Assumptions in my example:
1. Miles driven per year: 12,000
2. Cost per gallon of gas: $2.00
3. Assumes no time value of money
4. 6% sales tax rate
Now this gets to be a little more interesting if the proposed carbon tax (cap and trade) legislation passes. Using the same assumptions above, EXCEPT:
5. 90% increase in cost of gasoline due to the idiotic “carbon tax”
So, including the carbon tax it looks like this:
It makes sense that the payback period is shortened as the price of gasoline increases; however, this argument will be used by the Obama administration and the Democrats in Congress as a reason to pass carbon tax legislation.
We will hear something like, “other than the obvious benefits the environment will experience due to cap and trade legislation, consumers, too, will benefit as the payback of the $1300 increase in the cost of their car due to recently announced CAFE standard revision will be nearly cut in half.”
See how an obvious negative will be spun as a positive to the American consumer? I fail to see how paying more for a car and more for gasoline is good for me or any American.
I have not even bothered to mention the human cost factor from the standards (i.e. lighter, smaller cars = more people dying in accidents) OR the hardship the already struggling car companies will experience in implementing these standards (estimated to be around $50 billion...last time I checked, the car companies aren't making much money, so how will they pay for it? They won't WE will, thanks again Mr. Obama).
You wait and see. It all just makes me want to vomit!!
