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CEO of AutoNation “Looking Forward” to Selling Plug-In Hybrids; Calls for Increase in Gas Taxes

13 September 2006

In an opinion piece published in the Fort Lauderdale Sun-Sentinel, Mike Jackson, the Chairman and CEO of AutoNation, makes a case for plug-in hybrids.

AutoNation is the nation’s largest auto dealership group with 350 new vehicle dealers in more than 15 states. Its 2005 revenues were $19.2 billion.

Jackson believes that the plug-in hybrid will shatter the discrepancy between stated consumer interest in hybrids and actual sales.

That brings us to what I believe will be one of the technologies that ultimately will address America’s addiction to oil: the plug-in hybrid.

Next-generation batteries are significantly more powerful and can tolerate discharging and charging much more forgivingly than earlier versions. And that opens up the possibility of creating a vehicle that will deliver genuine benefits to consumers and society.

Consider an all-electric mode that has a 50-mile range before the gasoline engine kicks in. A vehicle that gets the equivalent of 100 mpg; can be fully recharged at night when excess energy capacity is available; relies on electricity produced in clean, safe domestic power plants; and delivers all the performance and comfort of a traditional gasoline-powered car without the damaging emissions or dangerous geopolitics.

That is a vehicle that I believe the American consumer will not just consider, but buy. We look forward to selling it.

—Mike Jackson

At the Reuters Autos Summit in Detroit, Jackson said that the United States should raise taxes on gasoline to encourage the development of more fuel-efficient technologies.

We’re at a tipping point here. We have to do something to favor the new technologies and send a message to American consumers that gasoline prices are going to be systematically higher. A gas tax is a statement from the government that this is an issue of national security and we’re going to do something about it.

—Mike Jackson

(A hat-tip to Felix Kramer!)

September 13, 2006 in Plug-ins, Policy | Permalink | Comments (99) | TrackBack (0)

Comments

Cervus, What happens when you speed? If you are caught you face a fine of anywhere from $50 to $300 depending on state. Does speed cause accidents? No, careless & inattentive drivers cause accidents [unless of course the speed is very excessive] such as those driving too slow trying to merge on highways at 20-30mph slower than the rest of the traffic. Yet people pay a large fine for speeding constantly, everyday, and accept it unless we are the one who is paying the fine. I suggest the same should be done for those who grossly & excessively use gas...many municipalities & counties already having "no cruising" laws (but not for gas consumption reasons) where fines are levied. Examples of this sort are near endless and I suggest that those who use too much gas should have a similar incentive to use less gas.

Posted by: Patrick | September 13, 2006 at 12:21 PM

[Partially tongue-in-cheek]

Instead of more taxes on US users, how about eliminating some indirect subsidies that the US is providing to hostile petroleum producers' distribution channels?

As in, how about China's central bank forgiving some of that US Treasury debt as payment for the US Navy's protection of supertankers on the Iran-China route?

Of course they can say no, and negotiate better fees with the pirates in the straits of Malacca. Best of luck, so sorry about that boat you lost, etc.

Either way, a good amount of pressure would be applied on Ahmadinejad's profit margins.

Posted by: dimitris | September 13, 2006 at 12:47 PM

Patrick:

We already have a gas guzzler tax on cars. You may be able to convince me that SUVs should be included in that. But the regressive nature of the high fuel taxes--far above and beyond what is necessary for roads, which I do support--you and others propose here is a bad thing. A friend of mine takes home barely $1100 per month after taxes. Tacking on a couple dollars per gallon onto his monthly fuel bill would cost him dearly, and he doesn't even own an SUV.

Add to that the inflationary pressure that those fuel taxes would cause, because the cost of transporting goods would go up, and the situation is even worse.

The only people who would be seriously hurt by $2-3 in gas taxes would be the poor and middle class.

Posted by: Cervus | September 13, 2006 at 12:49 PM

"Tacking on a couple dollars per gallon onto his monthly fuel bill would cost him dearly"

A couple of dollars has already been tacked on since Bush took office. But that's OK, right? If "the market" crushes your "friend", then that's fine. But if the government raises the price, that's bad.

Makes sense.

Posted by: anno | September 13, 2006 at 01:05 PM

From some comments here, I assume there is a presumption that the cost of energy will only go up if the government applies a tax. It appears to me that other forces can also raise the cost of enegy in very volitle ways.

If someone cannot afford higher gas prices then they make decisions accordingly such as using public transportation or car pooling.

