O, ye of little faith. 
NY Times 02/16
A Way to Cut Fuel Consumption That Everyone Likes, Except the Politicians
By ROBERT H. FRANK
Published: February 16, 2006
SUPPOSE a politician promised to reveal the details of a simple proposal that would, if adopted, produce hundreds of billions of dollars in savings for American consumers, significant reductions in traffic congestion, major improvements in urban air quality, large reductions in greenhouse gas emissions, and substantially reduced dependence on Middle East oil. The politician also promised that the plan would require no net cash outlays from American families, no additional regulations and no expansion of the bureaucracy.
As economists often remind their students, if something sounds too good to be true, it probably is. So this politician's announcement would almost surely be greeted skeptically. Yet a policy that would deliver precisely the outcomes described could be enacted by Congress tomorrow — namely, a $2-a-gallon tax on gasoline whose proceeds were refunded to American families in reduced payroll taxes.
Proposals of this sort have been advanced frequently in recent years by both liberal and conservative economists. Invariably, however, pundits are quick to dismiss these proposals as "politically unthinkable."
But if higher gasoline taxes would make everyone better off, why are they unthinkable? Part of the answer is suggested by the fate of the first serious proposal to employ gasoline taxes to reduce America's dependence on Middle East oil. The year was 1979 and the country was still reeling from the second of two oil embargoes. To encourage conservation, President Jimmy Carter proposed a steep tax on gasoline, with the proceeds to be refunded in the form of lower payroll taxes.
Mr. Carter's opponents mounted a rhetorically brilliant attack on his proposal, arguing that because consumers would get back every cent they paid in gasoline taxes, they could, and would, buy just as much gasoline as before. Many found this argument compelling, and in the end, President Carter's proposal won just 35 votes in the House of Representatives.
The experience appears to have left an indelible imprint on political decision makers. To this day, many seem persuaded that tax-cum-rebate proposals do not make economic sense. But it is the argument advanced by Mr. Carter's critics that makes no sense. It betrays a fundamental misunderstanding of how such a program would alter people's opportunities and incentives.
Some examples help to illustrate how the program would work. On average, a family of four currently consumes almost 2,000 gallons of gasoline annually. If all families continued to consume gasoline at the same rate after the imposition of a $2-a-gallon gasoline tax, the average family would pay $4,000 in additional gasoline taxes annually. A representative family with two earners would then receive an annual payroll tax refund of $4,000. So, if all other families continued to buy as much gasoline as before, then, this family's tax rebate would enable it to do so as well, just as Mr. Carter's critics claimed.
But that is not how things would play out. Suppose, for example, that the family was about to replace its aging Ford Explorer, which gets 15 miles per gallon. It could buy another Explorer. Or it could buy Ford's new Focus wagon, which has almost as much cargo capacity and gets more than 30 miles per gallon. The latter choice would save a whopping $2,000 annually at the pump. Not all families would switch, of course, but many would.
From the experience of the 1970's, we know that consumers respond to higher gasoline prices not just by buying more efficient cars, but also by taking fewer trips, forming carpools and moving closer to work. If families overall bought half as much gasoline as before, the rebate would be not $2,000 per earner, but only $1,000. In that case, our representative two-earner family could not buy just as much gasoline as before unless it spent $2,000 less on everything else. So, contrary to Mr. Carter's critics, the tax-cum-rebate program would profoundly alter not only our incentives but also our opportunities.
A second barrier to the adoption of higher gasoline taxes has been the endless insistence by proponents of smaller government that all taxes are bad. Vice President Dick Cheney, for example, has opposed higher gasoline taxes as inconsistent with the administration's belief that prices should be set by market forces. But as even the most enthusiastic free-market economists concede, current gasoline prices are far too low, because they fail to reflect the environmental and foreign policy costs associated with gasoline consumption. Government would actually be smaller, and we would all be more prosperous, if not for the problems caused by what President Bush has called our addiction to oil.
