Wednesday, March 18, 2009

More Signs of the Apocalypse

GM's Chief thinks it might be a good idea to have $4 gas.
In a surprising turnabout, General Motors Corp. Chief Executive Officer Rick Wagoner said Tuesday that increasing the federal gasoline tax to guarantee a minimum price of $4 a gallon is an idea "worthy of consideration."
Obviously this would help them sell more Volts. But it would also get people to think about their decisions and the true cost of gasoline.
A GM spokesman acknowledged that the automaker is thinking about the price of gasoline as an incentive to buy hybrids. "Everybody talks about $4 a gallon because, until gas prices hit $4, nobody saw any shift in consumer behavior," said Greg Martin, GM's Washington, D.C., spokesman. "Only then did people put fuel efficiency front and center."


Thelonious_Nick said...

I think it makes sense for GM to support this. One problem for the car companies is that prices will be low for several years, enouraging consumers to buy larger cars, then high for several years. If gas prices were steadier, companies could better predict which models to design and build (it can take years to go from the drawing board to the showroom floor). Could save $100s of millions in design, reduced factory retoolings, reduced unsold inventory, etc.

Tim said...

I agree. And their bozo stock holders get angry anytime they try to build something like the volt when gas is $2/gallon. Then when gas hits $4/gallon they complain that GM doesn't have any fuel efficient vehicles. Efficiency of the market indeed.

Robert said...

As Tim and Nick suggest, GM's future will depend on marketing ultra-efficient or non-gasoline cars. Getting a head start on competitors (or at least keeping up with them) will build its brand value. However, there is no way that GM can market these expensive and potentially profitable cars without high gas prices.

The problem with this approach will be convincing the owners of 250 million gasoline-engine cars that they should be taxed. To be clear -- I don't think this is the wrong way forward, but it would be really hard.

The best approach to getting such a gas tax approved is making it easy for people to choose not to buy heavily taxed gas by providing rapid mass transit and housing in walkable neighborhoods near work or good transit options.