GM’s Push for Higher Gas Taxes

The head of General Motors, Dan Akerson, has called for an increase in the gasoline tax of up to one dollar a gallon.  Akerson’s proposal illustrates, in a nutshell, the perversity of the federal government’s fuel economy standards for new vehicles.

The program is known as CAFE (for Corporate Average Fuel Economy).  CAFE has been criticized on several grounds:  it limits consumer choice; it jacks up the price of new vehicles; it forces new fuel-saving technologies to be rapidly employed without adequate testing; and, worst of all, it increases traffic fatalities by forcing cars to be made smaller and lighter, reducing their crashworthiness.  CAFE’s advocates claim that the law saves consumers money in the long run by reducing their gasoline costs, but if that’s true then we wouldn’t need a federal law imposing these technologies on the public.

But Akerson’s proposal highlights yet another destructive aspect of CAFE:  how it drives a wedge between the incentives of manufacturers and the desires of consumers.  That’s already happened with such humdrum products as washing machines, where energy-efficiency rules and manufacturer tax credits for ultra high-efficiency models are leading the industry to produce washers that many people hate.  And now there’s the prospect that it might happen with cars, as the feds consider boosting their fuel economy standards yet again, possibly up to the stratospheric level of 62 mpg.

Faced with such standards, the last thing a carmaker wants is low-priced oil, because that makes it even harder to sell small, expensive high-efficiency cars to consumers.  The irony, however, is that low-priced oil is exactly what the carmaker’s customers want.

One wonders whether GM has taken the lead on higher gas taxes because its bailout ties to the feds have created a more government-oriented corporate culture.  But regardless of that; when carmakers push to raise to raise the cost of the very substance that fuels their products, we have a serious problem.  They’re serving the government rather than the public, and that does not bode well either for the vehicles they’ll be producing or for the policies they’ll be pushing.