Saving Detroit Requires Higher Pump Prices
President-elect Barack Obama and the Democrats in Congress seem to have a clear vision of the auto industry they think the country needs. It must be financially self-sufficient. It also must be capable of producing highly fuel-efficient, next-generation vehicles that can help the nation cope with climate change and finite supplies of oil.
Yet for all the conditions attached to it, the multibillion-dollar aid package for Detroit’s carmakers approved by the White House (with Mr. Obama’s support) fails to address one crucial question: Who will buy all the fuel-efficient cars that Detroit carmakers are supposed to make?
The danger is that too few will, especially if gasoline prices remain low. Therefore, it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession.
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International Energy Agency reports the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago.
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