At today's price of about $2.50 a gallon, a $2-a-gallon tax would raise prices by about 80 percent (leaving them still more than $1 a gallon below price levels in Europe). Evidence suggests that an increase of that magnitude would reduce consumption by more than 15 percent in the short run and almost 60 percent in the long run. These savings would be just the beginning, because higher prices would also intensify the race to bring new fuel-efficient technologies to market.
The gasoline tax-cum-rebate proposal enjoys extremely broad support. Liberals favor it. Environmentalists favor it. The conservative Nobel laureate Gary S. Becker has endorsed it, as has the antitax crusader Grover Norquist. President Bush's former chief economist, N. Gregory Mankiw, has advanced it repeatedly.
In the warmer weather they will have inherited from us a century from now, perspiring historians will struggle to explain why this proposal was once considered politically unthinkable.
Bless you Tiger! This is a fantastic idea! I will be talking this idea up to anyone who will listen, and a few who would rather not! 
I've been told that it's because of the war and the fact that most of the heavy equipment over there uses Diesel causing a burden on the system.
I think diesel is taxed more than gas.
Sounds like a great idea, until you think about this:
Unless there is constructed a DIRECT corollary between gas consumption and payroll tax return, or some sort of end-of-year deduction scheme, all this will do is make rich people richer and the poor, poorer.
Low and middle-income people don't go out and buy new cars. They can't afford to. They put $5 in their tanks at a time and go to work. And face it, for the most part, it's the lower-incomers who drive the lower-mileage vehicles.
So these low and middle-incomers see an IMMEDIATE knock to their cash flow but a VERY gradual and probably unbalanced recompense, since the payroll tax 'repayment' would be a national average. And payroll tax is proportional to income, right? So Joe Bubba is laying out hundreds of dollars more in gas costs and seeing only a few dollars return every week. Keep in mind, Joe Bubba is living week to week...
It's only the upper mid and upper income people who will go out and buy that new Explorer with the better mileage. And then see a greater profit, because they're paying the higher tax, but they're getting more back and expending less on gas. The lower brackets will suffer it out and take a beating.
One other possible corollary to make the scheme work would be if there was some sort of subsidization, tax incentive, whatever, to allow lower-income people to go and buy those lower-mileage automobiles.
baa baa, United Sheep of America, it ain't gonna happen, there's too much stroke and too little incentive, especially culturally, against conservation. Ask yourselves why don't we have more mass transportation, for instance?
Question 1 from the Guyness Quiz
1. Alien beings from a highly advanced society visit the Earth, and you are the first human they encounter. As a token of intergalactic friendship, they present you with a small but incredibly sophisticated device that is capable of curing all disease, providing an infinite supply of clean energy, wiping out hunger and poverty, and permanently eliminating oppression and violence all over the entire Earth. You decide to:
a. Present it to the President of the United States.
b. Present it to the Secretary General of the United Nations.
c. Take it apart.
Why end of year, I think "food Stamps" are actually credit cards, so why not a gas card?
Also, middle incomers (like me ) can basically buy any car they want. The auto industry has very sophisticated lending practices, they aren't leaving anyone out!
This program would make the consumer think: "do I really want the most expensive thing I can afford". I believe the net result would be reduced fuel consumption.
Remember too, that GM's financial problems are exacerbated by the drop in SUV sales.
The price of fuel is going up, you can manage the rise and keep some of the money at home, or keep sending more and more to the middle east.
Oop- you haven't been watching Hollywood movies/Live TV lately:
After 1. as you say....
a. Swat Team, FBI, Federal Secret Police, NSA, CIA, US Army are pointing 1000 guns at you and screaming, "GET ON THE GROUND, GET ON THE GROUND!" 
b. They confiscate the device and take it apart.
c. You are jailed secretly forever as a subversive, no options or choices.
Green Guy:
I'd email you and asked what made it tick!
In effect, the laywers were afraid for the unknown and preferred the inferiour performance of a known situation rather then risk improving things by introducing a relatively unknown situation.
Also for some reason people are expected to sooner litigate a company whose "trained" car was involved in an accident then a car company that produced an "untrained" car, even while the latter situation is most likely a more dangerous situation. As in most applications; human controllers are pretty mediocre. Alot of accidents happen because a human controller made a error or intepretated the situation the wrong way.
