Energy Policy:

Options to Reduce Environmental and Other Costs of Gasoline Consumption

RCED-92-260: Published: Sep 17, 1992. Publicly Released: Sep 17, 1992.

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Pursuant to a congressional request, GAO examined the policy options on the environmental and other costs external to the pump price of automobile and light truck gasoline use, focusing on: (1) environmental quality; (2) petroleum conservation; (3) energy security; (4) congestion; (5) equity; (6) economic growth; (7) competitiveness; (8) cost visibility; and (9) administrative feasibility.

GAO found that: (1) the six options it reviewed could reduce dependency on oil imports and reduce air pollution, but no option could meet all policy objectives, although higher gasoline taxes and tail pipe emission taxes met the most objectives; (2) higher gasoline taxes would reduce gasoline consumption, emissions, imported oil dependency, and highway congestion, but would reduce economic growth and be inequitable; (3) a tailpipe emissions tax's effects would be similar to higher gasoline taxes, but it would be potentially less costly and more difficult to administer and enforce; (4) increased subsidies for alternative fuels would reduce gasoline consumption and dependency, but other positive effects are uncertain due to differences in combustion properties and production methods; (5) higher corporate average fuel economy (CAFE) standards could reduce gasoline consumption and emissions, but could also encourage more driving and lead to higher costs, while not affecting older vehicles, highway congestion, and consumer demand for fuel-efficient vehicles; (6) fee-rebates for purchasers of fuel-efficient vehicles and charges for purchasers of fuel-inefficient vehicles would have similar effects to CAFE standards, except they would directly effect consumer demand for fuel-efficient vehicles; (7) vehicle scrapping programs, unlike CAFE and fee rebates, would reduce the number of older vehicle, leading to less pollution and highway congestion, but would be regressive and would not affect new vehicles; and (8) policies could be modified to offset negative impacts or combined in a coordinated strategy.

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