|
"so u think that demand for fuel is entirely inelastic:iono: ."
No, not completely, but at the very least it is a slow moving curve. For instance, in many areas of the country people's commute is without compromise. Further, family dynamics restricts how small a family can shrink their automobile. For all the rich individuals out there it is now stylish to have their Prius parked right next to their Bentley, but for the rest of the market that choice is not possible. Therefore, most individuals have to have at least one car that can maintain 2-3 kids and all their stuff.
Gone are the days when the kids could all sit in the back seat of a sedan. The Car seats that are required are huge. The strollers' are gigantic. No regular sedan with few exception could take on that task, without being only marginally better MPG than the SUV or Minivan. Additionally, any one buying a new car that is considering a car that gets less than 20 mpg, is already factoring in a large sum of money to pay for higher gas bills. If you increased the price of gas by a factor of 1/3 I doubt that cost benefit analysis would change much. If individuals want powerful cars, they will purchase powerful cars.
The best example of this is that 1/2 ton pick-ups have been the best selling cars by a WIDE margin in this country for over 30 years. This includes the early 80's when gas was the most expensive in our history. Oldsmobile, Buick and Cadillac were selling in record numbers in the early to mid 1980's. American's have a love affair with their cars and will compensate for higher gas prices before they will compromise on status, power, or lifestyle. Taxes don't have the power to marketly change that. Ironically the individuals that would be the most responsive to a potential gas tax, have already compensated by buying more fuel efficient cars.
Therefore, in order to improve MPG for all vehicles, we need to quit diluding ourselves into thinking a tax here or a regulation there will create a solution. Money, Research and Development is the only light at the end of this tunnel. Currently all of the automakers are falling all over themselves to create new technology to improve efficientcy. Do you think a tax will create additional motivation? Will new CAFE regulations improve the speed of hybrid tech when GM, Ford, Daimler, BMW, Toyota, etc. Are beating down the door of every available engineer to improve battery technology?
Higher Taxes only help stem demand when the market is not responding with higher technological investment. Such as in the 1990's. SUV's began to predominate because gas was at all time lows, and few auto companies were concerned with greater efficientcy. To the contrary, they were more concerned in developing greater power. But the time for higher taxes is gone. Right now gas is nearing the historical high for real dollars. Therefore, there is great demand of more efficent vehicles. Therefore, a tax will not create greater impetus, it will merely harm the current projects underway.
Even if the Government were to pay for R&D, why would we want them to? Why not let the current market pay the bill and let the new technology demonstrate the marketability without have to subsidize it. Throwing more money at a problem where the market is intensly focused merely makes us FEEL better, it does not solve problems.
|