Gas prices have finally taken a pause from climbing and have even inched downward over the last few weeks. Most Americans think that's good news. It means that less of the average paycheck will go toward gas each week. For GM CEO Dan Akerson, however, it seems that gas prices are too low.
As the Wall Street Journal reports that the White House is considering an increase in the corporate average fuel economy (CAFE) standards for new cars to as much as 60 miles per gallon or more for the year 2025. He suggested to the Detroit News that the government should instead raise federal taxes on gasoline by as much as $1 per gallon.
That, says the man running General Motors, would encourage people to buy more fuel efficient cars. For the average family driving 15,000 miles per year, that would mean spending an extra $410 or so at the pumps based on the current 2016 CAFE standard of about 35 mpg.
The extra gas tax would hit every family that drives. And don't forget to multiply that figure by the number of cars in your driveway. A two car family who drives each car 15,000 miles suddenly pays more than $820 bucks out of pocket in extra gas prices year after year after year.
Over a period of five years, a one car family would have spent about $2040 on the Akerson gas tax. Double that to $4160 for a two car family. But wait, with the proposed new CAFE standard cars, instead of the gas tax, you'd get an extra 24 miles per gallon on average, a 66% increase, meaning that you'd not only save over $410 a year by not paying Akerson's proposed tax, but you'd buy about 160 gallons of gasoline less per year per car.
How much will that be worth in 2025? Nobody knows, but let's be optimistic and say gas is still just $4 a gallon by that time. $640 in gas savings for these new fuel efficient vehicles adds up to a cool $3200 over five years. If you add that to the lack of Akerson's new gas tax, that's an extra five grand in the pocket of the average car owner over a five year period. That sounds like a pretty good incentive to buy a new car, right there. If gas prices go up in the next 15 years (a pretty safe bet) that savings goes up too.
While Mr. Akerson might like to sell a few extra cars right away based upon his proposal of the Akerson gas tax of $1 per gallon, what's in his best interest isn't in the best interest of the average American family. For most Americans, driving is not an optional luxury that can easily be curtailed if gas prices go up and those struggling to pay for that gas are not in the best position to buy a new car anyway. That might not be obvious to a guy who, says NPR, just shelled out nearly a million dollars of his personal pocket change for more GM stock.