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

[Alan]

I really like to see a comparison to the Australians who also have a vast country.

This is what my niece drives in Australia - Queensland. Big enough?

Her Dad (my brother) drives a station wagon and her mother a Toyota 4-Runner

 

[BunsGettingFirm]

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?

Your position assumes that the transfer is one way. We transfer $300 billion a year to the Midwest farm states in the form of farm subsidies. We use 142 billion gallon of gasoline a year. Current taxes average 18 cents Federal and 21.5 cents state. Let's say we add another $2 of extra tax per gallon, the additional bill is only $284 billion a year, not anywhere close to all of it paid by the Midwest farmers, so they are coming out ahead.

Gasoline FAQs - Energy Information Administration

It is interesting that the assumption 'we must use less oil' is accepted, no discussion. Now I not saying it is or is is not, but I would say, before one strikes out at higher gas prices, which will most certainly have an adverse effect on not only our but the world economy, witness what happened when we got $4 gas, we should make sure that the assumption is truly in our best interest. As I see it there are two major arguments, most likely more, balance of trade and global warming. We might get an agreement on the first, but as to the effect of the use of oil on the second, I am almost positive you will not get an argeement on here or anywhere else in the general public.

Your premise for waiting for complete agreement before acting is a false one. Heck, the cigarette companies didn't "agree" with the Surgeon General that smoking caused cancer and managed to hold on that that disagreement for decades. That doesn't mean that smoking doesn't cause cancer.

 

[Midpack]

It is interesting that the assumption 'we must use less oil' is accepted, no discussion. Now I not saying it is or is is not, but I would say, before one strikes out at higher gas prices, which will most certainly have an adverse effect on not only our but the world economy, witness what happened when we got $4 gas, we should make sure that the assumption is truly in our best interest. As I see it there are two major arguments, most likely more, balance of trade and global warming. We might get an agreement on the first, but as to the effect of the use of oil on the second, I am almost positive you will not get an argeement on here or anywhere else in the general public.

Is there any question in your mind that demand will increase (population growth, emerging economies) faster than supply (the supply is relatively finite, no matter how many oil fields there are, they are not infinite)? I don't know how there could be, the only question is when? So our options are ultimately:

1. We can do absolutely nothing and let energy become scarcer and more expensive, which will most likely happen more quickly than we're prepared for (the supply demand relationship is not linear by any means). This will definitely resolve itself, but it could be devastating for most people, and you will most certainly have much higher energy costs and less supply.
2. We can act now, pushing energy costs higher with taxes/fees, driving us to buy more fuel efficient cars and therefore manufacturers to build more desirable and even more efficient cars. Believe me, I don't like taxes at all, but higher energy costs are inevitable and doing it through taxes and fees gives us some ability to control the rate of increase so consumers and manufacturers have some time to adapt. Prices are going to go higher anyway, I'd prefer controlled over uncontrolled which will be more unpredictable and may happen faster than we can adapt to.

I grew up believing government had no role in our personal lives, all free market, fee regulations, etc. But I have come to believe there are some things people will not do on their own despite the obvious road ahead. Energy and the environment are two clear cases IMO. Someone gave the example of smoking above, it's amazing to me that anyone smokes with all we know now, yet many do. How can that be?

Could it make us less competitive in the short run? Yes, but one day the technology to be more energy efficient will be crucial. Countries that rely on cheap energy are going to find themselves in trouble one day. Do we want to lead this and have energy technology that other countries need from us, or watch other countries become more efficient while we stick our heads in the sand and wait - and beg them with our $ for their energy technology?

 

[ERD50]

I grew up believing government had no role in our personal lives, all free market, fee regulations, etc.

...

Believe me, I don't like taxes at all, but higher energy costs are inevitable and doing it through taxes and fees gives us some ability to control the rate of increase so consumers and manufacturers have some time to adapt. Prices are going to go higher anyway, I'd prefer controlled over uncontrolled which will be more unpredictable and may happen faster than we can adapt to.

These are the same reasons why I think that some govt intervention in this area could be for the "common good". The free market *will* take care of the problem on it's own, but just like the reactions we had to $4 gas, it could be painful. IMO, a more controlled, gradual process could be better for all.

Of course, if the govt intervention is done in the typical bone-headed fashion, then we are probably better off with the dog-eat-dog free market than tons of unintended consequences.

One thing I've been thinking lately - since raising gas taxes in a recession probably is not a good idea, and would not fly anyhow, maybe just the "power of suggestion" would be enough? What if the govt announced that starting in say, 2012, a gas tax would be initiated which would keep the floor at/above a certain level. And that floor would rise by 24 cents a year ( 1 cent on the 1st and 15th of each month) until certain conservation goals were reached. Kept revenue neutral - the taxes would be returned to consumers (I think samclem suggested increasing the number of people who qualify for the 10% marginal rate - sounds good).

Now, that would cause zero hardship today, but people would have three years to start planning. Put a sign at every gas pump indicating future gas prices. Have people sign a form when they apply for their state plates each year. More people would *plan* to buy a higher mpg car over the next few years. Manufacturers of high mpg cars could count on increased demand. More people could consider their commute, telecommuting options, car-pooling options when looking for a new job or new home, and a thousand other conservation measures.

