By Government Accountability Office
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Extra resources for Vehicle Fuel Economy
Sample text
If the tax were applied to a broader 38 Government Accountability Office range of vehicles—for example, by increasing the fuel economy standard to which the tax applied—the tax could influence more consumers’ car purchasing decisions. While expanding the Gas Guzzler Tax would encourage consumers to buy fewer vehicles subject to this tax, those already owning such vehicles before the tax goes into effect may choose to hold onto those vehicles longer than they otherwise would. If new cars subject to an expanded Gas Guzzler Tax had better fuel economy than these cars, then holding onto them longer would be at cross purposes with the objective of reducing fuel consumption.
For example, manufacturers that responded to growing consumer demand for larger vehicles by selling large sedans or SUVs must work harder and devote more of their resources to comply with CAFE because the larger vehicles lower their fleet fuel economy average. However, these vehicles are often among manufacturers’ most profitable to sell. Manufacturers whose sales are focused mostly on smaller vehicles, which tend to have relatively higher fuel economy due to their relatively low weight, have less incentive to further use their expertise and install more fuel-saving technologies and do not have to spend resources attempting to meet higher standards.
As noted, E85 is not widely available to consumers and while most E85 fueling stations are located in the Midwest, we recently reported that, according to the Alliance of Automobile Manufacturers, in 2006, the largest number of privately owned flex-fuel vehicles were in Texas, Florida, and California. 44 Government Accountability Office A second program to increase the availability of flex-fuel vehicles and alternative fuels by increasing demand for both was included in the Energy Policy Acts of 1992 and 2005, which required federal agencies to increase their purchase of flex-fuel vehicles and use alternative fuels to fuel these vehicles.