The value of artifically raising the cost of energy now (by government action) is that we have the potential to gain more energy independence and reduce volitility. We must act together using our representative government to gain a greater good which, in my opinion, is the freedom from the threat posed by the despot regimes currently controlling most of the oil.

Posted by: Ed | September 13, 2006 at 01:25 PM

"A friend of mine takes home barely $1100 per month after taxes. Tacking on a couple dollars per gallon onto his monthly fuel bill would cost him dearly"

$1100 per month? I don't see how he could afford to drive even if the gas was free. Maybe he should take a bus?

Posted by: Herb Sewl | September 13, 2006 at 01:36 PM

Anno:

Nobody controls the market, though OPEC sure tries. But we, supposedly, control how much our goverment taxes us. That is the difference.

Herb:

Have you considered that he may not live in a town where public transportation is available? My friend is just one example. There are thousands of small towns with no buses, where a car, even an old junker, is an absolute necessity.

Posted by: Cervus | September 13, 2006 at 01:46 PM

Gas prices are down, the November election is starting up.
Just a coincidence? I think not.

Posted by: Dursun | September 13, 2006 at 01:52 PM

Cervus,

See, if there were an extravagant gas tax of some manner instituted many years ago then the current situation which began since 2000 would have had little to no impact as the taxes could have been lowered to keep the sudden spike in prices from being noticed at all. As supply stays steady or slightly decreases and demand increases such a cushion seems to be a no-brainer to me because as another major calamity occurs your friend will be SOL as he will have no time to adapt to the sudden increase in price. With a gas tax phased in over time (Yeah, I proposed something other than a gas tax in other posts) he would have time to adjust and a sudden spike in price would be absorbed by the gas tax being lowered. Making $7.50/hr, as your friend does with 40 hour work weeks, seems to indicate he has bigger problems than paying for gas.

Posted by: Patrick | September 13, 2006 at 02:13 PM

Patrick:

Not allowing the price to fluctuate with the market conditions is a recipe for shortage. Price controls are bad idea.

Posted by: Cervus | September 13, 2006 at 02:58 PM

Cervus, I think it would help people understand your position a lot better if you let everyone know that you don't really think green house emissions are a serious problem. At the very least that you think there is a high degree of uncertainty that they are a problem. You may insist that your attitude towards taxation are independant of GH concerns but I suspect that if you were convinced of their importance to the degree of many of us here, a carbon tax may make more sense to you. You and many of us here will never agree on the importance of changing the status quo when we are starting from quite different GHG assumptions.

Posted by: marcus | September 13, 2006 at 03:01 PM

Cervus, your sentiment is flawed in that you are applying the opposite of what I state: artificially controlling the prices to be below market value. I, only suggest controlling market prices through taxation to keep them above a certain threshhold at which point, if shortage becomes a reality the price would take it above what the taxes had it at anyways. This would in fact cushion the effects of a shortage and delay them. If the price is artificially higher there will be more supply as demand will be less. As the price rises and the tax is relinquished to compensate the demand will stay relatively the same (artificially suppressed) until the point at which the fair market value exceeds the lower tax threshold. The case you suggest, no taxation at all, would actually be far worse for supplies and cause demand to be great until market values are high causing the supply to run short much faster.

Posted by: Patrick | September 13, 2006 at 03:11 PM

Point of order: All taxes are social engineering. All tax deductions are social engineering. Either the taxing agency intentionally is doing social engineering or it is doing so unintentionally.

Personal opinion: I believe we need a carbon tax. It should start low and gradually but inexorably increase. It should tax all fossil fuels, not just transportation. (This would incrementally increase coal much more than oil or natural gas.) The revenue generated should be pooled and evenly divided among the citizenry and legal residents.

Posted by: Bill Young | September 13, 2006 at 03:52 PM

Marcus:

I think that the laser focus on CO2 ignores other significant climate forcings based on land use, clouds, and aerosols, "http://climatesci.atmos.colostate.edu/2006/04/27/what-fraction-of-global-warming-is-due-to-the-radiative-forcing-of-increased-atmospheric-concentrations-of-co2/">as explained by Dr. Pielke. I think that the level of uncertainty in GCMs makes their conclusions suspect. I think that the Wegman Report and the debunking of the Hockey Stick gives me reason to doubt the objectivity of a significant portion of the climate scientist community. And I think Dr. Lindzen's complaint that dissenters discouraged from speaking out holds some weight.

I also think that in the light of the lifestyle changes we're being asked to make by people like you, said science must bear very close scrutiny and a high level of certainty. Because if we do X when we should be doing Y, there might be no way to to Y. Especially if X involves restricting individual liberty.