Just like the market responds to future expectations, we could influence behavior today with future expectations for gas prices at zero extra cost today.

-ERD50

 

[Rustic23]

Yes oil will cost more as other nations develop, and the market will respond, as people demand more fuel efficient cars and trucks. Putting a $2 a gallon tax on gas now is not going to do anything more than hasten the process, depress the economy, and make politicians and their friends happy. I am not opposed to more efficient cars. I am not opposed to spending less on oil. Say, why not just prohibit single occupancy vehicles within city limits without a special permit, sold by local government. Or how about a tax on parking spaces. There are lots of ways to skin a cat. Bet these would be real unpopular with many posting here.

I am reminded of an old saying 'There are no easy answers to complex problems. If there were, there would be no complex problems' Raising the tax on gas to solve the energy problem is a 'simple solution', fought with unintended consequences. I can think of at least two. A draw down in consumer spending, and increase in cost of everything that has to be delivered by truck. Once more, rural America will suffer more, IMHO.

By the way, I think if you are going to post on this subject you should state what type car/truck you drive, and if you are rural or metropolitan. I drive a Honda Pilot, 20mpg city/25 Hwy (I have gotten 26.5 hwy) and live rural.

 

[Midpack]

These are the same reasons why I think that some govt intervention in this area could be for the "common good". The free market *will* take care of the problem on it's own, but just like the reactions we had to $4 gas, it could be painful. IMO, a more controlled, gradual process could be better for all.

Of course, if the govt intervention is done in the typical bone-headed fashion, then we are probably better off with the dog-eat-dog free market than tons of unintended consequences.

One thing I've been thinking lately - since raising gas taxes in a recession probably is not a good idea, and would not fly anyhow, maybe just the "power of suggestion" would be enough? What if the govt announced that starting in say, 2012, a gas tax would be initiated which would keep the floor at/above a certain level. And that floor would rise by 24 cents a year ( 1 cent on the 1st and 15th of each month) until certain conservation goals were reached. Kept revenue neutral - the taxes would be returned to consumers (I think samclem suggested increasing the number of people who qualify for the 10% marginal rate - sounds good).

Now, that would cause zero hardship today, but people would have three years to start planning. Put a sign at every gas pump indicating future gas prices. Have people sign a form when they apply for their state plates each year. More people would *plan* to buy a higher mpg car over the next few years. Manufacturers of high mpg cars could count on increased demand. More people could consider their commute, telecommuting options, car-pooling options when looking for a new job or new home, and a thousand other conservation measures.

Just like the market responds to future expectations, we could influence behavior today with future expectations for gas prices at zero extra cost today.

-ERD50

Great idea - just like post #1 in this thread:

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.

We have a Honda Element 22-25mpg & a Toyota Camry Hybrid 33mpg winter, almost 40mpg summer (batteries vary with cold). The Element will probably be replaced with a Prius or another high mileage car over the next 12 months.

 

[Zathras]

Rustic, what do you think of ERD50's comment above yours. Seems that would work well for many and address some of the issues you speak of.
Likewise, as an earlier poster mentioned, rural America also reaps benifits from the government that urban/suburban American pays for. I don't begrudge this at all, I wonder though how you feel about those programs that put the shoe on the other foot.

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I drive a PHEV (converted prius) (74mpg average). Live suburban. Will own a RAV4EV in a late June.

 

[ERD50]

Great idea - just like post #1 in this thread:

Ah yes, look like we agree there. Sorry for the repeat, I got caught up in the sequential posts and didn't go back to re-read the OP before I posted.


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Main vehicle for me is Volvo S40, 21 mpg on my usual mix of driving (mostly into town and back), 26+ mpg on a trip. More importantly, 50,000 miles over 8 years, including 3 years of commutes to work (~ 10 miles each way).

So instead of mpg, maybe we should list gallons of fuel consumed each year?

-ERD50

 

[FinanceDude]

Americans as a whole don't WANT little fuel efficient cars, unless the price of gas goes to $4+ and stays there. I don't think the FUNCTION of govt is to tell folks what kind of cars they can drive.

Europe is a terrible example because the entire land mass of Europe is slightly bigger than one of our coasts. That's why Eurail and small fuel efficient cars are all the rage. Mass transit does not work in American, its too spread out. Do you really think a rancher in Montana is going to drive a Prius to haul supplies

The market will dicatate change. I think the govt will mandate what cars GM and Chrysler can make, and it will be the death spiral. Honda, Toyota, Nissan, Hyundai and yes even Ford will be HUGE benefactors of that action.........

The USA is NOT set up for mass transit, unless you leave in a few heavily populateed areas, like NYC, Boston, Chicago, and LA. I live in Milwaukee, the nearest train is 22 miles away. Even if they build some more rail I will still have to drive 5 miles to get on the train, and then drive 5 miles home,I don't see the time or energy savings in that.....

