Best way to move the D3 to smaller, more fuel efficient cars?

[Midpack]

The cars the American government expects from Detroit - Apr. 3, 2009

Please, this is not a post to debate whether or not smaller more efficient cars are desirable for the USA. It begins with the assumption we will need smaller cars and from there, how best to get there.

The article above, like others, suggests our gubmint thinks the best way is to increase CAFE standards. No matter what automakers produce, if fuel costs are low, consumers will buy larger, less fuel-efficient cars. If the last 10 years and the Escalades, Hummers, etc. haven't shown that, I don't know what will. Conversely, the relatively brief period of high fuel costs last year showed it as well with large vehicle sales hitting the wall very quickly.

I believe increasing the taxes on fuel are the more effective approach, also within the power of our gubmint. It's clear we have too much debt, and we're in the process of making it much worse, so Federal revenues are going to be an issue. Taxes are going to go up. Why not substantially increase the cost of fuel via taxes and fees - instead of relying entirely on income tax increases?

European's have generally much smaller, better more fuel-efficient cars than we do. I don't believe it's because their citizens are smarter than we are. I do believe it's because their fuel costs have been so high for so long (due to taxation) that it's caused demand for small, fuel-efficient cars. And they're looking pretty smart about now for having done so.

However, this could cripple the D3 short term, so it might need to announced to begin in 4 years or phased in to a) give D3 automakers time to develop models for a $4-8/gallon USA and b) to give consumers time to plan their purchases. Automakers and consumers who don't will risk the consequences.

While the latter will be disruptive, it will be more effective than the CAFE approach IMO. CAFE will be disruptive, and less effective.

[donheff]

Shoulda imposed a substantial gas tax back in the 70s. Even more than a green issue, its a national security issue. Probably won't do it today. The Hill has no stomach for taxes even if they make sense.

[Rustic23]

High gas tax poses a greater burden on the rural portions of the country than the cities. Cities have alternate means of transportation. In my area it is a 30 mile round trip to the grocery store. So we shrink the car, so it carries less, making more trips necessary, and then raise the price of gas. I'm just trying to point out that one size does not fit all in this country as it does in Europe. I'm not sure if there is a single European country the size of Texas, and I am quite sure there is not one the size of Alaska. Size matters!

[jambo101]

A good Europe/America size comparison site
Europe and US Country Size Comparison Map - How Big is Europe Compared to the US?
Just move the red dot.

[Midpack]

Quote:

Originally Posted by Rustic23 High gas tax poses a greater burden on the rural portions of the country than the cities. Cities have alternate means of transportation. In my area it is a 30 mile round trip to the grocery store. So we shrink the car, so it carries less, making more trips necessary, and then raise the price of gas. I'm just trying to point out that one size does not fit all in this country as it does in Europe. I'm not sure if there is a single European country the size of Texas, and I am quite sure there is not one the size of Alaska. Size matters!

Won't argue with your POV, but again I am getting the impression the geniuses in Washington are GOING to mandate smaller cars PERIOD. From there, how best to actually increase average fuel economy in the USA - via CAFE standards or higher fuel costs?

[Rustic23]

Obviously I would be in favor of more fuel efficient cars of all sizes. It will be interesting to see how congress approaches this as the Senate may be controlled more by rural states than metropolitan states.

[alvarezg]

Mandated smaller cars will reduce fuel consumption and fuel tax revenues, so either way the fuel tax will increase. Might as well start with a gradual fuel tax increase and make the CAFE unnecessary. The logical place to spend fuel tax revenues is on public transportation.

[Rustic23]

Once more, the rural parts of the country will pay for the public transportation in the metropolitan parts of the country, as the rural parts must drive more and therefore pay the lyons share of the tax. What kind of public transportation do you propose for the farmer in west Texas, or Kansas?

[samclem]

Higher fuel taxes make more sense than regulations forcing automakers to produce cars people don't want, or bribing people to buy cars (when does that end? Plus, it encourages consumption of new cars--environmentally speaking, not a sound approach).

