• Home

Monday, August 13, 2007

How to fund Pennsylvania's Transit and Infrastructure projects

Attention Governor Rendell and members of the PA House and Senate: A sure way to simultaneously raise revenues and increase the use of fuel efficient vehicles is to implement a program that offers rebates to buyers of fuel efficient vehicles and penalizes buyers of gas guzzling vehicles through a fuel inefficiency tax. This proposal is likely to spark a debate between the folks who claim it would provide a death blow to US auto manufacturers and those like me who believe we must take a more aggressive approach to raising the average fuel efficiency of our vehicle fleets. Recent news suggest that this is certainly not the case, as US manufacturers, led by GM, are closing the fuel efficiency gap between themselves and Toyota, the leading hybrid manufacturer.

Another potential pitfall is that some would argue that this plan would penalize small business owners who need pick up trucks and SUVs to do their work. This is indeed a fair argument, although there should be hybrid options and this new state rebate that would encourage them to drive an SUV that is not in the penalty zone. Certain vehicles should be exempted from this, and some work would have to be done to see which average mpg would be in the neutral zone - meaning your vehicle that attains average fuel efficiency would get neither a rebate or penalty.

Backing up a few steps, I want to share with you some of the logic behind this idea. First, this would not be the first time I have suggested this, as I thought of this a while back and blogged about it here on Green is Good. Recent news headlines coming out of Canada brought this idea back on my radar screen. Canada's Finance Minister is under attack by the auto unions for his proposal for a similar fuel efficiency rebate program. The current proposal is to offer rebates for purchases of certain vehicles, but the most polarizing part of the plan, the list of vehicles that will be penalized, has not been formalized. The last part, the penalty aspect, is the key, because although rebates are good, they do not get people to act as quickly as a bill in the mail stating they owe the federal government $2000 for their purchase of an inefficient vehicle.

Back to the logic behind the plan. The other day I was driving in a suburban shopping center while I noticed the size of a black Cadillac Escalade EXT. This thing was enormous - almost as big as a city bus, and it got me thinking to this idea I had a while ago - the people that drive these things are ridiculous. There is no excuse for driving a truck that big that gets close to 10 mpg. The cost of tank of gas in these things is at least $100 - yet that is not enough to get someone to drive a hybrid SUV.

Well, I have accepted that we cannot force people to change for the better of society, so if individuals want to continue to practice free choice of driving whatever they feel like driving, even though it is a detriment to us all - make them pay for it. These individuals should either pay an extra $1000 or $2000 fuel efficiency "tax" when purchasing a $70,000 Escalade or they can go ahead and purchase a Toyota Highlander Hybrid which achieves a combined 12 miles per gallon more than the standard Escalade model and comes with federal tax credits at almost half of the cost of the Cadillac. Not a bad trade off if you ask me.

2007 Cadillac Escalade AWD

2007 Toyota Highlander Hybrid 4WD

2007 Cadillac

2007 Toyota Highlander Hybrid
Compare Side-by-Side

Hybrid Vehicle

Possible Tax Incentives


MPG ratings for 1985-2007 models have been revised More information.

Premium Gasoline

Regular Gasoline

Now, if you ask me what the US auto manufacturers should do - they need to continue to invest in hybrid and battery technology so that every vehicle that they manufacture includes a hybrid electric system. The key roadblock to making this a reality is the high cost of the hybrid system. Even though this should only take at the most a few years to figure out, the auto industry continues to lobby the US Congress for more time - 20 more years to be more precise. We should not sit by idly waiting for them to figure it out while individuals who drive the guzzlers get a free ride to polluting our environment and contributing to to the congestion and smog in our cities.

I hope our leaders here in PA and also nationally will have the guts to implement an aggressive, sensible, and yes, controversial plan like this because just asking people to drive hybrids and more fuel efficient vehicle is not enough. The carrot and stick principle is the only way this can work.


Rearden said...

I commend your ideas for leveling the field when it comes to energy consumption in the automotive sector.

Unfortunately, it is unlikely that a state governor or a state legislative body would be empowered to implement such a program given that the federal government has first dibs on this through the "Energy Policy Conservation Act" of 1975 which set the guidelines for corporate average fleet economy (CAFE) for all cars and light trucks sold in the U.S. Some CAFE Faq's here.

It was fairly easy for Congress to sell this idea to the public when the Arab oil embargoes were still fresh in people's minds, but as with many well-intentioned laws, the teeth of enforcement became less sharp over time. The public lost interest in CAFE and paid scant attention to the heavy lawyering, jawboning and creative mathematics employed to meet the standards. Gas was cheap and plentiful.

Cowboys and their horses are sacrosanct in this great nation and any legislation which appears to cause the demise of the Marlboro Man image will not stand. Since horses have been replaced by pickup trucks, it made perfect sense to hold out those trucks for special treatment in the fuel standards goal. There was even a subset of rules distinguishing four wheel drive units from two wheel drive units and after all the differential equations had been cranked through the lobbyist's jack-in-the-box, out sprang fleet compliance requirements with a few glaring anomalies.

Our legislators had no way to predict that a component of the light truck market would morph into what we now know as Sport Utility Vehicles which would be used not for work, but for everyday transportation. Why would anybody really want to bounce around all day in a four wheel drive truck? Surely not.

Soccer moms with pony tails pulled through the back of ball hats are now sacrosanct in this great nation and any suggestion that the 6,000 pound Cadillac Escalade hurling down I-95 at 92 feet per second while consuming gasoline at the rate of 1 gallon per 18 miles is not keeping with the spirit of CAFE will fall upon mostly deaf ears. It's all about coffee cup holders, multiple DVD players and the perception of safety these days. But, under the guidelines, that SUV is technically a light truck with four wheel drive and not subject to the same expectations as a 2,000 pound sub-compact.

Everyone here at Rearden Industries predicted the precipitous fall of SUV sales when gasoline prices vaulted over the three dollar mark, but we were wrong. We failed to factor in the effects of the 'It's All About Me' generation that bubbled up in the 'eighties. Even when gasoline hit three twenty-five, our corporate neighbor selected a Porsche Cayenne costing as much as a condo and adopted the body language and mantra of the Nation of Narcissism: 'If You Can't Afford It, It's Your Own Fault.' So much for market controls at the gas pump.

CAFE is up for revision this year and I do hope that we see a dramatic increase in fleet goals and a dramatic decrease in the semantic and mathematical games which left this nation no better off in unit fuel consumption than when we started in 1975. Curing the narcissism which pervades this great nation may be a more daunting task.

Anonymous said...


Schultz said...


How does that proposal make me a Communist? Just last week, John Edwards asked Americans to "sacrifice their SUVS." Besides being a hypocrite, I think his proposal is ludacris. I'm all about people having freedom to do what they want - but there should be penalties when their choices have negative effects on society.

VP said...

Now that Bush is gone, gas will stay lower than $4.00 a gallon for at least 2 or 3 years. He sucked this country dry, btw did I forget to mention that he has interests (owns) part of three oil refineries that import from overseas.. I let you guess from where.