I'm sure that "trained" cars will add a few new error and accident modes, but the reduction in human induced accidents could be much more significant.
But it is the same thing ago; alot of world problems could have been solved already if not everybody was paying so much attention to protecting their own backsides.
Wouter
Wouter,
I am with you. I am sure that the engineers were devastated.
Matt
Matt, can you give me the name of the company who did this work and development ?
Wouter
The name of the company was Calspan and now more recently Veridian Engineering. The Transportation Division had a grant from the U.S. Department of transportation. I did not see too much of it as I was in flight research, but my boss did contract work for the Transportation Division on that project.
The model was in my vehicle dynamics textbook, so I am sure the design is out there somewhere on the internet.
Matt
What you describe is exactly what has been done in many European countries. Over halve of the price of gasoline is government tax and indeed it has kept fuel efficient cars on the road, kept smog down and stimulated industry to keep working and more efficient tecnhologies.
I don't see Europe doing any worse then say USA economically. So apparently the tax-rebate scheme works.
It is not the solution to everything, from from it as several traffic problems we still have, but it has kept things more manageable.
Wouter
Are you telling us that Joe Bubba, who is too poor to feed his family or whatever, can still justify owning a 10 mpg (money guzzling) car ?
Hell if the guy was so poor and pittyful he would be driving a ford pinto or any smaller toyota and save a bundle by doing 40 mpg or more.
But apparently his need for a manly car outweights any money considerations. Is there any reason to have a V8 deep throat 6 liter 200 hp engine to do commuting or pick up Daisy-May at the diner ?
Wouter
Has anyone considered it from this perspective.
we can either keep the prices low till we are about to run out and then see a major price increase that will hit us like a meteor or when can make the chance more gradual and softer by raising the prices much earlier and stimulate a staged conversion.
Wouter
I think I remember that project now. Thanks for the info.
Wouter
Wout, I think the poor people in Europe are better off than the poor in America. (At least the more western/northern parts of Europe (excluding the Eastern bloc). Remember, we're not socialists.
And you are right about the cultural 'manly car' issue, but in a lot of cases I don't think it's even that. I'm speaking from some experience, I'll admit my background is pretty white trashy. Keep in mind, also, that as much as I hate to admit it, Americans are not taught to think. Look how we handle debate, you see it right here on the Internet. And the lower down on the income scale (for the most part) the less thought process there is. Boy am I gonna catch it for that remark, but that's how I see it.
I digress...
Joe Bubba doesn't think as far ahead as 'justifying' anything. He's living week to week and like I said he's putting $5 in the tank at a time so he sees his cash flow as being OK. He isn't saving for a rainy day or making investments, every bit of his check is gone every week. I didn't say Joe was sensible, that's just how it is. Kinda like when Joe buys furniture by renting. He's seeing that week-to-week cash outlay and he can handle that, but he doesn't realize he's paying a whole buttload of interest on that furniture and doubling his price. He affords it best he can.
It's not even so much as a manly-man thing. You can buy used gas-guzzlers for cheaper than you can buy used economical cars. Joe Bubba's got that old clunker paid for, OK? He sees that he can kinda make ends meet, and the car is running more-or-less ok. Remember he's living week-to-week, and if he gets into more debt for a new car, because he won't get decent trade-in for the clunker, he ain't gonna do even as well as he's doing.
Joe Bubba's got too many kids, too. And he's bought a vehicle with the same room as that economical SUV for a whole lot less.
I'm not saying that taxing gas is a bad idea, but it's gonna have to be worked out a lot better than just 'taxing the gas and refunding it back by payroll.'
What cat would the typical Joe Bubba sail then?
He would probalby sail one of them there "HOBBY CATS" as they are cheap!!!
When I’m not designing and building boats with way too many hulls, I design engines and have been doing so for nearly 20 years. You wouldn’t believe the amount of good ideas that I see that can make engines better/cheaper/more fuel efficient. What kills most of them is the complexity of economics. Its way to easy to kill off any good idea with bad economics. Wouters idea may be a good one. But it’s the start up economics that would kill it, you would need an initial critical mass to get it going, that’s going to need government backing. He may be right but no ones going to fund it.
