It is that time of year again, what we have dubbed the “summer driving season.” While gas prices have fallen slightly of late, they are still alarmingly high for the average U.S. consumer hungry to hit the open road. Thankfully, President Barack Obama recently ordered the release of 30 million barrels of oil from the Strategic Petroleum Reserve. Unfortunately, this move does not go far enough to address our long-term energy needs, and in our current political climate, no politician seems willing to endorse the bold moves needed to do so.
Just before the president tapped into our reserves, General Motors CEO Dan Akerson called for a bolder plan, which asked the government to raise the federal fuel tax by $1 — from its current amount of 18.4 cents per gallon. GM potentially has a lot to gain from such a tax, as it has recently made a strong push to promote its plug-in hybrid, the Chevy Volt. However, in this case what’s good for GM may be good for the rest of us as well.
A higher government tax on gasoline would drive consumers to switch to more fuel-efficient automobiles in order to save money. This approach is more efficient than other methods, like raising CAFÉ standards on automakers. Higher gas prices lead to greater demand for greener cars and greener technologies. The added perk for GM, of course, is that greater demand for green technology will boost the sale of GM’s new green-friendly products. But this tax will also dramatically raise revenues for the federal government, which could go towards significantly cutting into the federal deficit.
Opponents argue that, as a regressive tax, this move will do more harm to the working middle class, as it would be harder for people to switch to fuel-efficient cars in the short-term. Moreover, a tax hike of this nature would likely raise prices on most consumer goods, not just gasoline, further decreasing consumer spending all while increasing fears of inflation. As consumer demand falls, they hold, so too will employment, and our current perilous economic situation may further worsen.
Sure, these are serious concerns, but not insurmountable problems. If Congress could unite around this issue, it could slowly phase in the tax and even add tax rebates to the working class in order to compensate for the regressive effects of the levy. Such a cautious measure would also minimize the tax’s potential negative effect on the economy by ensuring that gas prices do not rise too fast nor too high, giving the American consumer time to adjust. The tax could even spawn the green revolution we have heard the president speak so much about, finally promoting job growth throughout the energy and manufacturing sectors.
Sadly, however, our partisan legislators are too concerned with their political futures, terrified of being lambasted during the 24-hour news cycle. What we need is for our elected leaders to act as stewards and do what is in our best interests. For many companies in the private sector, creating that push towards greener technology is sound business. Perhaps the drive to make these tough decisions will come when more business leaders follow in Akerson’s footsteps and place much-needed pressure on Congress and the president.
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