We all know that the carmakers generally hate fuel economy regulations that require them to build specific types of vehicles to meet the standards. The primary reason for that is that if fuel prices drop and consumers rush back to less efficient vehicles (which they inevitably seem to do) they are stuck with vehicles people don't want to buy. When you talk to people in the auto industry at length they explain that they wouldn't mind the standards if they were accompanied by some mechanism to ensure that fuel prices don't dip so much which would drive customers toward the more efficient vehicles.

Of course almost no politician in this country has the guts to call for increased fuel taxes, lest they be crucified by their opponent in the next election. Over at the Detroit News this morning John McCormick has a novel idea that might get around this. Instead of having an up-front gas guzzler tax as we do today, we should use some of the technology at our disposal today through telematics systems such as GM's OnStar to charge users based on actual usage, including mileage, time, location, and vehicle type.

Continue reading my analysis after the jump

[Source: Detroit News]
For example someone who buys an exotic sports car like a Ferrari or Lamborghini typically doesn't accumulate as many miles on it as people in other cars. Because of that the environmental impact is actually fairly small in spite of high fuel consumption. So charging based on that actual usage makes more sense. On the other hand using a big SUV extensively in highly congested areas might cost more. Of course driving a Ferrari in similar conditions would also cost more.

Drivers would be made aware of how much the charges for various usage would be up front and could make their driving decisions accordingly. Since drivers could be charged based on their actual environmental impact they would have a clearer picture of the true cost of their actions and could adjust their behavior accordingly.

Of course this plan isn't without flaws. While many new cars coming out now are equipped with much of the required technology, it is by no means universal. There is also the issue of the 240 million+ vehicles already on the road and the fact that many of those will still be there for many years to come.

The cost of retrofitting existing vehicles would be prohibitive and probably not technically feasible in many cases. There is also the problem of cheating. Any technological solution like this could be hacked or bypassed by enterprising users or "service" personnel. There is also the non-trivial issue of privacy. People have already gotten antsy about the idea of data being logged when their airbag system goes off. If they realize that everywhere they go will be logged, a real revolt is likely to happen. Although the telematics approach could in fact the be the fairest, the other issues would probably make it totally unworkable.

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