Financial Times FT.com

How Obama could introduce a petrol tax

By Michael Levine and Mark Roe

Published: July 6 2009 19:20 | Last updated: July 6 2009 19:20

Last month, a major climate change bill began winding through Congress. Meanwhile, carmakers, environmental regulators and the Obama administration announced with great fanfare a plan to raise the fuel efficiency of new vehicles – and energy secretary Steven Chu announced that a petrol tax was “not on the table” politically.

Yet almost everyone who has studied the subject – including Mr Chu before his latest job – agrees that a petrol tax would be much superior to directives such as those announced last month. It is hard for the government to choose the right fuel efficiency targets; and when consumers see fuel is cheap it encourages them to drive big, fuel-hungry cars and to drive them further. A petrol tax would help consumers to make choices that face the environmental facts, instead of having the government nag them to do the right thing.

You have viewed your allowance of free articles. If you wish to view more, click the button below.

Read this