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Political Death Warrant
Industry analyst Aaron Bragman, from Global Insight, thinks mileage requirements don’t work. “Trying to regulate consumer behavior from Washington only works through one way: taxation,” he says. “This is the path Europe followed—tax the hell out of gasoline, make diesel more affordable, and watch people flock to 1.0-liter hatchbacks. Change the supply of gasoline by making it much more expensive, and you’ll affect consumer behavior.”
But then Bragman drops the bomb. “Unfortunately, in America, you’ll also sign your political death warrant,” he says. “Any attempt to raise fuel taxes is viewed as something between treason and terrorism. It boggles my mind that politicians actively push for higher and higher CAFE standards for automakers, while at the same time (and sometimes in the same speech!) advocating measures to bring down fuel prices.”
This point was neatly brought home in a March 2007 meeting between the CEOs of GM, Ford, and Chrysler and US president George W. Bush. According to Business Week’s David Kiley, all three CEOs agreed that the best way to reduce consumption was a gasoline tax—offset by an income tax cut for low- and middle-income consumers. The president, says Kiley in an angry blog posting, “immediately dismissed it on political grounds.” The problem? It’s a new tax, and citizens wouldn’t understand the complexities of energy policy.
Fast-forward almost 18 months, and the public is way ahead of the automakers and the regulators. Consumers have responded to higher gas prices so quickly that automakers have been whipsawed. Toyota Prius supplies are measured not in days, but hours. Buyers who ordered a Ford Escape Hybrid last spring may get delivery before the end of the year—or not.
“High fuel prices,” says Bragman, “are doing in six months what 30 years of CAFE has failed to do: push people towards more fuel-efficient cars! And consumers are making the shift on their own, because (wonder of wonder) gas prices have driven them to make better, more responsible choices.”
Quite suddenly, the public now wants fuel-efficient cars—at least, this month it does. So perhaps the question after this fall’s elections will be: How can the current shift to more fuel-efficient cars be sustained, regardless of what happens to gasoline prices?