Survey: Making Greener Cars- Tax or Regulate?

TreeHugger was dismissive of the car manufacturers' attempts to stop the increase in the Corporate Average Fuel Economy (CAFE) minimums, but Ford CEO Alan Mulally, makes a very interesting point: "The way to get at it is to make an economic decision like they do in Europe our behavior would change dramatically." He continues: "I have never seen a market-distorting policy like CAFE," Mulally said. "It's a policy that forces you to put out more small cars than there is consumer demand for to make the bigger cars that people really do want. You're trying to force the market instead of being market-driven." Mulally said U.S. Rep. John Dingell's recent proposal of a 50-cent-per-gallon tax on gasoline is an option worth considering. "I just think it's so important that we all join in this debate and we really decide what we want to do about energy security and global warming," Mulally said "A piece of that could be a tax."

So instead of regulating what is available to purchase via CAFE, he is suggesting that the price of gas be taxed to the point where people will demand smaller, more efficient cars. Let the market do the job. ::Detroit News via ::Environmental Economics