Don't Mess With Taxes

Late last week, the Senate passed an energy bill that calls for more fuel-efficient vehicles, outlaws energy price gouging and requires huge increases in the production of ethanol.

The proposal to increase government mandated fuel economy for vehicles, known as Corporate Average Fuel Economy (CAFE) standards, was particularly contentious. CAFE rules were established by Congress in 1975 in response to the 1973 Arab oil embargo and are administered by the U.S. Department of Transportation.

This latest change, the first increase in vehicle fuel efficiency since 1989, would up CAFE to 35 miles per gallon for cars, SUVs and pickups by 2020. It was crafted at the last minute, according to this AP report on CNN.com, after two days of closed-door meetings.

Supporters said the new requirement would save 2.5 million barrels of oil a day by 2025, when more of the mandated fuel-efficient cars will be on the road. But even with such environmental arguments -- or maybe because of them -- the measure was a tough sell in the Senate.

It now awaits action by the House, expected this coming week. And since the House and Senate energy measures likely will be different, they'll have to be hashed out and probably won't make it to 1600 Pennsylvania Avenue for final action until later this year.

Differing perspectives: Despite Senate approval, some on Capitol Hill weren't very happy.

Democrats didn't get the $32 billion in tax incentives they wanted for renewable energy and clean fuels.  And Republicans complained that the energy bill does nothing to boost domestic oil or natural gas production.

Bloggers, as expected, also have widely diverse takes on the bill.

Tim at Environmental Economics says the bill "contains more overwhelming evidence of the unwillingness of Congress to pay attention to basic economic principles."

Meanwhile, Kari at It's Getting Hot in Here characterizes the legislation as Halfway on CAFE.

And Mark at Straightline's Carnival of Cars says "Detroit best prepare for all those liability suits that will be filed because 35 mpg cars will have to be lighter, meaning more people will die in accidents as a result. Ambulance chasers call that harvesting a new field of litigation."

Price gouging provision: In addition to increased CAFE standards, the Senate bill outlaws price gouging.

For the first time, it would be a federal crime to charge "unconscionably excessive" prices for petroleum products at the wholesale or retail level. Critics of the provisions say the measure amounts to price regulation and could lead to supply shortages.

Don't Mess With Taxes readers apparently aren't too concerned about whether current high pump prices are the result of intentional overcharges. According to our vacation transportation survey, most of them are still  driving to their summer destinations, whatever the costs.

You can check out the full survey results (poll #15) at this archives page.