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Monthly Archives: May 2012

Unintended Consequences: CAFE Standards

Well, it appears that CAFE Standards are going to be effective enough to reduce the tax revenue from the gas tax. The CBO is reporting that over the next 10 years revenue from the gas tax will be reduced by $57 billion.

This makes sense and actually indicates the CAFE Standards are having the desired effect… increasing fuel efficiency and thereby reducing consumption for gas vehicles.

What’s disappointing is the that CBO proposes solutions that really just address the symptom. This from autobloggreen:

The CBO suggests three ways to deal with the shortfalls: do nothing (i.e., keep on transferring money from the general fund), spend less on highways and mass transit or raise the gas tax (or other taxes and direct them to the Fund).

The problem is that under this system not only are the true costs of the infrastructure hidden from the end user, but many hybrid and electric vehicles will be getting a “free ride”. Hybrid and electric vehicle use, and therefore wear and tear, of the infrastructure occurs without those operators sharing the cost of the infrastructure.

Simple solution… usage tax. Pay per mile (or your unit of measure of choice).

More at The Detroit News.