Michigan, August 9:

The United States should consider implementing a European-style petrol tax if it hopes to deal with energy security and global warming, the head of Ford Motor Co said today.

“The way to get at is to make an economic decision just like in Europe where the fuel prices are seven or eight dollars a gallon,” Ford CEO Allan Mulally said. “Then our behaviour would change dramatically.”

The current policy of forcing automakers to maintain an average fuel economy level across their product lines is not sufficient to cut gasoline consumption and is harming the industry, Mulally said at a conference in Traverse City, Michigan.

“I’ve never seen a market distorting policy like Corporate Average Fuel Economy (CAFE),” Mulally said. In order to keep average fuel economy standards in line, automakers have been forced to produce more smaller cars than there is demand for in order to be able to produce the larger ones that customers really want, he said.

While automakers have doubled the average fuel efficiency of vehicles on the road since CAFE was implemented in 1975, there are now three times as many vehicles on

the road and they are driving four times as many miles, he said. And the US now imports 68 per cent of its oil, up from 28 per cent in 1975.

“Energy independence is really important,” he said. “But we’ve also got to do it in a rational way so we don’t destroy a phenomenal manufacturing industry in the US.” When asked by reporters if he was endorsing a gasoline tax, Mulally said ‘no, not exactly’. “I think it’s so important we all join in this debate and we really decide what we want to do about energy security and global warming. A piece of that could be a tax.”