U.S. auto policy is in the midst of a revival of relevance in the wake of Cash for Clunkers and with the nation watching the Obama administration’s handling of GM. Recently, RFF’s Weekly Policy Commentary series set out to examine key components of other U.S. auto policies.
In this November 13 commentary, RFF fellow Shanjun Li took a closer look at the popularity of hybrid vehicles among U.S. consumers. He writes:
Today, hybrids represent roughly three percent of new car sales because of—or perhaps in spite of—federal subsidies, which are due to expire across the board in 2010.
The evidence to support the success of those subsidies is somewhat mixed. For example, in the two years since federal subsidies for the most popular hybrid, the Toyota Prius, have ended, it has continued to gain market share. While most observers agree that federal subsidies were critical to gain market acceptance of what was then a brand-new technology, is that still true today? Or is what matters most the price at the pump?
And what of those prices at the pump?
In his November 20 commentary, Kenneth Small of the University of California at Irvine wondered if the time has come for a federal gas tax increase. According to Small, the convergence of three key factors—an infrastructure in need of updating, petroleum dependence and climate change, and budget deficits at both the state and federal level—may make the time right to raise gasoline and diesel taxes:
It’s rare that a single policy instrument can solve several problems at once. Rarer still that the political and economic motivations to address these problems converge; and almost unheard of that lessons of history lead to the same conclusion. We are in such a situation today with respect to taxes on motor vehicle fuels. It is time for a dramatic, permanent increase in these taxes.
Read Li’s What Motivates People to Buy Hybrids? and Small’s Triple Convergence toward a Higher Gasoline Tax plus nearly 40 additional commentaries at RFF’s Weekly Policy Commentary Energy and Climate page.
