TRAVERSE CITY, Michigan (AFP) - The United States should consider imposing a European-style gasoline tax if it hopes to improve energy security and tackle global warming, the head of Ford Motor Co. said yesterday.
"The way to get at is to make an economic decision just like in Europe where the fuel prices are seven or eight dollars a gallon," Ford chief executive officer Allan Mulally said. "Then our behavior would change dramatically."
The current policy of forcing automakers to maintain an average fuel economy level across their product lines is not sufficient to cut gasoline consumption and is harming the industry, Mulally said at an automotive conference in Traverse City, Michigan.
"I've never seen a market distorting policy like CAFE (Corporate Average Fuel Economy)," Mulally said.
To keep average fuel economy standards in line, automakers have been forced to produce more smaller cars than there is demand for to be able to produce the larger models that customers really want, he said.
While automakers are committed to squeezing more fuel efficiency out of their vehicles every year, the technology does not exist to make the cuts legislators are asking for unless consumers stop demanding large, gasoline guzzling vehicles, he said.
"The numbers that are being talked about are not possible -- you have to do it by the product mix," Mulally said.
While automakers have doubled the average fuel efficiency of vehicles on the road since CAFE was implemented in 1975, there are now three times as many vehicles on the road and they are driving four times as many miles, he said. And the US now imports 68 percent of its oil, up from 28 percent in 1975.
"Energy independence is really important," he said. "But we've also got to do it in a rational way so we don't destroy a phenomenal manufacturing industry in the United States."