I commented earlier on No Right Turn about the government's scheme to reduce fuel usage by restricting the import of gas-guzzling cars.
I said I had a better idea, so here it is:
Some petrol usage is clearly non-discretionary - e.g. driving to work. Other usage is highly discretionary, e.g driving to a bach in the Coromandel every weekend. I propose that we tax the former less heavily than the latter.
One mechanism for this is for each vehicle owner to get a smartcard (no more than one per person, clearly). This would allow them to buy a certain amount of petrol each year at a discounted price. Fuel bought outside this would be taxed more heavily (to pay for the scheme and to allow for the purchase of carbon credits).
The amount of cheap fuel would be based on driving one of the most economical cars currently available (e.g. a Daewoo Matiz) for an average commute (this could possibly be regionally based). This equates to around 400 litres annually. The price of this cheap fuel would be pegged to inflation, while the amount would reduce every year to allow for changed travel patterns and improvements in vehicle economy.
The chart below shows the effect over five years. I've assumed that to start with the price of cheap fuel would be $1.30, resulting in an unsubsidised price of $1.56. I've also put various inflators in. This is a very rough calculation, but it serves to illustrate.
I reckon this would modify people's behaviour in a positive fashion. It would also help the less well off, who would benefit from reduced, predictable fuel costs.
PS: I will post the spreadsheet when I track down a suitable site!