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Customer Logins$6 gas – a good idea?
I was at the Society of Automotive Analysts (SAA) 7th Annual Strategic Planning Summit yesterday and there was an interesting panel discussion called Icons of the Industry with John McElroy, George Perry and Hal Sperlich. One of the topics was how good life would be for the Auto Industry, and the U.S. as a whole if gas was $6 a gallon. Are they crazy??!!
The idea is that some brave politician can convince Joe the Plumber and all his drinking buddies that we should create a fuel tax. It would progressively, over 5-10 years, raise the price of gas to over $6. This would mean paying over $100 to fill the average tank which is seen as a huge mental barrier. The sales pitch would be based on oil independence and not having to ensure security for those regions of the world that are rich in oil - "Bring the fighting boys (and girls) home, pay more for gas!"
The result would be a massive overhaul of the existing 240 million vehicles on the road today - who would be willing to drive that 8 year old sedan that gets 18 mpg or that 10 year old pickup that gets 13 mpg? This overhaul would drive vehicle sales for years, even if you replace 1/3 of them over 10 years, that's 8 million units in additional sales each year. It would also force OEMs to get serious about fuel economy far more effectively than any CAFE regulations. The progressive introduction and advanced notice of the tax would allow people and the economy time to adjust. Introduce more mass transit, install electric vehicle re-charging facilities, replace vehicles in their natural purchase cycle, etc.
Is it crazy? Sounds like an interesting idea that deserves reasonable discussion and consideration to me - what about you?
Maybe the biggest weaknesses: The need for a brave politician and reasonable discussion rather than media hype.
Posted by Chris Royle, Director, Strategy & Planning, Polk (09.24.2010)