I regard peak oil as a more immediate problem and I see the way to solve it are fuel algae bioreactors that, as fortune has it, also soak up a lot of CO2 from natural gas and coal-fired powerplants.

I would also prefer to find compromise rather than endlessly argue back and forth.

Am I clear?

Posted by: Cervus | September 13, 2006 at 04:01 PM

Oh my... Robotic purveyers of... I have heard no one suggest redirecting windfall profits from refiners into a fund specifically to build out alternative distribution. Consumers will not adopt a new fuel unless it is available. Since biofuels and ethanol both require retrofitting - how about asking the guys making 400% profit margins to kick in for their next gen pumps? Forcing people to adopt via higher costs precludes the idea that non-robotic people will see the benefit to 100mpg hardware. This requires less 'social engineering' and greater understanding of human nature.

Posted by: transparent | September 13, 2006 at 04:15 PM

I've stated my revenue-neutral ideas on US gas taxes often enough on this forum, so I won't do so again. I do, however, want to caution against the idea of having the government maintain a lower threshold for prices at the pump.

In e.g. Germany, fuel excise duty represents the second largest line item of federal government income. This has indeed achieved the effect of substantially and permanently shifting demand toward more fuel-efficient vehicles (relative to the US experience). However, switching from a fixed to a variable excise duty rate would concentrate all the volatility of world oil markets on the finance ministry, which is already struggling to get the budget deficit back under 3%. The US deficit, in spite of higher GDP growth, is currently already ~5%.

Note that the current high but fixed excise duty already sustantially reduces consumer price volatility. It is also far easier to administer and less prone to fraud.

Ergo: IF (big if) the US were ever to decide to tax gasoline and diesel as heavily as Europe already does, it should stick with the established fixed excise duty model and simply change the duty level.

Posted by: Rafael Seidl | September 13, 2006 at 04:33 PM

"Nobody controls the market"

Ri-iiiight. It's all "natural" movement -- like the recent precipitous drop in gasoline prices.

Posted by: anno | September 13, 2006 at 04:58 PM

"I would also prefer to find compromise rather than endlessly argue back and forth."

So, like flat earthers and sphere-earthers should just split the difference? The fact that there's an argument doesn't mean that what's right is in the middle, or that there is an equal number of people on sides of a given debate.

The climate change debate is over. Anyone still haggling about it at this point is fringe.

Posted by: anno | September 13, 2006 at 05:00 PM

Cervus, you are clear.

Hockey stick debunked??

The Wegman report never attempted to assess whether the deficiencies in statistical methodology they found changed Mann's overall conclusion. In fact correcting as Wegman et al suggest hardly changes anything! See here:

http://www.realclimate.org/index.php/archives/2006/07/the-missing-piece-at-the-wegman-hearing/

Secondly, two congressional comittee hearings as well as a much more comprehensive review of the Hockeystick study by the National Academy of Sciences reinforces an overall conclusion that we are in a period of rapid warming and that it is likely to be caused by us.

I have already commented on your approach of cherry picking the people you choose to believe. It's a dead giveaway for someone who isn't going to be convinced no matter what evidence is presented to the contrary.

We really are only arguing back and forth about climate change since if I also thought GHGs werern't a big issue then I probably wouldn't want a carbon tax either. Until you have a some kind of change in attitude towards climate change you and I as well as many others will always disagree about the role of government in changing the economy.

Posted by: marcus | September 13, 2006 at 06:00 PM

Cervus:

Please tell us how you and your sefl-supported poors managed to survive when gas price (naturally) jumped for less than one dollar to $3+?

The answer is that you all survived and kept on buying more gas guzzlers.

We all know that OPEP and large oil firms fix the price of oil and gas as they feel like and $billions are going out of USA every week to enrich those guys.

The revenues from a progressive (one or two cents per month) carbon/gas tax would stay home and could be used to reduce the current high budget deficit, finance more costly wars of terror, raise national security, lower income taxes for the poors, enhance the national health program, help finance the bankrupt retirement program, build and repair roads, accellerate the development of more efficient batteries, PHEVs, cellulosic ethanol and butanol, progressively reduce fossil fuel consumption and eliminate oil imports within 20 years.

A good politician could win an election or two with all those goodies.

Posted by: Harvey D. | September 13, 2006 at 06:55 PM

Cervus whines:

Using taxes for social engineering, as many here propose, is wrong. It is not the goverment's job to manipulate gasoline demand via regressive fuel taxation.
But it is government's job to subsidize gasoline demand through depletion allowances, the military, road building and other means?  <cough>

The real cost of gasoline (all externalities included) is estimated to be about $8/gallon, and that's if it doesn't come from the Middle East.  The ME adds about $3/gallon.

