Ford Chief Says U.S. Should Consider Gas Tax

Aug. 9, 2007
CEO says U.S. needs to have an energy policy that doesn't destroy a phenomenal manufacturing industry.

If it hopes to improve energy security and tackle global warming, the U.S. should consider imposing a European-style gasoline tax, Allan Mulally, CEO of Ford said." The way to get at is to make an economic decision just like in Europe where the fuel prices are seven or eight dollars a gallon," he said. "Then our behavior would change dramatically."

The current policy of forcing automakers to maintain an average fuel economy level across their product lines is not sufficient to cut gasoline consumption and is harming the industry, Mulally said at an automotive conference in Traverse City, Michigan." I've never seen a market distorting policy like CAFE (Corporate Average Fuel Economy)," Mulally said.

To keep average fuel economy standards in line, automakers have been forced to produce more smaller cars than there is demand for to be able to produce the larger models that customers really want, he said.

While automakers are committed to squeezing more fuel efficiency out of their vehicles every year, the technology does not exist to make the cuts legislators are asking for unless consumers stop demanding large, gasoline guzzling vehicles, he said." The numbers that are being talked about are not possible -- you have to do it by the product mix," Mulally said.

While automakers have doubled the average fuel efficiency of vehicles on the road since CAFE was implemented in 1975, there are now three times as many vehicles on the road and they are driving four times as many miles, he said. And the U.S. now imports 68% of its oil, up from 28% in 1975. "Energy independence is really important," he said. "But we've also got to do it in a rational way so we don't destroy a phenomenal manufacturing industry in the United States."

When asked if he was endorsing a gasoline tax, Mulally said "no, not exactly. I think it's so important we all join in this debate and we really decide what we want to do about energy security and global warming. A piece of that could be a tax." But Mulally indicated he did not think a modest tax, like the 50-cent tax recently proposed by Michigan senator John Dingell, would be sufficient.

"The citizens of Europe made a decision a few years ago to tax the diesel and the petrol. The average size car in Europe is around a Ford Fusion size of a car."

Copyright Agence France-Presse, 2007

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