A good analogy would be getting us (UK) and Japan to drive on the same side as the rest of the world. Think how much money it would save us in the long run, but think of the chaos it would bring to start with!
The big complexity is life cycle costs (or the real cost of things). Life has become too complicated to define real costs. At what point do you start counting the cost. This is a really big source of bad economics, that and subsidies.
If I was going to put my money into something to save fuel it would be regenerative braking, instead of wasting energy to slow a vehicle down, use it to create energy that can be used later. There is lots of technology around to do that, the flywheel being the simplest. And as the traffic volume increases we all have to hit the brakes so much more often.
Gareth
www.fourhulls.com
I built my boat with an innovation grant from the UK government.
Gareth
www.fourhulls.com
Guys:
The BIG problem is whenever a 200 mile per gallon carburetor is invented she/he either gets $10,000,000 to junk it or he/she gets cement overshoes in the river!!! 
Doug Snell
And you are right about the cultural 'manly car' issue, but in a lot of cases I don't think it's even that. I'm speaking from some experience, I'll admit my background is pretty white trashy. Keep in mind, also, that as much as I hate to admit it, Americans are not taught to think. Look how we handle debate, you see it right here on the Internet. And the lower down on the income scale (for the most part) the less thought process there is. Boy am I gonna catch it for that remark, but that's how I see it.
I digress...
Joe Bubba doesn't think as far ahead as 'justifying' anything. He's living week to week and like I said he's putting $5 in the tank at a time so he sees his cash flow as being OK. He isn't saving for a rainy day or making investments, every bit of his check is gone every week. I didn't say Joe was sensible, that's just how it is. Kinda like when Joe buys furniture by renting. He's seeing that week-to-week cash outlay and he can handle that, but he doesn't realize he's paying a whole buttload of interest on that furniture and doubling his price. He affords it best he can.
It's not even so much as a manly-man thing. You can buy used gas-guzzlers for cheaper than you can buy used economical cars. Joe Bubba's got that old clunker paid for, OK? He sees that he can kinda make ends meet, and the car is running more-or-less ok. Remember he's living week-to-week, and if he gets into more debt for a new car, because he won't get decent trade-in for the clunker, he ain't gonna do even as well as he's doing.
Joe Bubba's got too many kids, too. And he's bought a vehicle with the same room as that economical SUV for a whole lot less.
I'm not saying that taxing gas is a bad idea, but it's gonna have to be worked out a lot better than just 'taxing the gas and refunding it back by payroll.'
Now I know I'll catch crap for this... What amazes me is that the guy living day to day and driving that same old beat up pick up that gets 12 mpg is exactly the one who has the W sticker on the bumper!!!!
About American's not thinking- Republicans can, for the most part, count on the "rich" vote (unless you're a trial attorney). What amazes me is that they get so much of the poor vote (poor lower class with no money who need the social programs that republicans love to cut like programs to feed their kids, have barely decent healthcare.. etc. )!! I call this stupid.
Who said fear, uncertainity and doubt mixed in with some bible thumpin' doesn't buy votes? At least now with Cheney shooting the Texas lawyer we finally have someone at the top who has combat experience.
At least now with Cheney shooting the Texas lawyer we finally have someone at the top who has combat experience.
Nice point 
Oh dear lord.
Don't worry about the lawyer, he's got a second face...
Exactly right. Just yesterday we discussed these problems over a beer at my faculty with my collegeas of the deparment of control system. I said myself that making the road train idea work would require a team of many phsygo-analists, social scientish, lawyers, marketeers and promotors and only 2 to 3 technical engineers. The project would be devoting 80 % of its time and efforts to designing and implementing the introduction and general acceptence and only about 20 on hardcore technical aspects.
Actually, it seems that one avenue is being succesfully implemented at this time. Our control systems deparment is part of a European wide effort of Universities and car manufactures to design and implement an intelligent cruise control.
