Energy Policy: Options to Reduce Environmental and Other Costs of Gasoline Consumption

GAO discussed the external costs of gasoline consumption and fuel policy options, focusing on the: (1) current options' effect on consumers and the economy; and (2) effects of option modifications and combinations. GAO noted that: (1) options which could reduce gasoline consumption and pollutants include federal gasoline taxes, tailpipe emission taxes, and alternative fuel usage; (2) federal gasoline taxes could lead to slower economic growth and impose a financial burden on the poor; (3) tailpipe emission taxes could reduce pollution severity, but measurement and enforcement would be difficult; (4) alternative fuels could increase greenhouse emissions, vary emission aspects, and require federal subsidies to compete with low gasoline prices; (5) higher Corporate Average Fuel Economy (CAFE) standards and a fee-rebate program could improve fuel economy and reduce greenhouse emissions, but would impose additional costs on the U.S. automobile industry; (6) scrap program options would target old vehicles and reduce emissions, but could impose a financial burden on lower income groups; (7) redesigning fuel tax options could redirect negative economic growth effects and burdens on the poor; (8) improvements in gasoline and tailpipe tax options could assist in deficit reduction, reduce other taxes, and promote long-term economic growth; (9) combining alternative fuel and tax options could increase alternative fuel demand and usage, reduce emissions, and reduce the need for subsidies; and (10) combining higher CAFE standards, fee-rebate programs, and scrap programs would reduce emissions and increase demand for fuel-efficient vehicles.