More Argument For Permanently Higher Gas Prices in the U.S.

As comments on this blog attest, I have been taking a beating for pointing out that gas prices need to go higher yet in order to get American consumers to migrate in big numbers to more fuel efficient vehicles.

My point has been that the European model shows us that it takes sustained higher gas prices to get people to make permanent changes in their buying and driving behavior.

Cars. com reported today that searches on its site for hybrids and other fuel-efficient vehicles gained significant momentum in the month of May as gas prices continued to break record highs.

Three hybrid models - the Toyota Camry Hybrid, Ford Escape Hybrid and Toyota Prius - all top the list of new cars experiencing the greatest increases in search activity on, with each vehicle’s search numbers increasing by at least a staggering 52 percent over April. The Toyota Prius also cracked the list of the top 10 new cars with the most searches on and now ranks second among cars generating the most email inquiries to dealers. On the flip side, of the new cars experiencing the largest decreases in searches, seven of the top 10 are trucks or SUVs.

“The more that gas prices rise, the more consumers start doing their homework on fuel-efficient cars available on the market,” said Patrick Olsen, managing editor of “Fortunately, there are more hybrid models to choose from in 2007 and more coming in 2008, including eight hybrid SUVs.”

Judging from some of the angry posts and e-mails I have received, some of what I previously posted has gotten lost in the reading. If we tax gas higher, the money can go to offsetting higher prices to lower income households by way of payroll tax reductions (more take home pay, not an end of year refund,) as well as to incentivizing the expansion of alternative energy infrastructure and investment. Every time gas prices rise now, the increase just means more profit for oil companies and more petro dollars for oil producing countries that are mostly hostile to America’s interests.

Before it's here, it's on the Bloomberg Terminal.