I used to be a flaming libertarian, but I grew up.  As long as the US is a nation and has national interests, it may legitimately use its powers - including taxation - to promote those interests.  If running US transportation on something other than petroleum (especially Middle-east petroleum) is in the national interest, the powers of government may be legitimately used to bring about that end.

Of course, crashing the economy is not in the national interest.  This rules out extreme, sudden or unworkable schemes.

A friend of mine takes home barely $1100 per month after taxes. Tacking on a couple dollars per gallon onto his monthly fuel bill would cost him dearly....
Would you like some cheese to go with that whine?

The US uses about 140 billion gallons of gasoline a year, plus another ~60 billion gallons of diesel.  The US has about 145 million employed people.  If there was an extra $2/gallon tax on motor fuel, it would yield about $400 billion dollars per year.  Paid back evenly to each worker, it would come to about $2760 a head.

I seriously doubt that your friend burns more than 1000 gallons of fuel a year, even by proxy; he'd be way ahead with such a deal.

The irony is that "don't hurt the poor!" was the reason for imposing CAFE regulations instead of fuel taxes in the first place... and now look where we are!

Posted by: Engineer-Poet | September 13, 2006 at 07:14 PM

Harvey:

When you start talking "Conspiracy!" I start snoring. Go watch the ups and downs of the commodities market on Bloomberg for a few weeks and get back to me. Recent events have flushed a lot of speculators out of the market, resulting in a drop in prices. This is how it goes.

As for the rest of you argument, the investment in alternative fuels will have to come from the private sector. Not some poorly-run, pork-ridden goverment boondoggle.

Marcus:

Until last year I didn't know that climate scientists like Dr. Lindzen and Peilke existed. It seemed like a good idea to give them a fair shake. So I have, and I've read up on the skeptics. They do exist. And they bring up points to ponder that tend to reinforce one another. Here's an article in USA Today from Dr. Craig Bohren:

Skeptics about global warming are often painted as hirelings of the oil and automotive industries. Such claims irritate me. I have never earned a nickel as a consequence of my skepticism. Indeed, I have lost hundreds of thousands of dollars by it. First, you have to understand how a large research university operates. The professors are expected to obtain research grants, and in the atmospheric sciences these grants come mostly from government agencies.

In the atmospheric sciences it is difficult to get grants unless you can somehow tie your work to global warming, that is to say, to scare science. Because of my reputation, I immodestly believe that I could have jumped onto the global warming bandwagon. But I refused to do so because I would have found this repugnant.

At some universities, professors get only a fraction of their salary from the university, the rest coming from contracts and grants. Research associates and research professors often must scrounge for 100% of their salaries.

Professors not only directly profit from their research grants (summer salaries), they also indirectly profit. If Professor X has grants amounting to millions of dollars, this gives him leverage. He wants more money so he threatens to leave and take his bags of money with him if he doesn't get a whopping raise. Or he plays one university off against another. He gets an offer from another university in order to pressure his present university to increase his salary. I have seen this done many times. The system of federal grants, which hardly existed before (World War II), has created a professoriate with greater allegiance to government agencies than to their universities.

Professors who get research money to work on aspects of global warming are not doing anything dishonest or illegal. This is not graft. But when it is in the best financial and career interests of professors to raise the alarm about global warming (or anything), we should be skeptical.

You claim "cherry picking", but I don't think my skepticism is unfounded. I don't see why I should just dismiss these qualified scienstists out of hand.

As for the "Hockey Stick", the NAS panel never specifically endorsed Mann. See Steve McIntyre's posts:

http://www.climateaudit.org/?p=812

http://www.climateaudit.org/?p=810

And an article about McIntyre and McKitrick's original work debunking the Hockey Stick:

http://muller.lbl.gov/TRessays/32-Global_Warming_Bombshell.htm

Posted by: Cervus | September 13, 2006 at 07:35 PM

Cervus I think I have made my points adequately and your latest post just reinforces my arguments. I don't hope to change your mind, just debunk your posts.

Posted by: marcus | September 13, 2006 at 08:30 PM

Marcus:

Fine. It's not like I really expected to convince you of anything either.

Posted by: Cervus | September 13, 2006 at 08:45 PM

Cervus is a plain denialist.  He doesn't want global warming to be true, so everything which indicates that it is must be faulty, a conspiracy, paid sycophancy, etc.

Posted by: Engineer-Poet | September 13, 2006 at 08:50 PM

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