Auto industry no image

Published on January 13th, 2010 | by Christopher DeMorro

60

GM’s Bob Lutz Says Higher Gas Tax Would Help

January 13th, 2010 by  
 

[social_buttons]

When I visited my former college roommate in northern England last summer, one thing that stood out in my mind was the price of gas. My roommate did the math for me (since they sell it by liter rather than by the gallon) and it was about $10 per gallon. Can you imagine spending $150 to fill your tank?

Most of these high prices come from gas taxes, and the idea has been bounced around the US too. It isn’t a very popular idea here, but GM’s “Maximum” Bob Lutz thinks a higher gas tax would help. And this from the guy who declared global warming a “crock of shit”.

Now it isn’t as much of an about face as you might think. But from the guy who trumpeted awesome-yet-inefficient cars like the defunct Pontiac GTO (a rebadged Holden Monaro) and the Chevy Camaro, well, it raises some eyebrows. The market and environment is a lot different now than it was in 2000 though, when Lutz joined GM and said that a 500 horsepower car would save the General from itself. That… didn’t turn out so hot.

Lutz doesn’t even like hybrids, but the world certainly seems to with hybrid sales ratcheting up in 2009. The problem is, if gas prices stay too low, people aren’t going to buy hybrids or fuel efficient vehicles if they have other options. By ratcheting up the gas tax and keeping petrol artificially high, it would help automakers sell the fuel efficient cars the government is mandating they build. 35 MPG by 2020 is a tall but not unreachable order, if you remake your lineup with enough small cars and hybrids to offset bruisers like the Camaro and Cadillac CTS-V.

According to CNN, Lutz said Monday at the Detroit Auto Show that “If the rise in gasoline prices is gradual, I think that all of us in the industry would frankly welcome that, because there is nothing more illogical than forcing fuel-saving technology when gasoline is extremely cheap.” And well, he is right.

Alas, this seems like a bit of a Catch-22 for us consumers. We’re definitely getting fuel-sippers in the near future, but if gas is cheap people aren’t going to buy them in the numbers needed to make much of a profit (American companies historically have a hard time making money on small cars). If people don’t buy fuel efficient cars, they aren’t going to get better and more fuel efficient because people will want the gas guzzlers again. So to help GM sell efficient cars, the government might need to hike gas taxes. CEO of Ford Alan Mulally has also said he supports a gas tax in an interview with CNBC last year, though it should be made clear that Lutz is not speaking for GM as a whole. Just himself.

The AAA fuel gauge report says that the average price of gas is about $2.75, though here in CT it is closer to $3 a gallon. Last year, the average price was almost a $1 less ($1.79 to be exact). The Fed’s already get 18 cents per gallon of gas pumped, and the average state gas tax is around 20 cents.

Would you support a gas tax increase? And if so, how much should gas cost?

Sources: CNN | CNBC | Image: GM





Tags: , , , , , , , , , , , ,


About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



  • Dave

    I don’t think they should raise it just for the sake of artificially making gas more expensive.

    But I would agree that they should roll the cost of all the green car subsidies into the gas tax as well.

  • Dave

    I don’t think they should raise it just for the sake of artificially making gas more expensive.

    But I would agree that they should roll the cost of all the green car subsidies into the gas tax as well.

  • Even after the bankruptcy and losing it’s #1 spot to Toyota, Lutz still doesn’t get it. GM needs to realize the days of the $50K Suburbans and the $70K Hummers are over.

    The last thing America needs is the Government gouging us on gas taxes so that GM can inflate their profit margins. That just hurts people who have to commute to make a living.

    What people need instead are realiable and efficient vehicles that don’t cost a fortune. People would snap up millions of Volts if they cost $25K, instead of $40K. Most Americans can’t afford to buy a $40K car. Especialy one that needs a lot of maintenance.

    That’s why Toyota has sold a million Priuses. People are happy to buy a Prius for $23K. Even though gas is only $3 per gallon, it still makes sense at 50 MPG.

  • Even after the bankruptcy and losing it’s #1 spot to Toyota, Lutz still doesn’t get it. GM needs to realize the days of the $50K Suburbans and the $70K Hummers are over.

