Gas Prices – and what ever happened to the gas guzzler tax?

Americans have been complaining about gas prices lately; recent polls have shown that high gas prices are their number one economic concern. Of course, high gas prices are driven by high oil prices, which are in turn driven by supply, demand, and a healthy premium to account for terrorism, hurricanes, and other delights. Demand has grown faster than supply lately, shrinking surplus capacity to a minimum. Many point outside our shores to emerging economies as the source of this growth. But no one likes to look inward, right?

Since the late 80’s, fuel economy in American consumer vehicles has decreased, while vehicle weight and performance have increased (the EIA has the details). Since American vehicles consume 20% of the world’s oil, our driving habits have a huge effect on oil prices. Since everyone seemed to want an SUV until recently, the increased demand eventually impacted gas prices. Another way to look at this: if average fuel economy got back to what we achieved in 1987, we would consume 2 million less barrels of oil per day, driving oil prices down significantly, and cutting our import requirements by 20%.

The federal government instituted a tax on inefficient vehicles – the “gas guzzler” tax – back in 1978. So why hasn’t it had any effect on the demand for inefficient vehicles? The gas guzzler tax doesn’t apply to trucks of any kind, so it doesn’t apply to SUVs and trucks even though they account for 54% of all US vehicle sales today! If you buy a Lamborghini, expect to pay up to $8000 in gas guzzler taxes; if you buy an 8000 pound Excursion, laugh at the other guy on your way out!

Extending the gas guzzler tax to apply equally across all vehicles would seem a logical start to encouraging conservation and decreasing oil dependency. Then again, I’m not aware of any lobbyists who get a paycheck for that, while I expect the auto industry has its forces lining up against this already…

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