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Ford CEO Fnds 50-Cent Gas Tax Increase "Interesting"

By Joe Benton
ConsumerAffairs.com

August 8, 2007

If the 50-cent tax were in place now the average price of a gallon of regular self serve gasoline would be $3.32, ten cents higher that the previously recorded record-high price set May 24.

Mulally stopped short of endorsing the tax increase proposed by U.S. Representative John Dingell, D-Michigan.

Mulally said a gas tax rise would be one method to include consumer choice in the debate over how to improve fuel efficiency in the United States.

Ford, General Motors Corp., Chrysler LLC and Toyota Motor Corp. have all joined in an effort to defeat the fuel economy increase approved by the Senate in June, which calls for automakers to hit a standard of 35 mpg by 2020.

Of all of the automakers, Ford has the most at risk with higher fuel economy demands. The company relies heavily on sales of fuel-hungry trucks to make money. The Ford F150 pickup is the top-selling vehicle in the country at 19 miles per gallon on the highway.

Dingell is the most powerful auto industry ally in Congress and devotes much of his time and power to the task of protecting automakers from federal mandates and regulation.

The auto industry is pushing legislation on Capitol Hill that would federal regulators set a standard of between 32 and 35 mpg by 2022.

The Ford CEO defended his support of an increased gasoline tax citing decisions to heavily tax gas in Europe, driving fuel prices to $7, $8 and even $9 a gallon.

When pressed, Mulally stopped short of directly endorsing a gas tax increase, either personally or on Ford’s behalf.

“The reason I made the comment is, I think it’s so important that we all join in this debate and we really decide what we all want to do about energy security and global warming,” he said. “A piece of that could be a tax. I don’t have a thought past that, but I think it’s great that our political leaders are dealing with the situation in a robust way.”

Mulally said the Corporate Average Fuel Economy (CAFE) standard and efforts by Congress to boost the fuel economy mandates to 35 miles per gallon for all automakers would be a mistake.

“I’ve never seen as big a market-distorting policy as CAFE,” he said, arguing that the policy, first implemented in 1975 when 28 percent of U.S. oil was imported, has failed because oil imports are now 68 percent of U.S. consumption.

Asked if a higher gas price at the pump would really change consumer behavior, Mulally said, “It already has, with the decline in SUV and big truck sales.”

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