We know how you much you gurus love tax increases, especially when it comes to activities that impinge on cherished freedoms like driving your high-powered, high-consumption Camaros and Mustangs. Well, get ready to pay more for those freedoms, because higher gas taxes are coming. It’s inevitable, because gas has been artificially low for many years – pegged, if you will – and the time to pay the piper is almost here.
There are two reasons for this—the country’s short-term and long-term needs. First is the necessity for federal highway funding. The system has been short-changed for a long time, and the condition of the country’s roads, bridges, and tunnels is scandalous. The present 18.4-cents-per-gallon gas tax is inadequate to fund even present maintenance levels. Sen. Richard Durbin (D, Ill.) has put the handwriting on the wall. A new highway bill will be adopted, possibly by spring of next year. Somebody has to pay for it.
States like West Virginia are considering imposing their own gas taxes, as their infrastructure crumbles. With the economy stumbling and people driving less, gas tax revenues have declined everywhere. Plus, revenues get reduced as more fuel-efficient vehicles take to the road.
Which leads to the other, equally powerful, long-term exigency: The government must support in some fashion the electrification of the car industry and the infrastructure to serve it—or that brave new world simply won’t happen. There has been much written on how federal government should or should not fund industrial policy, but without it you can kiss oil independence and a clean environment goodbye.
A lengthy, interesting, and mostly convincing article in Inc. explains how the Chevy Volt (unskinned, above) and other EVs represent “connected vehicles,” cars built on a principle of networked systems requiring a new way of conceiving and building automobiles. Vertical integration, the industry’s traditional pyramid approach, is fast disappearing.
Today, however, car companies look less like pyramids and more like hubs and spokes connecting product teams: teams networked across the globe to one another and to myriad suppliers, a little like open-source software designers.
Makers of EVs will not only require new components, both hardware and software, but will need to face the enormous challenges of developing energy distribution and the grid. At the same time, there is and will be an explosion of great business opportunities. The future belongs to those who can network these new opportunities.
The auto industry will never again be a land of giants like GM but a landscape of small-business innovators. And it will be the government’s business to encourage and support these efforts at the outset. Funds will come from your pocket, once again, and higher gas taxes (in some form) are surely in your future.
Are you ready to pay higher gas taxes next year? Why or why not?