But, just because we want to have good small-car choices available doesn't mean the automakers shouldn't also continue to make larger cars and trucks. That's where the profits are (today and possibly in the future), and now all taxpayers have a personal stake (like it or not) in the success of US automakers (and foreign automakers who hire US workers). Also, people want these vehicles, they do serve a valuable function, and the government has no business taking steps to curtail their production.

Higher fuel taxes are not a perfect solution. They will increase the cost of everything we buy (disproportionately impacting the poor), will especially hurt folks living in rural areas (as Rustic23 points out), and will increase highway deaths when we move to smaller cars (no--I seriously doubt any minor decrease in the number of larger vehicles will significantly enhance the safety to the passengers of smaller cars.)

For the record, I don't cede your point that the government has any legitimate role in helping to shape the product line of GM, Ford, and Chrysler.

[Alan]

Quote:

Originally Posted by Rustic23 High gas tax poses a greater burden on the rural portions of the country than the cities. Cities have alternate means of transportation. In my area it is a 30 mile round trip to the grocery store. So we shrink the car, so it carries less, making more trips necessary, and then raise the price of gas. I'm just trying to point out that one size does not fit all in this country as it does in Europe. I'm not sure if there is a single European country the size of Texas, and I am quite sure there is not one the size of Alaska. Size matters!

Last time I was in Australia visiting my family gas was double the price it is here - due to taxes - and they manage just fine. (it is 4 times higher in England). I remember one year my brother telling me that a MaDonalds had opened in Emerald So that for them it was now only an hour's drive for a Big Mac.

We had a vacation in rural Spain last year living in a rented house in Orinditz. Spain is about the size of Texas and we had about a 30 mile round trip to the nearest reasonable grocery store.

I really don't get the rural living argument for maintaining cheap gas.

[Zathras]

Quote:

Originally Posted by Rustic23 Once more, the rural parts of the country will pay for the public transportation in the metropolitan parts of the country, as the rural parts must drive more

While I don't disagree with this, I also was thinking about this assumption.
Does someone in rural areas drive more on an annual basis?
While I can see the need to drive further, do most rural folks drive as much?
I have a number of relatives that live in more rural settings who actually drive very little.
Aside from business (farm, ranch or otherwise) does anyone have any references for the average annual distance driven and if it is that much different between rural, suburban and urban areas?

[Midpack]

Quote:

Originally Posted by samclem For the record, I don't cede your point that the government has any legitimate role in helping to shape the product line of GM, Ford, and Chrysler.

If this is directed at me, we're in heated agreement. They seem to have decided they have a legitimate role already IMO...

[Rustic23]

Sometimes the reasoning on this board really amazes me. 'I was on vacation, paid high gas prices in Spain, so everyone in rural America can afford to do it to' Besides I live in a city/town and have alternatives!

Zathras,
Currently, my guess is there are folks driving about the same milage as I am. About 15-20 thousand miles a year. And, if a higher gas tax is implemented I will drive 15-20 thousand miles a year. I have not option. That is my real point. I heard a prominent Tv commentator say we don't need SUV's and big pick up trucks. He lives and has lived his entire life in New York. Now many people don't. However, many truly feel the need. The problem is when one part of the country attempts to make a law that is good for them but not for others. Along with this rant, I have not even gotten into the fact that governments solution is to raise taxes for politicians to buy votes. Every day this land of the free seems to get less free.

[Zathras]

Rustic, I appreciate your experiences. In your annual driving, is any/some/most of that job related (farm, ranching, etc)?

I agree that a fuel tax would affect people who drive more miles with lower mpg vehicles more money.
However, even given that, I don't know of a better solution.
CAFE standards are, I feel, ineffective. To many special ways to get around, and no affect on vehicle choice (for those that have a choice).
Gas prices did seem to have a remarkable affect on gasoline demand. So it seems that is the policy that would have a chance at reaching the desired goal.
I also feel some credits should be available to those that have jobs that require driving, and some minimum credit for everyone such that it wouldn't impact the poor in a punative manner.

And Sam, I agree with you, the government should not be making decisions as to what cars the auto companies can produce.
I also feel that the government does have the right to price fuel to actually represent the true cost of that fuel (which I don't believe they currently do).
Thirdly, I don't feel the government has any place bailing out the auto companies, so just as the government should keep clear of the auto companies, the auto companies should have steered clear of the government.

