Auto Dealers Seek 'Gas Price Floor'

Would raising the gas tax to $1 and establishing a 'gasoline price floor' provide market stability for auto dealers? Some dealers, including the nation's largest, say 'yes'. Economists agree. Politically impossible? Read on.

2 minute read

August 15, 2012, 11:00 AM PDT

By Irvin Dawid


National Journal's energy and environment correspondent, Coral Davenport goes to "the heart of the Southern California car market" to speak with an auto dealer who supports a a more than 500-percent increase in the gas tax to $1 because it would bring "market certainty".

The fluctuating price of gasoline creates market uncertainty for dealers, meaning sales of SUVs and efficient compacts vary with the price of gas, according to the Morovia dealer.

"A growing number of car dealers advocate the same solution to the problem: raise the gasoline tax, enough to create a consistent, predictable demand for fuel-efficient cars and to force automakers to build gas-sippers that people want and can afford. One way to do this, say automakers, would be to create a new gasoline price floor -a point below which prices won't fall."

Not a new concept, Washington Post conservative columnist Charles Krauthammer wrote about it in 2004, as did University of CA energy expert Severin Borenstein (Planetizen, 2008).

Michael Jackson, chief executive officer of AutoNation, the world's biggest auto retailer, is an outspoken gas tax advocate. In April, he told CNBC: "At the end of the day, you would need a gas tax, increased over decades, to keep the consumer focused on conservation."

"Two of our biggest problems, as an economy, is our dependence on oil and our contribution to climate change. A gas tax gets at all of these neatly, elegantly, and efficiently," says James Sallee, an expert on energy and tax policy at the University of Chicago.

"We know clearly and convincingly that new-car purchases are responsive to price fluctuations. It sends a market signal, instead of having government regulations pick what we do", says Sallee.

"That idea, of course, is tantamount to jumping on a political hand grenade, which is why the politicians these economists advise haven't tried to do it.

The solution there could be a tax trade-off: raise the tax on gasoline but make an equivalent cut on payroll or income taxes."

Thanks to MTC-ABAG Library

Thursday, August 9, 2012 in National Journal

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Map of Haussmann's redesign of Paris in the 1850s through 1870s under Napoleon III.

In Urban Planning, AI Prompting Could be the New Design Thinking

Creativity has long been key to great urban design. What if we see AI as our new creative partner?

June 30, 2025 - Tom Sanchez

View of dense apartment buildings on Seattle waterfront with high-rise buildings in background.

King County Supportive Housing Program Offers Hope for Unhoused Residents

The county is taking a ‘Housing First’ approach that prioritizes getting people into housing, then offering wraparound supportive services.

7 hours ago - Real Change

Aerial view of suburban housing near Las Vegas, Nevada.

Researchers Use AI to Get Clearer Picture of US Housing

Analysts are using artificial intelligence to supercharge their research by allowing them to comb through data faster. Though these AI tools can be error prone, they save time and housing researchers are optimistic about the future.

July 11 - Shelterforce Magazine

Green bike share bikes parked in a row on a commercial street with outdoor dining and greenery.

Making Shared Micromobility More Inclusive

Cities and shared mobility system operators can do more to include people with disabilities in planning and operations, per a new report.

July 11 - Cities Today