Fuel Security Fund
The Fuel Security Fund (FSF) seeks to generate monies from a variety of sources and return that money to American citizens in the form of an incentive to purchase a more fuel-efficient vehicle. The concept of the need for fuel-efficient vehicles provides a familiar entry point for citizens on the more complex topic of the future of affordable energy sources. Many of the revenue sources proposed in the fund are the same policy tool options that can lead to a comprehensive national energy policy that is responsible and sustainable. In this way, the Fund provides an educational framework for a lively dialogue on the challenging energy issues we face, and a vehicle for discussing how to evaluate the many options we have as we work to solve our affordable energy dilemma.
The average working American's livelihood is already threatened by U.S. addiction to unstable foreign oil supplies (~25% of which originate in the Persian Gulf region), to summarize in order of priority:
- Our all-important currency, our economy, and the average working citizen's pocketbook are jeopardized by the trade deficits that oil imports spawn, not to mention the growing burden of energy costs to the consumer's monthly budget;
- Our national security is compromised by having to protect U.S. oil interests in the Middle East as we trade lives for the very fuel we use in our inefficient vehicle fleet;
- Our environment deteriorates every day due principally to excessive gasoline consumption and resulting greenhouse gas emissions.
Unfortunately, we are not moving at the speed and scale required to preserve the economy and the natural environment from imminent and perhaps irreversible damage. That is, national energy policy measures adopted by the White House and Congress will not provide solutions within the so-called "period of peril" (2010-2020) that is our short window of opportunity to act.
But fortunately, this dangerous addiction to unstable foreign oil supplies is one problem that, with political will and leadership, we can meaningfully remedy.
There are two fundamental ways to reduce our addiction to unstable foreign oil supplies:
- Fuel conservation, and:
- Alternative transportation energy sources
Pursuing alternative biofuels is important, but even with strong incentives (which currently do NOT exist), alternative biofuels alone cannot significantly reduce our foreign oil dependence within the short period of time we have to act (2010-2020).
So the first method, energy conservation, is essential and must be pursued.
The largest impediment to conservation is the energy inefficiency of the U.S. vehicle fleet.
There are over 2l0 million vehicles on U.S. roads and their average real fuel consumption is estimated to be 19.8 miles per gallon, approximately the same as 20 years ago. The CAFÉ standards in the 2007 Energy Bill simply will not significantly affect U.S. auto fleet efficiency within the critical, pivotal decade of 2010-2020, if ever.
Given current circumstances, incentives, and structures, most Americans, as well as U.S. automobile manufacturers, are not financially able to contribute significantly to the necessary efficiency upgrade of the vehicle fleet before or during the critical period of 2010-2020. New cars are expensive, and new fuel efficient cars cost even more (although only slightly more). Meanwhile, auto manufacturers make most of their profits from large "gas guzzler" vehicle sales. Unless the system is changed soon, we will never get to the point of sufficient auto efficiency in time to avert certain economic, environmental and foreign policy disaster.
The national FUEL SECURITY FUND (FSF) would be a self help program primarily used to help lower to middle income U.S. citizens purchase fuel efficient cars. The revenue sources for the fund could be:
- An increase in the federal fuel excise tax (The current tax, at 18.4 cents per gallon, has declined as a percentage of gas prices from 14.7% in 1990 to 6% in January, 2008);
- An upgrade of the gas guzzler tax, which has not been adjusted for inflation and does not include light trucks or SUVs;
- A carbon tax applied to all fossil fuel combustion;
- Potential tax on imported oil;
- Government sold credit revenue from a carbon cap and trade program;
- Private donations could be encouraged -- the fund would be more than a financial system -- it would stand for our country's commitment to change, to save the environment and our economy and strengthen our national security.
Help for lower to middle income Americans would come in the form of rebates for the purchase of fuel efficient vehicles manufactured primarily in the U.S. To avoid a regressive situation, the rebate would apply only to low to medium-priced vehicles and be available first to the poorest of Americans. Conceptually, this would allow low-middle income citizens the opportunity to save additional dollars as the difference in vehicle price between an inefficient used car and a fund compliant car would be picked up by the rebate while total gasoline consumption (and therefore consumer gasoline bills) would also drop considerably. The minimum efficiency to obtain any rebate would be 40 mpg, and as new technology becomes available, the minimum would increase over time. A reasonable objective by 2015 is 60 mpg. Additionally, the rebates would be available only on vehicles that also meet certain safety standards. Additional incentives would apply to plug-in or plug-in up-gradable vehicles.
To give drivers time to adjust, any tax burdens would be phased in over several years, but would begin immediately. Most of the aforementioned taxes would have the added benefit of reducing gas consumption. Some economists believe that directly taxing gasoline would be partially or fully offset by a reduction in the price of oil from foreign countries. Or put another way, OPEC will effectively pay for a large portion of the Fuel Security Fund.
This is achievable if one considers that, as gasoline prices continually rise, the additional dollars can either be routed to oil suppliers or be realized in the form of a demand-decreasing tax increase. If gasoline prices were to remain the same but demand significantly decreased, American's would spend the same or less on gasoline but a much larger portion of a gasoline bill would stay right here in the US for programs such as the FSF. As a rough estimate, a $1 per gallon tax input into the fund (whether through a gasoline, carbon, or some other tax) would yield $4,500 to every US driver every 5 years at current gasoline consumption rates.
And finally,
Structured as described here, the FUEL SECURITY FUND CREATES AN UPWARD SPIRAL for our economy, our society, and our environment:
- Even before the fleet upgrade, it will stimulate reduced fuel consumption;
- For beleaguered U.S. auto manufacturers, it will provide the financing and incentives to produce a market for fuel-efficient vehicles and provide American jobs;
- Longer term, it will create a modern fleet of safe, fuel-efficient vehicles;
- From an environmental perspective, it will decrease the number of gallons of gasoline combusted for transportation purposes, resulting in fewer greenhouse gas emissions;
- Decreased oil use bodes well for our national security and opens the door to new, less militaristic foreign policy options;
- Interests are aligned toward conservation, as automakers respond with fuel- efficient vehicles and consumers who choose to buy less fuel-efficient vehicles not only receive no dollars from the fund, but also effectively pay more into it at the gas pump or due to their larger carbon footprint;
- Policy makers can approach citizens with a palatable plan that properly aligns with national interests;
- Citizens find the plan compelling since all dollars put in are in turn available to them for the purchase of a compliant vehicle.
For more information about the Fuel Security Fund, contact us today.
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