Another reason to consider going electric in California

by Ernie Hernandez on February 24, 2013

Dollar sign

Gas tax increase on the horizon

The California State Board of Equalization (that state agency tasked with responsibility for overseeing sales and use taxes, property taxes, special taxes, and the tax appeals that invariably exist when they do something wrong), is looking to raise the state excise tax on a gallon of gasoline.

While a ten percent rise in the excise tax (39.5 cents versus the current 36 cents per gallon) will not be the straw that breaks the camel’s back, it is yet another load to be carried. We have written before about the difference in the increase in the cost of electricity versus the increase in the cost of gasoline over the past ten years (found here). As gasoline powered vehicles become more efficient, we see a future that offers two components squeezing the price of gasoline higher. The first is due to that efficiency – as vehicles use less gasoline, state taxes derived from the sale of that gasoline go down, depriving the state of income needed for road maintenance. The only way for states to regain that revenue stream is to increase the taxes on the gasoline sold.

The second component of the future price hike in gasoline has nothing to do with efficient cars in the U.S. It has everything to do with the increased affordability of automobiles in the rest of the world. As lesser developed countries attain the ability to offer more of their populace an automobile to drive, the global demand for petroleum will increase. Nissan itself has a high-growth strategy designed around China, India and Russia, among others.

As the price of acquiring electric vehicles (EVs) declines, and the cost of gasoline continues to rise (for whatever reason), EVs will become a more attractive alternative to a greater percentage of the populace.

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