countries in western Europe. Where are we better? More SUV’s? Okay, we are better than China. For now.

    If you want real competition, let some of our transportation tax dollars go to something else besides building highways. We spend much more building bridges to nowhere in Alaska, and highways to nowhere in Montana and Wyoming than we do on improving the rail system in the parts of the country that pay by far the most in taxes.

    Give people the chance to take clean, efficient, inexpensive public transportation and they will vote with their feet – just as millions on New Yorkers do every day.

    But when we continue to subsidize a lifestyle that is only a delusion, wasting precious fossil fuels on gas-guzzling SUVs; then we are not truly living in a free market. My taxes are going to subsidize somebody’s Range Rover. Why should they get to deduct their car when I cannot deduct mine? Why should any of my tax money go for propping up those fat cats?

    And we have seen the results of “privatization.” Just look at Iraq. Sure, you can pay someone from KBR $100k to do the same job as a $30k serviceman, but is that cheaper? And where are the missing billions? Privatization = Iraq = Dick Cheney. No thank you. I am sick of this corrupt free market. Let’s have a real one.

  • avatar
    Bob Burns

    Thank you for a well written and informed article about CAFE. I agree with you.

    The crazy thing is the environmentalist must know that this won’t help the environment. 20% of the U.S. pollution comes from cars. Since CAFE won’t take old cars off the road and the number of cars sold in the U.S. is growing, we won’t even dent the stuff we are putting in the air.

    I have said for quite some time that the only thing that can fix the problem is developement (likely through government $) of better batteries and cleaner sources of electricity.

  • avatar

    jkross22 Observed a correlation between those who don’t like CAFE and do like gas taxes. Here is why I fall in this category: If the gov’t wrote down the purpose of CAFE, say “to reduce CO2 more than the free market will on its own”, then most people trained in economics would propose that a gas tax would be the hands down best way to accomplish this goal. See my post for some of the reasons.

    jkross22 also suggested: “When has the gov’t instituted alleged earmarked taxes and not raided those “earmarked” funds for other uses?”

    His economic insight is spot on in general, but the insight does not apply at all to my proposal, so I must have been misunderstood. I am not proposing that the gov’t raise a tax and then allocated or earmark the income to CO2 reducing technologies. Rather, I am proposing the cost of gaoline at the pump be increased by an increase in the Federal tax. I have made no statement about how the income will be spent so the earmarking comment is not applicable. I am redcing CO2 by increasing the price of gas, period.

    Even the Federal bureaucracy can tweak the gas tax without screwing up the implementation. Low cost, low bureacracy implementation is one of the benefits of the tax approach.

    We could have a conversation about how to spend the income, but it would all have to be with a healthy respect for the inability to sustain an earmarked tax allocation. However, since you brought it up, we would probably have to make some kind of “promise” on how to spend the money to sell the tax. Two candidates would be: 1)for other subsidized CO2 reducing efforts, and 2) for National Health Care.

    We might be able to sell the masses on a swap, higher gas tax for National Health Care. Think about it, two of our biggest social issues in one simple tax solution.

  • avatar

    mike_i_n_mich wrote:
    “We might be able to sell the masses on a swap, higher gas tax for National Health Care. Think about it, two of our biggest social issues in one simple tax solution.”

    That is an interesting idea. But we also need to repeal all the tax breaks set in place under the current regime. Income inequality is at the worst it has been since the Guilded Age.

    The other thing that would happen after raising gas taxes is that gas guzzlers would become very cheap very fast. Therefore, Detroit would implode. Food prices would skyrocket due to increased transportation costs. Poverty would increase in the short term, and there could be riots and martial law. It has happened before in this country.

    In fact, such high gas taxes could drive us to attack Iran or another oil-rich country in order to get our next fix.

    Here is a friendlier way to accomplish the same thing: Provide $10000 towards the purchase of a vehicle such as the Prius. At the same time, increase CAFE standards for SUVs and cars which get less than a combined 25 mpg, (new EPA rating). Any new vehicles that cannot meet this standard, would be taxed $10000 at the time of sale. The money would be used to pay the people who buy the efficient cars. What goes around comes around.

  • avatar

    A swap of gas tax for national health care would hurt the Detroit makers on one hand, because they tend to sell larger cars. But it would help them relative to the foreign car companies because they pay billions more for private health insurance for retirees and workers.

    No one said the tax had to be raised over night.

    I do not believe in direct taxes on big cars or direct subsidies on fuel efficient ones, especially foreign cars. This is a blunt instrument, even worse than CAFE. What if someone has 4 kids, do they pay a higher tax for a 6 passenger vehicle? How do you distinguish between someone who needs a pickup for their business, from someone who doesn’t?

    The gas tax will provide enough incentive to buy fuel efficient cars.

  • avatar

    To add fuel to the “what to do with the money” fire, I’ll throw this in: those advocating alternative energy technology, I think, have it half-right. But emissions aren’t the only problem that cars cause. How about urban sprawl? “Free” parking, which is nothing but a subsidy for those who drive paid by those who do not? Massive expanses of concrete? An excuse for terrible city planning? Tires filling landfills? Arguably obesity and stress, and the millions of problems that those create?

    I’ve been commuting by bike for the last few years, pretty consistently. I happen to live in a very bike-friendly town, which makes that possible. More than possible–I’ve never been in better shape, or more relaxed, or happier on my commute. Even if I drove a dickheadmobile I could laugh off the gas prices, since I “need” to drive a handful of thousands of miles per year.

    If public transportation designers count on foot passengers only, then public transportation has to take you within not much more than a mile of your destination. Even a small city with a 20-mile diameter would require something like 70 bus stops. But on a bike in a city that is bike-friendly, I can bus the unpleasant parts and, if I’m pretty lazy, bike no more than 5 miles on either end (20 minutes or so), the same city needs about 4 stops. Obviously we can’t all bike all the time, so owning a car is still important. But what do you think your city would be like with, say, half as many cars on the road? Would you object to gas costing twice as much if you only had to drive half as much? How about if you also didn’t have to worry about obesity, heart disease, cancer, high blood pressure, asthma, that ridiculous diet, …….?

    Bikes could potentially be a very nice part of the answer, but they’re not all of it. However, they serve to make my point: investment in better car technologies would be one worthwhile use of the money from a gas tax. But cars will never be even remotely as efficient as no cars. Create infrastructure to make alternative transportation of all kinds not just viable, but preferable.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • 28-Cars-Later: No, they really don’t for a variety of reasons. But I have to agree with the overall point,...
  • ajla: I really don’t want to sound like an insufferable fanboy but GM doesn’t have anything that would...
  • WalterRohrl: The point was that while you CAN, the vast majority DON’T for various reasons. There’ll be...
  • 28-Cars-Later: Do you happen to sit on a corporate board? If not, what you want is irrelevant and if the product...
  • DenverMike: You kidding? I’d love a ’71. Anything ’71. Pinto on up! Most things from 50+ years ago...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber