GM's Lutz: Higher gas tax would help

[phantom power]

What he appears to mean is that it would help make it easier for him to make reliable market predictions, sell more cars and continue to get richer. Interestingly, I have heard the same line of argument applied to renewable energy tax incentives for a long time. To wit, lack of predictable incentive structure makes economic cost/benefit decisions about renewable installation impossible.

So Bob Lutz wouldn't seem a likely candidate to argue for significantly higher gasoline taxes, or to suggest that such taxes would be a good thing for the auto industry. But in a meeting with journalists at the auto show Monday, he did just that.

"If the rise in gasoline prices is gradual, I think that all of us in the industry would frankly welcome that, because there is nothing more illogical than forcing fuel-saving technology when gasoline is extremely cheap," he said when asked about any concerns about oil again rising above $80 a barrel.

Lutz was asked if that means he would favor higher gasoline taxes, as in Europe where taxes drive fuel to more than $5 a gallon. He said he couldn't speak for GM, but he said he saw a lot of value in a steady tax rise to much higher levels.
Driving the Volt when the juice runs dry

"You either continue with inexpensive motor fuels and have to find other ways to incent the customer to buy hybrids and electric vehicles, such as the government credits," he said. "Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base."

http://money.cnn.com/2010/01/11/news/companies/lutz_gastax/index.htm

[endless october]

1. no.

gas is expensive enough. expensive energy is a drag on the economy.

if you want to do something productive, bring all the troops home and use that money to build new electrical infrastructure. we can use that additional capacity to power electric cars while we transition away from gasoline. but just arbitrarily making gas more expensive is a stupid way to do it. plus, there would be massive political consequences.

[nykym]

2. And had they

Actually done something way back during the Energy Crisis of the '70's we would not have to hear this kind of bullshit marketing. We would all be driving hybrids and the middle east would be a huge sandbox full of dirty black sticky oil.

[OKIsItJustMe]

5. No… that wasn’t in the cards

It’s high gas prices that make the additional expense of a hybrid attractive to customers.

(Note that this story predates the financial collapse.)

http://www.consumeraffairs.com/news04/2007/01/hybrids_trends.html

Hybrid Sales Drop with Gas Prices

But Auto Executives Believe the Hybrid Age Is Upon Us

By Joe Benton
ConsumerAffairs.com

January 4, 2007

Declining gasoline prices as well as disappearing federal tax credits are hammering hybrid sales in general and Prius sales in particular, although automotive executives worldwide believe that long-term consumer buying habits have been changed forever by the recent spate of high gas prices.

Not long ago consumers waited months for a Prius but now many Toyota dealers are advertising several Prius models in stock. In some cities, Toyota is offering to lease the hybrids for 36 months at less than $300 a month.

After rising for most of the year, hybrid sales fell to 19,000 in November from nearly 32,000 in August when gas prices across the country hit $3 a gallon.

Gasoline prices have declined 24 percent since August and hybrid sales have declined 31 percent.

…

[Blue_Tires]

3. holy shit...

this is the same clown spending tens of millions a decade ago lobbying congress, fighting CAFE standards in court, and defiantly spweing his free market-antitax rhetoric...

[phantom power]

4. It's actually pretty consistent:

You see, Bob wants what all self-styled Mighty Captains of Industry really want, which is for the govt to aid them in maximizing their profits. Back when oil was cheap and consumer credit was easy, Bob and his pals wanted the govt to keep those aggravating CAFE standards out of their way, because it would make it that much easier for them to sell overpriced gas guzzlers.

But now, as we move into the age of post-peak-oil, fuel prices are becoming very unpredictable. And that fucks up his easy, lucrative business model. So now, he would find it convenient for the govt to step in and smooth out those fuel prices. So his marketing department will have an easier time predicting what kind of cars to build, to make him exactly as much money as possible.

So you see it's not inconsistent. It is about corporatism.

[TxRider]

7. kinda

"You see, Bob wants what all self-styled Mighty Captains of Industry really want, which is for the govt to aid them in maximizing their profits. Back when oil was cheap and consumer credit was easy, Bob and his pals wanted the govt to keep those aggravating CAFE standards out of their way, because it would make it that much easier for them to sell overpriced gas guzzlers."

When you have been driven out of every market but overpriced big gas guzzlers, and that's all you can sell a law to make them more fuel efficient could put you out of business, especially when your already hanging on the edge.

"But now, as we move into the age of post-peak-oil, fuel prices are becoming very unpredictable. And that fucks up his easy, lucrative business model. So now, he would find it convenient for the govt to step in and smooth out those fuel prices. So his marketing department will have an easier time predicting what kind of cars to build, to make him exactly as much money as possible."

Prices have always been unpredictable to some degree.



As far as easy lucrative business model, it's not very lucrative as their recent bankruptcy points out.

It might be more apt to call it the dying old husk of an industry that been beaten to a pulp by the competition, trying desperately to hang onto the last segment of market they can actually make any profit from at all.

And even that market is being taken away by the competition, as the imports start to make larger and more powerful models to put the nail in GM's coffin and steal the gas guzzler market from them as well.


Lutz is correct in one aspect, without higher fuel prices hybrids and electrics will not sell well enough to gain much market share. People decide with their wallets. As long as it's cheaper to buy and operate a gasoline car, hybrids and electrics will be limited to an interesting sideshow.

[OKIsItJustMe]

6. Yup

I said for years, “So long as SUV’s are the most popular type of vehicle, gasoline is too cheap.”

I was in favor of http://en.wikipedia.org/wiki/John_B._Anderson">Anderson’s 50¢/gallon gas tax back in 1980:

… His poll numbers kept falling, attributable in large part to a campaign pledge regarding the cornerstone of his proposed economic policy, which was to enact, if elected, a 50 cent per gallon gasoline tax, and in an era of high gas prices and fuel shortages, this did not resonate very well with voters. …

It makes me chuckle when I see today’s politicians treated as radicals when they recommend the same 50¢/gallon tax.

[kristopher]

8. In the past, a basement price could be set with taxes -

For example, $3.50 gal could be a 5 year target. Raise taxes to get the price to $3.50 and then as energy prices go up and down, the retail price remains the same but the amount of tax paid would vary. This provides a great deal of economic stability and buffers the economy against price swings that cause boom and bust profitability in businesses (they hit small businesses hardest).

That is a practice in some countries and it works. However, IMO because of the emergence of China and India as drivers of petroleum pricing, the time is past when it is could work here. The problem we are getting ready to face isn't prices that are too low, but prices that are going to go too high too quickly.

If we were to try such a policy here and in today's petroleum market, my instinct is that a basement price of around $5-6 would be required.

[muriel_volestrangler]

9. Indeed. UK petrol is about $6.60 per US gallon at the moment

and that's fairly typical for Europe. The UK government has sometimes postponed tax increases when the world market oil price has shot up too much. The relative swings of fuel prices have been much smaller in the UK than the US.