The main recommendation is to let the free market do its work. It is likely that gasoline prices will continue to rise over the next 20 years and as a result will encourage consumers to buy more efficient cars, drive less, use more public transportation, live closer to work, etc. Government intervention is required only to nurture the market for oil replacement. The last oil shock and the new economic realities will reduce MPG substantially over the next five years.
Do not increase gasoline tax. It will slow down the economy for years. Although it will reduce consumption in the short term, its effect will be limited because there are practically no public transportation alternatives.
It stands against the main principle that the energy policy should provide the U.S. with a competitive and strategic advantage. We need cheaper transportation fuel from other sources, not artificially expensive gasoline.
The “success” of the gasoline tax in Europe is mainly due to the well developed public transportation system (which will take us decades to develop) and the population density. The Europeans also have to drive, on average, half the number of children per family (it translates into fewer miles per family and into using smaller cars).
When the electric battery car volume increases and the bio-fuel industry can supply the growing fleet, we should consider a gasoline tax to speed up the retirement of old gasoline only cars. We could develop a scrap and replace program to speed up the retirement of old gas guzzlers.
Do not tax high cc engines. We do not need additional bureaucracy. The rising price of gas is already taking care of it. The auto industry will have to go into painful transition as high cc leased cars will be dumped at the end of the lease in favor of smaller cc models. The effect would be minimal. The richer could afford it and people who need larger engines for their work will suffer. Let the market work â€“ MPG will drop dramatically in the next five years as result of the shift in consumer demand.
If taxes are to be considered, then feebates are probably a better alternative than a simple tax. Within a single class of vehicles, the less efficient cars are taxed and the more efficient cars receive a rebate. In theory it should be revenue neutral and will speed up the move to more efficient cars.
Moving additional volume of freight from trucks to trains. A special commission should be established to analyze the issue. Comparing to Europe, our rail potential is underutilized and we need to find a way to use it better (and as a result use less inefficient diesel trucks). The goal should be to freeze the trucks fleet at its current level and fulfill the projected growth in freight traffic with trains.
The commission should also discuss the electrifying of our railroads. In that context, it should consider the use of super fast passenger trains in major transportation corridors (like Boston-NY-Washington DC). We are decades behind the rest of the world in the implementation of electric and super fast passenger trains.
The current Corporate Average Fuel Economy (CAFE) regulation may not achieve its targets and could have undesirable side effects:
- The auto companies will produce more diesel cars. This is exactly what happened in Europe. The equivalent to our CAFE standards (+ diesel subsidies) forced the auto manufacturers to build more diesel cars at higher costs. Now, there is a shortage of diesel fuel and its price is as expensive as gasoline. It is the easiest way to achieve the targets:
- This will not only deepen our dependency on oil, but will also push the diesel price higher (because not all the oil can be converted to diesel).
- A diesel engine costs $1000-3000 more per car.
- We will need additional resources to produce diesel – most likely we will need to liquefy coal to meet demand.
- The improved miles per gallon will increase the number of cars on the road and the number of miles traveled. This is exactly what happened in Europe. The total savings per car was mitigated by the increased use.
- It is not the most effective use of capital. Raising the MPG standard of the internal combustion engine from 22 to 35 will cost billions (although much less than what the big 3 claim). There are simply better ways to effectively reach 500 MPG of gasoline through a combination of flex-fuel vehicles and plug-in hybrids. We should invest in quitting gasoline altogether, not in continuing our addiction. (quitting smoking is by far better than reducing the amount of cigarettes smoked)
- Given the economic situation of the auto companies, the political likelihood that they will pay the fine if they don’t meet the CAFE standards is very low. As the situation of the auto companies worsens, they will ignore CAFE (they will not have any alternative).
The current CAFE regulations should be modified to overcome the above problems. Possible modifications:
- Producing diesel cars should not be considered in the calculation.
- Energy battery policies (or plug-in hybrids) should receive double or triple credit.
- The Flexible Fuel mandate should be external to the CAFE.
- The current MPG standard should only be applied to gasoline, not to other liquid fuels. Each liquid fuel should have a different MPG target.
The current effort should be to modify the CAFE regulations so they can be more effective and with less undesirable side effects.
It may be worth considering changing the MPG targets in return for other costly changes (e.g., new car materials that will also improve MPG and battery range)