This system will not only maintain speed at a given value but also adjust this value to the required minimum distance to the car in front. The car companies want to sell this as an extra benefit in top of the line cars; thus making a status symbol out of it just like they did with GPS driven routing aids. I expect that in time everybody wants one because it is cool now ! From then onwards it is indeed only a very small step to go to full train-forming. Afterall, you only need a control system to maintain your car at about 1-2 feet behind the one in front. The steering can still be done by the human driving the car. This will also negate some of the confidence issue that plain humans may have with new technologies. Of course they can always decide to leave the train by steering their car to the side and out of the train. Of course this is a pretty useless thing to do but most people won't understand it that way and just feel more secure because they think that they have a meaningful control in the whole setup. Just like passengers in a fly-by-wire-auto-piloted airplane were they feel the pilot can safe the day when need be. Of course most of the time he can't in the case of a serious control system failure.
Wouter
This thread is making an interesting turn actually.
Your comments are exactly why I call myself a socialist but not a communist. I communism the ideal is to support everybody to an average living standard nt matter how dumb they are or how bad their work is. As there is hardly any improvement in living standards when performing quality work or being smart you end up with a society of losers. As a socialist I believe so should provide ample opportunity for everybody to improve on their living standard and status/position in society, but this doesn't mean that anybody refusing to be smarter or more active in bettering himself should get anymore then the bare minimum to keep himself alive and out of crime.
So I'm not shedding any tears for Joe Bubba. I would support any state program to buy his junky car at a higher value then markt price so he CAN buy a fuel efficient car that he couldn't do earlier, but only one time. Or any program that allows Joe to bridge the gap in investment that he will pay for in small weekly terms and see he earn money (not spending it) in the long run. But Joe decides that a V8 6 liter fuel pump matches his self image better then I say let him take the full 5- 6 dollar per gallon hit.
Actually such a society is the only way to maintain a minimal of smart thinking among the populace; a critical and strategic necessity if you ask me. Or do you really want all the better paying jobs to be outsourced to foreign nations ?
Wouter
Sorry Wout, I guess my point was too subtle. Personally, I don't feel sorry so much for Joe Bubba either, but I can see the politicians are gonna jump on that one with BOTH feet.
My suggestion re: Mr. Bubba illustrates the reality in the US that we have to undergo CULTURAL change in order for any conservation-minded programs to succeed. Good luck...
I think you're hung up on that 'image' thing, and I'm trying to illustrate to you that it's not just that.
Sure, in some cases it is, but that would be more likely seen in the middle-class than with the very poor, eg Mr. Middlebubba with the big triple-outboard powerboat and the Hummer to pull it, house way larger than he needs, his kids (too many) have JetSkis to play with. Middlebubba's in debt up to his eyeballs (eg the TV commercial, for those who have seen it.) Now, that's image.
The poor, on the other hand, don't have any concept of forward thinking. They only see week-to-week: what can I afford with my paycheck THIS week? There ARE state programs out there, but they don't seem to do any good. It's behavior they learned from their upbringing, and what they've seen in people around them, etc. Again, gotta go after it with 'cultural change.'
If the US wasn't half-assed socialist, we could see capitalism at work. These people would be cut off at the knees (oooh, the Democrats won't have THAT) and they'd learn the lesson a lot more quickly. Instead, they're 'sort-of' subsidized (food stamps, Medicaid, housing and school vouchers, disability-now THERE'S a racket, disability) and thus there's no incentive to improve. What little money they do make can be spent on dumb things like rental furniture, and they don't learn about smart money handling.
I'm broadening the subject here but then I think everything's pretty interconnected.
and for PTP:
NO I AM NOT A DEMOCRAT. US Politics is the very BEST arena demonstrating how Americans DON'T think. In a REAL democracy, we'd have more than two parties, and this partisan bantering wouldn't even exist. But then, it's just too easy for us to say, "yeah Rush (or whoever), you're right!" instead of just watching the news and deciding for ourselves. In a REAL democracy, talk radio and the like would be superfluous. Sorry, I'm changing the subject...