Auto Manifesto

July 8, 2009

Raise the Fuel Tax Already!

Raising the fuel tax gradually and consistently would be so much more effective at curbing consumption and enhancing technical/economic stability than all these political "solutions" such as the CAFE standard. The CAFE standard doesn't even have to be rescinded, just not increased further.

The solution is really simple (though no politician is likely to have the courage or support to propose it). Take the national average gasoline price for the year to date. Make that the minimum gasoline price everywhere in the country.

Then add a modest (e.g. $0.05/gallon tax). Then every quarter going forward add another 0.5% to 1% to the tax, adjusted for inflation.

The price is never permitted to fall below the minimum (unless you want to see a run on gasoline). The same could be done for diesel. Use the tax revenue to fund roads, bridges, and ways to further reduce oil dependency.

This way the cost of gasoline will eventually outpace inflation but in a gradual way that companies and consumers can actually plan for, rather than the crapshoot of price speculation and wild swings.

Here are couple of food-for-thought articles:

China Raises Fuel Prices, Fuel Standards Are Killing GM

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