Why the Prius loves a gas tax

In the U.S., when gas prices fell, so did hybrid sales. But not in Japan.


Andrew Leonard
June 6, 2009 1:17AM (UTC)

I noted last week that the third-generation Prius was off to a wildly successful debut in Japan. Meanwhile, Prius sales in the U.S. are off sharply, down 32 percent in May, presenting us with a small mystery. In the U.S. the falloff in gas prices since last July has savaged hybrid sales, but in Japan, sales are stronger than ever. What gives?

Keith Johnson at the Wall Street Journal provides the answer.

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One huge difference is the price of gasoline -- which automatically makes the hybrids more attractive, especially in a recession. Japan, like many European countries, slaps a hefty national tax on gas. Right now, Japanese pump prices work out to $4.61 a gallon. That compares to a U.S. national average of about $2.50 a gallon.

That means that even when oil is cheap -- or cheapish -- gasoline prices don't collapse, nor does demand for fuel-efficient vehicles. Which is exactly the kind of policy that U.S. auto executives from Bill Ford to Mike Jackson of AutoNation have called for to shift U.S. consumer tastes.

They better not be holding their breath. Just last week, no less an authority than Energy Secretary Steven Chu told the Financial Times that a gas tax is not "politically feasible" at the present time.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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