 

[MasterBlaster]

My objection to an additional gas tax is that it is just another way to extract money from us. Adding an extra $1 to the price of gas would cost my household over $1000 per year.

So if we must drive small cars, at least a CAFE approach doesn't ratchet up the taxes. I just have no faith in the government to not suck up whatever money they can (and then some).

Oh sure they'll refund some of it to those they deem to be worthy. But I have a suspicion that it won't be me.

So if we have to drive fuel efficient cars, I vote for a CAFE approach.

 

[Rustic23]

I don't think you can list transfer of payment from one group to another to justify taxing one group over another. Many farm subsidies do not go to people that live in rural America. I don't get one, and neither do any of my neighbors. I believe many go to large corporations and never see rural America. How about Ethanol subsidies, or air line, or in an 80,000 page tax document who knows what others. Look at the billions that are spent on Cities by the federal government to subsidize public transportation and build roads. You are proposing an increase tax to solve a problem. My point is that tax should be fair to all, (as possible), should be the last choice, rather than the first, and should actually solve the underlying problem. We should also look at what this tax is going to do beyond just solving the defined problem. i.e. 'The law of unintended consequences'

How about offering huge tax rebates for the purchase of small fuel efficient cars and trucks? Lets see. It would create a market, solve the problem, but politicians would not have billions to dole out to friends. Nope never work!

Like raising kids or pets, there are two ways to change behavior. You can reward good behavior or punish bad behavior. Government, for the most part, chooses to punish.

Erd's plan is a way of implementing a gas tax that would have less effect on the economy and would allow it to adjust. I would not, however, belay the unintended consequences brought on by a transfer of wealth from one sector of the community to another.

I believe the cost of energy is going to go up. The problem with alternate energy sources is that oil is still too cheap to produce. The recent high price of oil can not be attributed only to supply and demand, IMHO. The price went up way faster than demand, and fell much faster than supply could account for. We allow our primary energy source to be traded like candy. IMO again, not a good idea. Anyway, just another thought that we are trying to cure a symptom of the cold not the source.

 

[Midpack]

My objection to an additional gas tax is that it is just another way to extract money from us. Adding an extra $1 to the price of gas would cost my household over $1000 per year.

So if we must drive small cars, at least a CAFE approach doesn't ratchet up the taxes. I just have no faith in the government to not suck up whatever money they can (and then some).

Oh sure they'll refund some of it to those they deem to be worthy. But I have a suspicion that it won't be me.

So if we have to drive fuel efficient cars, I vote for a CAFE approach.

With our prior debt/deficits and the new stimulus, the Fed is going have to cut services and/or raise revenues. They've never cut services in any meaningful way that I am aware of. So if they are going to increases revenues (taxes) anyway, I am advocating doing it in part by taxing motor fuels more heavily (although phased in or beginning at a specified date some years in the future). Again, fuel costs are going to increase as (energy) supply and demand inevitably get further out of whack. And again, we can go through this in a somewhat controlled manner (so we can all have a chance to adapt) or uncontrolled (let economics dictate). Both will work in the end, but the latter could be terribly disruptive and I'd argue ultimately more painful.

CAFE does nothing to change behavior IMO. GM/Ford et al can build all the Federally mandated small cars they want, but if consumers buy SUV's because they can afford the gas, what has CAFE done for us? Our behavior this decade clearly shows we'll respond to gas prices and not what CAFE or tree-huggers tell us is best...

 

[MasterBlaster]

With our prior debt/deficits and the new stimulus, the Fed is going have to cut services and/or raise revenues. They've never cut services in any meaningful way that I am aware of. So if they are going to increases revenues (taxes) anyway, I am advocating doing it in part by taxing motor fuels more heavily (although phased in or beginning at a specified date some years in the future).

CAFE does nothing to change behavior IMO. GM/Ford et al can build all the Federally mandated small cars they want, but if consumers buy SUV's because they can afford the gas, what has CAFE done for us? Our behavior this decade clearly shows we'll respond to gas prices and not what CAFE or tree-huggers tell us is best...

In my opinion, the best way to fund additional government services is to have a tax on liberals. That way those that want to fund poorly run, poorly thought out programs with marginal results will have the opportunity to fund such.

For the rest of us, we stand wary of the governments offer to help us.

 

[Midpack]

In my opinion, the best way to fund additional government services is to have a tax on liberals. That way those that want to fund poorly run, poorly thought out programs with marginal results will have the opportunity to fund such.

For the rest of us, we stand wary of the governments offer to help us.

You've got my vote! What are you running for?

 

[FinanceDude]

In my opinion, the best way to fund additional government services is to have a tax on liberals. That way those that want to fund poorly run, poorly thought out programs with marginal results will have the opportunity to fund such.

For the rest of us, we stand wary of the governments offer to help us.

 

[Rustic23]

Well there sure are some bankers that are having second thoughts, and I'll bet more than a few at GM.

 

[Westernskies]

We already have fuel taxes in place- the more you use, the more you pay. People will conserve/buy more fuel- efficient cars/carpool/use mass transportation when the pain exceeds the gain. Supply and demand. We don't need those dunderheads in DC mandating or legislating this for us.