    The last thing America needs is the Government gouging us on gas taxes so that GM can inflate their profit margins. That just hurts people who have to commute to make a living.

    What people need instead are realiable and efficient vehicles that don’t cost a fortune. People would snap up millions of Volts if they cost $25K, instead of $40K. Most Americans can’t afford to buy a $40K car. Especialy one that needs a lot of maintenance.

    That’s why Toyota has sold a million Priuses. People are happy to buy a Prius for $23K. Even though gas is only $3 per gallon, it still makes sense at 50 MPG.

  • Gas should be at least four or five dollars a gallon. There are a number of externalities associated with using gasoline as a motor fuel — pollution, military expenditures, social costs, road and infrastructure, etc — and none of these are captured with the current, paltry federal tax.

    A rebatable gas tax, one where almost all the money is paid back to taxpayers in quarterly direct payments, would be a good way to strongly encourage fuel economy without placing too large a burden on lower income drivers.

  • Gas should be at least four or five dollars a gallon. There are a number of externalities associated with using gasoline as a motor fuel — pollution, military expenditures, social costs, road and infrastructure, etc — and none of these are captured with the current, paltry federal tax.

    A rebatable gas tax, one where almost all the money is paid back to taxpayers in quarterly direct payments, would be a good way to strongly encourage fuel economy without placing too large a burden on lower income drivers.

  • John

    I would love to see a high gas tax. The proceeds could initially be used to reduce the deficit, and perhaps eventually used to reduce other taxes.

    But politically I don’t see it happening. The over-representation of low-population states in the senate makes it almost impossible.

  • John

    I would love to see a high gas tax. The proceeds could initially be used to reduce the deficit, and perhaps eventually used to reduce other taxes.

    But politically I don’t see it happening. The over-representation of low-population states in the senate makes it almost impossible.

  • Gas taxes are OK, but to address the global warming issue directly, nothing beats a carbon tax. It would work something like this:

    If a car gets 30 mpg (real world), the buyer pays zero incremental tax.

    If a car gets 20 mpg (real world), the buyer pays a tax on the excess carbon generated by the 20 mpg car.

    If a car gets 40 mpg (real world), the buyer gets a tax credit based on the carbon they did not generate compared to the 20 mpg car.

    Call your Congressperson 🙂

  • Gas taxes are OK, but to address the global warming issue directly, nothing beats a carbon tax. It would work something like this:

    If a car gets 30 mpg (real world), the buyer pays zero incremental tax.

    If a car gets 20 mpg (real world), the buyer pays a tax on the excess carbon generated by the 20 mpg car.

    If a car gets 40 mpg (real world), the buyer gets a tax credit based on the carbon they did not generate compared to the 20 mpg car.

    Call your Congressperson 🙂

  • Mavrick

    This is too much~ No one on the planet wants electric cars more than I do (presently involved in bringing a new • all electric • city commuter • sports car to the market). However … we must consider those who can not afford to purchase a new car. Some of us are barely able to pay for gas in this economy. Think about the reality of ANY increased cost in personal transportation … this is truly a bad idea!

  • Mavrick

    This is too much~ No one on the planet wants electric cars more than I do (presently involved in bringing a new • all electric • city commuter • sports car to the market). However … we must consider those who can not afford to purchase a new car. Some of us are barely able to pay for gas in this economy. Think about the reality of ANY increased cost in personal transportation … this is truly a bad idea!

  • steve

    For the automakers a tax, if high enough, would give some stability in predicting the type of car people would buy.

    There are many ways to do it where you could funnel the revenue back into the economy or even ultimately to the consumer, but I can’t see it as happening. We’ll just move blindly along.

  • steve

    For the automakers a tax, if high enough, would give some stability in predicting the type of car people would buy.

    There are many ways to do it where you could funnel the revenue back into the economy or even ultimately to the consumer, but I can’t see it as happening. We’ll just move blindly along.

