U.S. Congress pushes up fuel economy standards.

[Ell_man]

If they increase fuel economy, might that encourage people to use more gasoline? Essentially, the price of driving a given distance is cheaper with a more fuel efficient car. Then, don't you think people will drive more distance and buy more gas than they otherwise would if they drove more fuel efficient cars.

Actually, whether people go out and buy more total gas is questionable. The fuel savings that you get from extra efficiency may outweigh the extra fuel use that comes from more driving. I'm just saying that people will react to the CAFE standards which may make the results from increasing CAFE standards not be as rosy as many people thinking they will be.

Instead of cafe standards, wouldn't it be simpler to just tax gasoline?

[Arrian]

We do tax gasoline. Seems to me that both approaches have their merits.

-Arrian

[Dinner]

State and Federal taxes amount to an average of $0.42 per gallon. It's not that much given gasoline is around $3.30 per gallon.

http://www.energy.ca.gov/gasoline/statistics/gas_taxes_by_state_2002.html

[Arrian]

I think my state has one of the highest gas taxes, if not the highest.

Anyway, one can certainly argue for raising the gas tax (which is, of course, political suicide right now). Or one can go at the problem from the other end for now, and wait until a more opportune moment on taxation.

-Arrian

[Arrian]

Hmm. Checking your chart, we're not the highest. 29.7 cents/gallon.

Hawaii wins, Nevada is also up there, which is surprising, even above New York, Cali and CT.

-Arrian

[Dauphin]

Originally posted by Ell_man
If they increase fuel economy, might that encourage people to use more gasoline? Essentially, the price of driving a given distance is cheaper with a more fuel efficient car. Then, don't you think people will drive more distance and buy more gas than they otherwise would if they drove more fuel efficient cars.

Actually, whether people go out and buy more total gas is questionable. The fuel savings that you get from extra efficiency may outweigh the extra fuel use that comes from more driving. I'm just saying that people will react to the CAFE standards which may make the results from increasing CAFE standards not be as rosy as many people thinking they will be.

Instead of cafe standards, wouldn't it be simpler to just tax gasoline?

Increase fuel efficiency by 25% and increase petrol prices by 25% and you'll find that drivers spend as much money per mile on petrol as before - so there would be no change in consumption pattern unless there is irrational behaviour.

Less petrol is used, and the tax take increases.

What's not to like about that?

[Ell_man]

I know we have gas taxes. I meant to say that why don't we replace cafe standards with gas taxes?

Cafe standards make ones use of gasoline more efficient. You get more out of each gallon than before. BUT, people are going to respond to the increased efficiency of the cars and drive more.

If you were to simply tax gas, then people would buy more fuel efficient cars AND drive less.

Cafe standards make people drive more. Which is counterproductive to the goal of reducing gas consumption.

[Dinner]

We do need gas taxes to help decrease consumption but often times a gas tax is a regressive tax because poor folks are more likely to own an old gas guzzler. CAFE helps even things out without punishing the poor.

[Impaler[WrG]]

Ell_man basic argument is correct in the notion that the standards are somewhat self defeating in the cost/benefit reaction they trigger. But the counter reaction (the increase in driving) will almost certainly be less then the reduction. Firstly gas will probably be $4 a gallon soon and secondly people generally want to reduce their daily commutes as much as possible for time budgeting purposes (It sucks to blow an hour a day driving when you could be )

[DAVOUT]

Originally posted by Oerdin
We do need gas taxes to help decrease consumption but often times a gas tax is a regressive tax because poor folks are more likely to own an old gas guzzler. CAFE helps even things out without punishing the poor.

True. And also, the 25 or 30% higher incomes do not really suffer from the tax increase and will reduce their consumption only if their car will do so.