General Motors CEO Dan Akerson would like to see a federal gas tax of as much as $1.00 per gallon, as it would drive consumers to purchase more fuel efficient vehicles. Akerson believes that such a move would be more effective than raising corporate average fuel economy standards, as the government has already committed to doing. By 2025, the new CAFE standard could be as high as 62 miles per gallon if proposed legislation passes, which will substantially increase the cost of producing new vehicles. Higher costs translate to higher prices, although no one has clearly identified how high retail auto prices would jump under the new standards.
Akerson, already known for his blunt opinions, told The Detroit News, “You know what I’d rather have them do – this will make my Republican friends puke –as gas is going to go down here now, we ought to just slap a 50-cent or dollar tax on a gallon of gas. People will start buying more Cruzes and they will start buying less Suburbans.”
And therein lies the problem for GM and other automakers. As long as customers want to buy trucks (and the they still do, since the Ford F150 and Chevrolet Silverado were atop May sales lists), manufacturers will have a hard time hitting upcoming CAFE standards. This year, the CAFE standard requires manufacturers to achieve an average combined fuel economy (including passenger cars and light trucks) of 27.3 miles per gallon. By 2016, just five years off, that combined standard jumps to just under 35 miles per gallon. Life would be easier for manufacturers if only customers would forget about pickups and SUVs, and focus on buying compacts and hybrids.
To say that manufacturers are concerned about upcoming fuel economy standards is a gross understatement, and a high tax on gasoline may help to sell more compact cars and hybrids to buyers who can still afford new cars. It would also have a disastrous impact on the cash flow of middle-class families, many of whom are still suffering in these trying economic times. This may not be obvious to Akerson, but families struggling to pay the rent or the mortgage won’t be lining up to buy new cars, regardless of the cost of gasoline.