  • ChuckL

    The problem is NOT lack of fuel taxes. The problem is taxes on business profits which are then built into the cost of the product and inflated again by the required profit margin. These tax costs are accumulated into the total cost of the final product.

    If you want to see a real lowering of product prices then the Tax Laws must be replaced. Business taxes should be placed upon only profits above 7% of gross sales, by product line. Costs that may be assigned to the product must include all labor costs including executive salaries and benefits. The maximum of these “labor” costs must be limited to a multiple of either minimum wage or the poverty level, whichever is lower.

  • ChuckL

    The problem is NOT lack of fuel taxes. The problem is taxes on business profits which are then built into the cost of the product and inflated again by the required profit margin. These tax costs are accumulated into the total cost of the final product.

    If you want to see a real lowering of product prices then the Tax Laws must be replaced. Business taxes should be placed upon only profits above 7% of gross sales, by product line. Costs that may be assigned to the product must include all labor costs including executive salaries and benefits. The maximum of these “labor” costs must be limited to a multiple of either minimum wage or the poverty level, whichever is lower.

  • Jon S

    So the guy from the company that just invested their entire reputation on an electric car comes out in favor of gas taxes… something stinks here and its not the lithium.

  • Jon S

    So the guy from the company that just invested their entire reputation on an electric car comes out in favor of gas taxes… something stinks here and its not the lithium.

  • Richard

    You think the economy is bad now, just try putting a higher tax on gasoline. One of the stupidest ideas to come along in a long time. Hasn’t history demonstrated time and again what happens when the government interferes in the market place?

  • Richard

    You think the economy is bad now, just try putting a higher tax on gasoline. One of the stupidest ideas to come along in a long time. Hasn’t history demonstrated time and again what happens when the government interferes in the market place?

  • Ellen

    Every government in the world salivates over higher taxes. With THIS government, I have to wear waders.

  • Ellen

    Every government in the world salivates over higher taxes. With THIS government, I have to wear waders.

  • jgreene

    The faster Government Motors gets off the Federal Tax Dollar TEAT and declares “bankruptcy” the better off we will all be. Bob Lutz can kiss my ass.

    Get rid of the unions in the automobile industry and we’ll have both good and competitively prices automobiles manufactured in the USA again. First step will be the “eventual” bankruptcy of GM which they should have done voluntarily three years ago.

  • jgreene

    The faster Government Motors gets off the Federal Tax Dollar TEAT and declares “bankruptcy” the better off we will all be. Bob Lutz can kiss my ass.

    Get rid of the unions in the automobile industry and we’ll have both good and competitively prices automobiles manufactured in the USA again. First step will be the “eventual” bankruptcy of GM which they should have done voluntarily three years ago.

  • H Tuttle

    I’d bet dollars to donuts that they folks clamoring here for higher gas taxes either (a) live in Manhattan, (b) don’t drive or (c) don’t understand how people in the rest of the country NEED to drive to simply live each day. And so NO, I do NOT want anymore !@#@# taxes. I pay enought !@#@# taxes already and I likewise live in CT. No mas! No more!

  • H Tuttle

    I’d bet dollars to donuts that they folks clamoring here for higher gas taxes either (a) live in Manhattan, (b) don’t drive or (c) don’t understand how people in the rest of the country NEED to drive to simply live each day. And so NO, I do NOT want anymore !@#@# taxes. I pay enought !@#@# taxes already and I likewise live in CT. No mas! No more!

  • sigh

    More social engineering by Marxists. Not surprising.

  • Mark

    I would much rather have a 50k Suburban than a 23k Prius. …even if gas was double what it is right now.

    To me, what I drive is not a question of accounting, it’s a lot more than that.

  • sigh

    More social engineering by Marxists. Not surprising.

  • Mark

    I would much rather have a 50k Suburban than a 23k Prius. …even if gas was double what it is right now.

    To me, what I drive is not a question of accounting, it’s a lot more than that.

  • Paul

    Lutz and Government Motors can make what ever they want. I’m never buying them. I’ll buy foreign. Let the Japanese, German or Chinese citizen get gouged by their fascists private/public racketeers.

