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President Obama granted one of our deepest pro-environment wishes Monday by directing the Environmental Protection Agency to reconsider allowing California to set tough emissions limits, and therefore tighter fuel economy standards, on vehicles. It's tempting to declare victory and move on, except that the president isn't finished with fuel and transportation policy yet. Though improving fuel efficiency will help, it's only the second-best way to reduce our reliance on foreign oil, lower greenhouse gas emissions and ensure the survival of Detroit's automakers, and it won't be enough by itself to do the job. What's really needed are higher gasoline taxes.
Following Obama's order, the EPA is widely expected to grant California a waiver to regulate greenhouse gas emissions from tailpipes, though the process will probably take a few months. In the end, vehicles sold in California and any other state that adopts its rules -- there are 13 so far -- would effectively be required to get better mileage than those sold in the rest of the country. By some estimates, they'd have to get as much as 42 mpg by 2020, compared to a national standard that will rise to 35 mpg by that year.
California's tailpipe rules would greatly burden Detroit, which would have to spend billions retooling to build cleaner cars. It also would cost consumers because hybrid engines and other fuel-sipping technologies are expensive. But that was going to happen anyway; though gas prices are low now, they are certain to rebound once the world economy recovers. Forcing automakers to start improving now will prepare them for that day and avoid another shock like the one they recently experienced when gas prices spiked and Americans suddenly stopped buying SUVs.
Yet one problem with a purely regulatory approach is that it burdens consumers without providing them any alternatives. Raising gas taxes, by contrast, creates a revenue stream that could be used to improve public transit and freight rail networks, accomplishing a host of beneficial public goals at the same time: easing traffic, reducing pollutants, providing cheaper alternatives to driving and combating sprawl. What's more, it would ensure a market for Detroit's cleaner cars -- consumers would be willing to pay a few thousand dollars more for a hybrid car if gas were heavily taxed and the higher up-front cost could be recovered over the long term. Finally, because the existing gas tax isn't indexed to inflation, it's no longer high enough to maintain the country's existing network of roads and bridges, let alone build a 21st century transportation system.
Don't get us wrong, we're doing cartwheels over Obama's quick action on California's clean-car waiver. But it should be seen as the beginning, not the end, of the administration's effort to wean the country from its oil addiction.