[samclem]

Quote:

Originally Posted by Zathras I also feel some credits should be available to those that have jobs that require driving, and some minimum credit for everyone such that it wouldn't impact the poor in a punative manner.

But how would we do that? "Credit stamps" like the old ration stamps of WW-II? And, surely we wouldn't just stop at credits for driving to work--there are many necessary trips people make--shouldn't we get some type of offset for driving the kids to school? Picking up grocereies?

I don't think adding complexity is the answer. If we want to go down this path of reducing fuel use with a higher tax, then it should not be an additional tax burden--it should be revenue neutral. That means adjusting the income tax to offset ths tax. In years past I might have suggested raising the standard deduction (so that everyone benefits on an even dollars-per-head basis) but that is no longer a wise course of action. We are almost to the point where 50% of the people pay no income tax at all, and that's not a healthy situation for our democracy, it is inherently unstable. Probably the best way to offset the gas tax would be with an increase in the top of the 10% tax bracket (presently it is $8350 for single filers, $16,700 for joint filers). Nearly everyone who has a job would benefit.

[NW-Bound]

While Americans in rural areas do need their cars more than city dwellers do, it does not mean that they need to buy groceries in huge 3/4 ton pickups with V8 engines. I really like to see a comparison to the Australians who also have a vast country. Or is our gasoline consumpion really due to the American love of the big cars, the feeling of "macho" in a Hummer, the measure of manhood by the cubic inches under the hood? For cargo hauling, should we bring back the VW van with its cavernous hauling space, yet propelled by a 4-cyl engine?

[Zathras]

Sam, I think exactly, or close, to what you mentioned. You are right, no need to add complexity, make it an income tax credit.

[eridanus]

Quote:

Originally Posted by Zathras Sam, I think exactly, or close, to what you mentioned. You are right, no need to add complexity, make it an income tax credit.

Why do that? It's amazing how people want a less complex tax code but then want exceptions or credits or deductions for A) and B) and C). It's how we got where we are in the first place. Raise the fuel tax and be done with it.

[donheff]

Quote:

Originally Posted by samclem Higher fuel taxes make more sense than regulations forcing automakers to produce cars people don't want, or bribing people to buy cars (when does that end? Plus, it encourages consumption of new cars--environmentally speaking, not a sound approach). But, just because we want to have good small-car choices available doesn't mean the automakers shouldn't also continue to make larger cars and trucks. That's where the profits are (today and possibly in the future), and now all taxpayers have a personal stake (like it or not) in the success of US automakers (and foreign automakers who hire US workers). Also, people want these vehicles, they do serve a valuable function, and the government has no business taking steps to curtail their production. Higher fuel taxes are not a perfect solution. They will increase the cost of everything we buy (disproportionately impacting the poor), will especially hurt folks living in rural areas (as Rustic23 points out), and will increase highway deaths when we move to smaller cars (no--I seriously doubt any minor decrease in the number of larger vehicles will significantly enhance the safety to the passengers of smaller cars.) For the record, I don't cede your point that the government has any legitimate role in helping to shape the product line of GM, Ford, and Chrysler.

I like what you said, although I am not sure I correctly understood what you mean I too don't like mandates (small cars, fuel consumption standards). I would like a hefty fuel tax - that would change the demand curve and Detroit could figure out the how. How about a fuel efficient Dodge Ram 2000?

[Rustic23]

Z,
I would say about 20% maybe a little more of our driving is not related to 'daily activity'. Travel and such. The rest is going to Church, shopping, entertainment, and visiting friends and family.

It would be interesting if folks would say if they live where mass transit is or will be available. I also think the market will work this out. If gas goes to $4 + a gallon due to market conditions, people will change. I would like to see more fuel efficient cars and trucks. For those of you who say 'You don't need a 3/4 ton pickup' I say you don't need a car at all. When we lived in Germany, towns people did not use a car for their daily shopping. Can't we all just be like Europe?

I just got back from the airport in Houston, early morning trip. I would say 90%% or more of the people going to work were one person to a car!