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January 19, 2006

The cost of reducing gasoline consumption

With the high cost of oil and gas, there is a renewed interest in getting people to reduce how much gasoline they use. N.C. State University's Mike Walden looks at two approaches.

"Two of the most commonly discussed are either forcing the auto manufacturers to improve the fuel efficiency of their cars or raising gasoline taxes and thereby causing people to want to purchase more fuel efficient cars," says Dr. Walden, a professor with the College of Agriculture and Life Sciences and economist with the North Carolina Cooperative Extension Service.

"I think there is a perception that the first approach is somewhat cheaper, because people don't understand that if you cause or force a manufacturer to do something -- in this case to perhaps make vehicles more fuel efficient -- that's probably going to cost that manufacturer more and he or she will have to try and add that to the price.

"So really what this comes down to," Walden says, "is do you pay for the fuel efficiency through the higher price? Or do you personally want to reduce your driving or look for more fuel efficient cars because the cost of gasoline is higher?

"Each approach will get you to the same place but the methods are different."

Posted by deeshore at January 19, 2006 08:00 AM