  • Paul

    Lutz and Government Motors can make what ever they want. I’m never buying them. I’ll buy foreign. Let the Japanese, German or Chinese citizen get gouged by their fascists private/public racketeers.

  • paul

    I’m pretty sure Lutz has always favored a gas tax as an alternative to CAFE. This is nothing new.

  • paul

    I’m pretty sure Lutz has always favored a gas tax as an alternative to CAFE. This is nothing new.

  • Victor Erimita

    One more reason to not buy from GM or Chrysler, as our beloved government uses these stolen enterprises to make or influence policy on a number of fronts.

  • Victor Erimita

    One more reason to not buy from GM or Chrysler, as our beloved government uses these stolen enterprises to make or influence policy on a number of fronts.

  • Lummox JR

    Higher gas taxes are a dumb idea, period. Gas costs about triple what it did a decade ago; anyone who thinks that’s meaningless to the economy is too stupid to be trusted with a box of crayons. Do people really think it’s a coincidence that the housing bubble collapsed right around the time that gas exceeded $4/gal in the summer of ’08? Everyday folks with mortgages they couldn’t afford got hit in a pocketbook that was stretched too thin already, and the seams busted. Now we’re in a depression–so hey, let’s raise people’s cost of living even further and see what happens, right? I applaud making vehicles more fuel-efficient, but raising the gas tax isn’t the way to do it.

  • Lummox JR

    Higher gas taxes are a dumb idea, period. Gas costs about triple what it did a decade ago; anyone who thinks that’s meaningless to the economy is too stupid to be trusted with a box of crayons. Do people really think it’s a coincidence that the housing bubble collapsed right around the time that gas exceeded $4/gal in the summer of ’08? Everyday folks with mortgages they couldn’t afford got hit in a pocketbook that was stretched too thin already, and the seams busted. Now we’re in a depression–so hey, let’s raise people’s cost of living even further and see what happens, right? I applaud making vehicles more fuel-efficient, but raising the gas tax isn’t the way to do it.

  • livermoron

    Bret: You misunderstand Lutz’s point and you reveal a lack of knowledge on how businesses whose profits are derived through more-or-less effective leveraging of the economy of scale. Lutz is simply stating that higher taxes on gasoline would motivate more people to buy hybrids/alternative fuel vehicles. Any automobile company has large start-up costs on a new vehicle (R&D, retooling, safety testing, training, marketing, etc.) and needs to be able to recoup its investment in a reasonable time. If gasoline costs remain too low, then there won’t be enough people buying them to allow the scaling economies to kick in. You won’t see your $25k Volt because it will cost more than that to bring it to market, for example.

    Remember the huge dealer mark-ups on the initial Priuses? Toyota was able to get those because they had the advantages of first-to-market, government subsidies, and a leadership position in the world market outside the US paying $8/gallon and more. GM’s former #1 global sales position rested primarily on the US market (which was also the world’s largest at the time) and Toyota was able to introduce the Prius to a hungrier audience w/o having to go through the costly process of conforming to US safety regulations. The Prius wasn’t even offered in the US until three years after its introduction in Japan and in its first full year only sold about 15k units, at prices substantially higher than its current $21k basic asking price. Toyota has sold about 700,000 cumulative units in the US in the decade since its introduction, By contrast, Ford sold two million Taureses in its first 5 years, all almost entirely in the US.

    While I do not want to see gas taxes raised both because of the higher costs and my distrust in the ability of legislators to effectively engineer society, AND even though I have always hated GM products, let’s not castigate people for speaking the truth…no matter how distasteful it may seem to us in our ignorance.

  • Doug Collins

    Interesting that someone in the auto industry wants to tax another industry’s product – that people have to use in their daily lives. I wonder what he would think about a car tax instead. If you want to discourage large cars, tax cars by weight, size or engine displacement.

    Of course, that would gore his ox.

