ABSTRACT
This chapter focuses on the difficulties of raising gasoline taxes by analyzing the determinants of gasoline taxation, people believe that one of the reasons for the difficulties is that political pressure influences the political decisions regarding taxation of gasoline consumption. The most efficient strategy for improving fuel efficiency and reducing carbon emissions would be to increase fuel prices. Fuel efficiency has increased in US thanks to Cafe standards and die oil crises of 1970s, but consumption remains high. There are also economic agents who benefit from a high fuel tax: Non-motorists as well as the providers of alternative modes of transport or producers of fuel-efficient cars. The characteristics of fuel markets are relevant as well in that some countries have a large fraction of diesel, gas or alcohol driven cars in their fleets, which changes the structure and thus politics of gasoline consumption. In some countries, gasoline is used mainly by small private cars while professionally operated vehicles use diesel.
