A gasoline tax increase to protect America

On March 20, Louis Thompson, former World Bank railways advisor, told a high speed rail forum in Washington that the right climate for high speed rail development in the US would involve gasoline prices around European levels, which he said were about twice the U.S. level. Of course, a gasoline tax increase would do more than help support high speed rail development.

• It would strengthen finances of our own government, enabling it to more easily address domestic needs. The present low-tax system gives most of the riches to the producing nations.
• It would reduce U.S. vulnerability to big up ticks in world oil prices. As I wrote here March 22, a UN official told Transportation Research Board in January that, in the two years ending August 2006, the average fuel cost per year per vehicle rose $600 here but only $290 in Germany. The pump price (with taxes) increased 59% here but only 22% in Germany.

In Washington, however, we have intense discussion about raising Corporate Average Fuel Efficiency standards—and deafening silence about the gasoline tax. How much environmental good can a CAFE increase accomplish without a gasoline tax increase? Will automakers (as they claim) wind up producing lots of small cars Americans won’t buy?       
On March 14, Thomas W. LaSorda, President and CEO of DaimlerChrysler Corporation, testified to the House Energy & Commerce Subcommittee on Energy and Air Quality, “Why is there a huge disparity [in fuel efficiency] between our fleets there [Europe] and here? After all, we are the same companies in Europe that we are in the U.S., with access to similar technologies. The difference is the European approach to energy and greenhouse gas policies. They’ve made some tough political choices. They’ve highly taxed gasoline, making the price three times higher than in the U.S., and they have incentives on diesel fuel. As a result of these policies, fuel economy is always high on a customer’s list, and not just when there’s a spike in fuel prices.”
Mike Jackson, chairman and CEO of AutoNation, the nation’s largest dealership chain, “said higher gasoline taxes would also help. ‘Fuel economy right now in the U.S. is right next to cup holders in consideration. You have to have a component that entices or encourages consumers to buy more fuel-efficient vehicles as it’s done in Europe. To just raise fuel economy without a consumer component will not work’” (The Washington Post, March 21).

Financial Times recently editorialized against the European Union’s proposed complex rules on carbon emissions, urging instead that the EU set a stiff price on carbon emissions and let the marketplace figure out the response. At least in the U.S., letting the marketplace figure it out is tough for political leaders to do, especially those who’ve savaged colleagues who dared talk about something as simple (but painful) as a gasoline tax—or who have watched colleagues pay dearly for suggesting such.

—Ross Capon