  • livermoron

    Bret: You misunderstand Lutz’s point and you reveal a lack of knowledge on how businesses whose profits are derived through more-or-less effective leveraging of the economy of scale. Lutz is simply stating that higher taxes on gasoline would motivate more people to buy hybrids/alternative fuel vehicles. Any automobile company has large start-up costs on a new vehicle (R&D, retooling, safety testing, training, marketing, etc.) and needs to be able to recoup its investment in a reasonable time. If gasoline costs remain too low, then there won’t be enough people buying them to allow the scaling economies to kick in. You won’t see your $25k Volt because it will cost more than that to bring it to market, for example.

    Remember the huge dealer mark-ups on the initial Priuses? Toyota was able to get those because they had the advantages of first-to-market, government subsidies, and a leadership position in the world market outside the US paying $8/gallon and more. GM’s former #1 global sales position rested primarily on the US market (which was also the world’s largest at the time) and Toyota was able to introduce the Prius to a hungrier audience w/o having to go through the costly process of conforming to US safety regulations. The Prius wasn’t even offered in the US until three years after its introduction in Japan and in its first full year only sold about 15k units, at prices substantially higher than its current $21k basic asking price. Toyota has sold about 700,000 cumulative units in the US in the decade since its introduction, By contrast, Ford sold two million Taureses in its first 5 years, all almost entirely in the US.

    While I do not want to see gas taxes raised both because of the higher costs and my distrust in the ability of legislators to effectively engineer society, AND even though I have always hated GM products, let’s not castigate people for speaking the truth…no matter how distasteful it may seem to us in our ignorance.

  • Doug Collins

    Interesting that someone in the auto industry wants to tax another industry’s product – that people have to use in their daily lives. I wonder what he would think about a car tax instead. If you want to discourage large cars, tax cars by weight, size or engine displacement.

    Of course, that would gore his ox.

  • Bill Johnson

    No to any new gas taxes. God only wanted 10% of your income. These guys are up over 50% (US, state city, sales, medicare, social security, property tax, business license, driver’s license, hairdresser’s license, alcohol server’s license…ad infinitum and ad nauseum) of your income as it is.

    When gas taxes are meant as a punitive measure, rather than revenue, it’s immoral. Punish him for driving a Hummer. How dare he.

    Get off your moralistic high horse and leave me alone. Conserve gas all you want. But taxing me just because you don’t like my life choices?

    Let’s tax homosexual sexual behaviors – many americans think those behaviors are not right. Probably more than think gas-guzzling is a sin…

    Shoe pinches the other foot, now don’t it?

  • Bill Johnson

    No to any new gas taxes. God only wanted 10% of your income. These guys are up over 50% (US, state city, sales, medicare, social security, property tax, business license, driver’s license, hairdresser’s license, alcohol server’s license…ad infinitum and ad nauseum) of your income as it is.

    When gas taxes are meant as a punitive measure, rather than revenue, it’s immoral. Punish him for driving a Hummer. How dare he.

    Get off your moralistic high horse and leave me alone. Conserve gas all you want. But taxing me just because you don’t like my life choices?

    Let’s tax homosexual sexual behaviors – many americans think those behaviors are not right. Probably more than think gas-guzzling is a sin…

    Shoe pinches the other foot, now don’t it?

  • Bill Johnson

    Maximum Bob wouldn’t have changed his tune now that he has a new master, would he?

    naahhh, couldn’t be. Just a coincidence.

  • Bill Johnson

    Maximum Bob wouldn’t have changed his tune now that he has a new master, would he?

    naahhh, couldn’t be. Just a coincidence.

  • Tim Cleland

    I’ve always thought the gas tax is one of the fairer taxes out there (since you have to have taxes).

    It’s avoidable: by walking, riding bike (or buying an electric car), so it has a choice aspect to it.

    It’s progressive: poor people usually buy smaller more fuel-efficient cars so they pay less fuel tax than the rich guy/gal buying an Escalade or Hummer, but if the rich guy/gal wants to pay less, he can by buying a hybrid. Really poor people don’t own cars so they pay nothing.

    It incentivizes exercise like nothing else can. Let’s face it, the U.S. can use some incentives to exercise (note: I’m against punishments for not exercising).

    It also incentivizes mass transport which would reduce road congestion.

