Obama Would Support Auto Incentives for Consumers

By CHRISTOPHER CONKEY

WASHINGTON -- The Obama administration would support the idea of giving consumers additional incentives to buy fuel-efficient vehicles, a White House official said Tuesday.
The White House would likely favor tax credits for vehicle purchases over any proposal to raise the 18.4 cents-a-gallon federal gas tax, as many industry officials and transportation experts have recommended.
"We fought for the $7,500 tax credit for the purchase of advanced technology vehicles in the Recovery Act," the official said, and "our administration remains committed to policies to help bring the costs down" for consumers.
Industry officials in recent days have expressed concern that consumers might balk at paying a premium for costlier, more fuel-efficient cars and trucks if gas prices don't rise to $4 per gallon or more in the years ahead.
The administration estimates fuel-economy regulations will add $1,300 on average to the price of new cars by 2016, but President Barack Obama on Tuesday said fuel savings would offset those costs for the typical motorist in three years. As part of a broader climate change bill, House lawmakers are debating a "cash-for-clunkers" proposal that would encourage consumers to trade in older, less efficient cars and trucks for newer, more efficient models. The proposal's future remains uncertain.
But industry officials have seen consumer tastes whipsaw from sub-compact and hybrid cars last summer - when gas prices soared over $4 per gallon -- back to larger vehicles this year when pump prices plunged.
"If prices are $4 per gallon, I think the math is pretty straightforward for consumers," said Dave McCurdy, president of the Alliance of Automobile Manufacturers, a Washington-based trade group that participated in the negotiations that led to the fuel economy agreement. "If we don't have prices like that, government is going to have to provide more incentives to help overcome the upfront cost differential of this new technology."
Write to Christopher Conkey at christopher.conkey@wsj.com