CAFE Standards vs. Increased Gas Tax

With the weak-minded Democrats in control of Congress there is a lot of talk about raising CAFE standards. For those not familiar, CAFE standards mandate the average fuel efficiency for an automaker's entire fleet of vehicles. In other words, they get to continue to sell their high margin 10 mpg SUVs as long as they sell a few compact cars too.

Congress enacted CAFE standards in 1975 as a result of the 1973 oil embargo. Passenger cars doubled their fuel economy over the next decade reaching a peak of 25.9 mpg in 1987. Overall fuel economy for passenger cars and light trucks peaked at 22.1 mpg, again in 1987. By 2004 that number had fallen to 20.8 mpg. Meanwhile, in Europe fuel economy is about 35 mpg!

Average fuel economy, in mpg, for the 2006 model year shows the big three (Chrysler, Ford and GM) at around 20 mpg and our Japanese rivals (Toyota and Honda) at around 24 mpg. So Japanese automakers are 20% more efficient. Granted, you can't really make an apples to apples comparison because these companies have a different product mix, but you get the idea. Toyota has been eating our lunch when it comes to efficiency.

So Congress, looking to appear pro-active on energy issues (bit late for that) is ready to pass a bill mandating CAFE standards. The catch is that the bill would allow the government to suspend standards if they impose severe economic hardships for automakers. Severe economic hardships are a given for GM and Ford. Look, we have to do something about our energy situation so this bill makes some sense. It's a weak attempt but an attempt nonetheless.

Problem is, this bill is another example of our leadership looking for the easy way out. Well, sorry, but there isn't one. The longer we kid ourselves the more likely we will have to drastically reevaluate when faced with a full-blown crisis. That's where we're headed. No doubt.

So what might work? Raise the gas tax! It'll never happen with the weak leadership we have, but raise it big time and we'll have a much better chance of sustaining the unsustainable. Raise the gas tax, 18.4 cents per gallon on the federal level since 1993, to three bucks. Phase it in by raising it 50 cents a year or something like that. Raising it at all is political suicide but the higher the better.

Six dollar gas?! See if we don't get our shit together then. Ford and GM, unable to sell the gas guzzlers on which they make all their profit, would be up the creek. But, that's a given sooner or later regardless. In the meantime they'd sure as hell find a way to make something efficient. Our over consumption would end as well. People would start riding bikes and investing in the public transportation we desperately need. Our government, with some of this huge windfall could do the same. Think trains. Think bike paths. Think buses. Think, for that matter, for different ways to live in which we don't have to drive everywhere for everything.

Let's be clear. "The Skeptic" abhors taxes. Period. One thing for taxes though. They change behavior. We need to change our behavior. Yet, we clearly lack the leadership to get us there.