    Overall, I’d like to see the income tax (and/or the payroll tax) reduced and the gas tax raised.

  • Tim Cleland

    I’ve always thought the gas tax is one of the fairer taxes out there (since you have to have taxes).

    It’s avoidable: by walking, riding bike (or buying an electric car), so it has a choice aspect to it.

    It’s progressive: poor people usually buy smaller more fuel-efficient cars so they pay less fuel tax than the rich guy/gal buying an Escalade or Hummer, but if the rich guy/gal wants to pay less, he can by buying a hybrid. Really poor people don’t own cars so they pay nothing.

    It incentivizes exercise like nothing else can. Let’s face it, the U.S. can use some incentives to exercise (note: I’m against punishments for not exercising).

    It also incentivizes mass transport which would reduce road congestion.

    Overall, I’d like to see the income tax (and/or the payroll tax) reduced and the gas tax raised.

  • Mike

    Yeah, four or five bucks a gallon for gas is a GREAT idea. Heck, let’s make it ten. And when it happens, those of you in the cities who always advocate loudest for this level of government micromanagement of the economy be sure to let us know how you like playing thirty bucks for a head of lettuce or a small bag of oranges, ‘kay?

  • Mike

    Yeah, four or five bucks a gallon for gas is a GREAT idea. Heck, let’s make it ten. And when it happens, those of you in the cities who always advocate loudest for this level of government micromanagement of the economy be sure to let us know how you like playing thirty bucks for a head of lettuce or a small bag of oranges, ‘kay?

  • If anything, the gas taxes would help our economy and manufacturing. Thing of all the companies which would just love to move their business to US, where the cost of business would dramatically go up with the new taxes. I mean, everyone loves paying more, right?

    Sarcasm off…

    BTW, shouldn’t we first lower the unemployment back to 5% – and only then allow the liberals to destroy the rest of our economy?

  • If anything, the gas taxes would help our economy and manufacturing. Thing of all the companies which would just love to move their business to US, where the cost of business would dramatically go up with the new taxes. I mean, everyone loves paying more, right?

    Sarcasm off…

    BTW, shouldn’t we first lower the unemployment back to 5% – and only then allow the liberals to destroy the rest of our economy?

  • TJ

    No, I would not support a larger gas tax.

    What I would support is GM’s demise, the sooner the better.

    After that ridiculously obvious pay-off to the unions last year, I won’t be buying a GM or Chrysler unionmobile.

    Carbon, smarbon. It’s all made-up political b.s. anyway.

  • TJ

    No, I would not support a larger gas tax.

    What I would support is GM’s demise, the sooner the better.

    After that ridiculously obvious pay-off to the unions last year, I won’t be buying a GM or Chrysler unionmobile.

    Carbon, smarbon. It’s all made-up political b.s. anyway.

  • Smoke

    You can pay a whore to say what you want to hear – ol’ Bob just has a higher price. And the john pays him with someone else’s money.

  • Smoke

    You can pay a whore to say what you want to hear – ol’ Bob just has a higher price. And the john pays him with someone else’s money.

  • bbthevidiot

    Gasoline, electricity, biofuels, cars, bicycles, horses and other such pretty things should be built, sold, and delivered at the price people will voluntarily pay for them. The only thing wrong with this is it does not allow politicians the opportunity to steal and spend other peoples money.

  • bbthevidiot

    Gasoline, electricity, biofuels, cars, bicycles, horses and other such pretty things should be built, sold, and delivered at the price people will voluntarily pay for them. The only thing wrong with this is it does not allow politicians the opportunity to steal and spend other peoples money.

  • JohnG

    Definitely raise the gas tax, for the stated reason that it would spur greater fuel efficiency from auto makers. Also, the extra tax revenue could be put toward improving public transportation options and infrastructure, making it easier to avoid driving and the corresponding high price of gas.

  • JohnG

    Definitely raise the gas tax, for the stated reason that it would spur greater fuel efficiency from auto makers. Also, the extra tax revenue could be put toward improving public transportation options and infrastructure, making it easier to avoid driving and the corresponding high price of gas.

Back to Top ↑