Low U.S. gasoline taxes may lead to waste -energy watchdog chief

WASHINGTON, July 14 Mon Jul 14, 2014 11:58am EDT

WASHINGTON, July 14 (Reuters) - The head of the International Energy Agency urged U.S. policymakers on Monday to look closely at their country's low gasoline taxes, saying that the resulting cheap prices may lead to fuel squandering even in the midst of a drilling boom.

"From a global perspective, I urge you to take a hard look," said Maria van der Hoeven, the head of the Paris-based IEA, the energy watchdog for developed countries.

"You may find that with your tax structure on gasoline, you ... may be encouraging wasteful consumption," she said at a conference held by the Energy Information Administration, the statistics arm of the U.S. Energy Department.

The United States has the lowest gasoline prices in the IEA, which has 29 country members, with taxes making up about 15 percent of that price. In comparison, taxes account for 60 percent of the cost of motor fuel in many European countries including Norway, the Netherlands and Italy, according to the IEA.

Van der Hoeven did not call for a U.S. gasoline tax hike. She said such increases are a tough sell in Washington, particularly ahead of congressional elections in November, and noted that the Obama administration has pushed through advances in vehicle fuel economy.

But the United States and other consuming countries must "challenge ourselves with tough questions" in times of abundance, she said.

Thanks to hydraulic fracturing and other technologies, the United States has already become the world's top natural gas producer and is on track to take the same spot in oil output.

But IEA forecasts show production of U.S. light oil reaching a plateau next decade. And violence in Iraq, home to some of the world's most abundant and inexpensively-produced oil, is making long-term investment decisions there "an exceedingly difficult task," she said. (Reporting by Timothy Gardner; Editing by Paul Simao)