Hyundai CEO: Gas Tax May Ease Consumer Uncertainty

Consumers remain skittish about buying new cars not just because gas is getting more expensive, but because they have no idea which direction prices will go next, said Hyundai's top U.S. executive, calling for a flexible gas tax designed to keep pump prices stable.

"It kind of ends up being paralyzing to people," Krafcik said in an interview Monday with The Associated Press. "If they pick the wrong car, they might be thinking, 'I don't know ... if I should go that way.'"

Average retail gasoline prices have risen more than 28 cents in the last two months, with Monday being the first time in 54 days that gas prices retreated. On average, a gallon of regular unleaded cost $2.69 Monday, according to auto club AAA, Wright Express and Oil Price Information Service.

That's a far cry from the more than $4 a gallon that gas fetched last summer, but still up sharply from earlier this year. Krafcik said the wild variation in the price of gas is currently the No. 3 reason behind consumers' hesitance to buy new vehicles, behind unemployment worries and the expectation of better deals on the way.

Krafcik said a gas tax designed to keep prices stable — rather than one designed to raise revenue — would go a long way toward easing uncertainties about the future price of fuel and would ultimately stimulate new vehicle sales.

"You can say, 'Well how is (a gas tax) going to stabilize things? You're just going to add 25 cents or 50 cents to a gallon,'" he said. "A flexible gas tax could be a new idea."

Krafcik is not the first in the industry to float the proposal. Mike Jackson, the chief executive of the biggest U.S. dealership chain AutoNation Inc., recently called for a revenue-neutral gas tax increase to keep the price stable at $4 per gallon.

Although many analysts have said higher gas taxes would be the most effective way to get consumers to adopt more fuel-efficient vehicles, the idea remains anathema to many in Washington. The Obama administration has been tepid about the idea of raising the federal gas tax, which stands at 18.4 cents a gallon, and many in Congress have opposed it.

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