Exec calls for raise in federal gas tax
From the Detroit Free Press:
Exec calls for raise in federal gas tax
AutoNation chief leads campaign
October 3, 2005
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
In a move he knows will be highly controversial, the leader of the nation's largest chain of car dealerships is today ramping up his campaign to increase the federal tax on gasoline, in an effort to encourage conservation and push consumers toward fuel-efficient vehicles.
"The gasoline tax hike is long overdue," Mike Jackson, chairman and chief executive of AutoNation Inc., wrote in an editorial that's scheduled to be published in today's Automotive News. He is to promote the idea in an interview on CNBC this morning.
Ft. Lauderdale-based AutoNation owns 352 new-vehicle franchises.
"We will ultimately be a stronger nation for having the fortitude to do it," he said.
The federal tax of 18.4 cents a gallon has been unchanged for more than a decade, and Jackson is calling on federal leaders to do the politically unpopular: Increase the tax on a gallon of gasoline "on the order of 10 cents a year."
He's proposing an annual energy-tax credit for poor people, so that the increase doesn't hurt them as much.
Jackson said an increase is necessary "to influence consumer behavior, create a significant demand for greater fuel efficiency and justify the costs of the technology that will deliver it. ... The goal of this is not to raise taxes but to change the consumer mind-set."
The call for a gas-tax increase comes at a time when gasoline prices continue to hover around $3 a gallon, causing consumers to bellyache over prices and shift into smaller vehicles. And two hurricanes in the Gulf Coast region -- Katrina and Rita -- revealed an oil infrastructure that is strained and vulnerable to volatile swings. After each storm, President George W. Bush decided to release some oil supplies from the nation's Strategic Petroleum Reserve to help offset the loss of refining capacity.
The unprecedented events left consumers nervous about gas spikes and are contributing to what appears to be a growing consensus in the auto industry that the nation's energy policy is in dire need of an overhaul.
On Sept. 22, Ford Motor Co. Chairman and Chief Executive Bill Ford wrote to Bush about the "great energy challenges facing our country," asking him to convene a group of leaders "to discuss our nation's energy security and our role in helping find a solution."
Tim Leuliette, chairman and chief executive of Plymouth-based auto supplier Metaldyne Corp., plans to travel to Washington, D.C., this month with Jim Press, head of Toyota Motor Corp.'s U.S. sales division, to push energy independence as a major issue in the 2008 elections and attempt to organize a consortium on the issue.
Leuliette said an increase in the gas tax could be used to fund an alternative-fuel infrastructure, such as the one needed for hydrogen-powered cars.
In a recent interview, Mercedes-Benz Chief Executive Dieter Zetsche, the former Chrysler Group leader who will be chairman of DaimlerChrysler AG, also said the volatility of gas prices is particularly damaging to the auto sector, possibly more than high gas prices themselves.
"If there is a high level of gasoline prices for a longer period of time, people kind of adapt and get used to it," he said. "If it changes in a very short period, it's like a shock" and consumer behavior might change more than if gas prices are "creeping and then stable for some time."
Jackson, in a recent interview with the Free Press, said recent events show changes are needed on the nation's energy front.
At $3 a gallon, consumer behavior changes a bit, Jackson said. But for consumers to really change their behavior on the scale that it changed in the 1970s and 1980s, gas has to reach $6 a gallon. And he thinks the nation should start moving the price of fuel in that direction.
"For the past 10 years, we've had what amounts to an irresponsible, unsustainable half-price sale on gasoline," he wrote. "That has meant little consumer demand for efficiency and greater consumer demand for supersized vehicles with supersized power plants."
Jackson doesn't directly say corporate average fuel economy rules, first instituted in 1975, aren't working to improve the fuel efficiency of the nation's cars. But, he noted: "Don't blame the manufacturers -- They're just giving the people what they want."
Having met with political leaders, Jackson said he's worried they are too concerned with their re-election to take the difficult steps on energy policy that are necessary.
That's why he is publicly calling for a change.
"While we all know that our dependence on foreign oil is a national security issue, it is hard to find a political leader, Republican or Democrat, to support an increase," he said. "Actually, you can't even find an environmentalist to bring it up. It is as if cheap gas is a divine right in America."