Higher gas tax may solve problems of carmakers

Many car companies like General Motors Corp., Ford Motor Co. and Chrysler are spending billions to make plug in electric cars at a time when the price of gasoline is below $2 per gallon. All these companies fear that if gas prices are so low even next year then their research of plug in electric cars will go waste. They have spent million of dollars for this research. In the last 5 months of 2008, average gas prices have fallen 58 percent form $4 per gallon to $1.74, making it difficult for auto makers to design the vehicles that will match consumer demand. To solve this problem, all the auto makers are planning to meet Obama to raise the gasoline tax or provide a solution for keeping the price of oil above a certain level. Due to changing market conditions, the profit of automakers has come down drastically. If Obama Administration increase taxes on gas or impose certain policies that would reduce oil consumption then auto makers can match their products to demand.

At present, the gasoline taxes for state and federal level on an average is about 40 cents per gallon in U.S. which is very less when compared to European countries. Gas is now taxed at 18.4 cents a gallon at federal level. But if the gas tax is increased it would not only benefit auto makers but also reduce consumption and greenhouse gas emissions. An increase in gas tax is not constant revenue for government but would favor mass transit and research in alternative fuel vehicles.

Auto makers like Chrysler are designing midsize Chrysler 2000 car which can handle electric or conventional power trains. Daimler showed its BlueZero concept, with the same model with three possible power trains like hydrogen fuel cell, battery electric drive and gas electric hybrid.