Apart from the obvious climate change implications of using oil to fuel vehicles, oil dependency is at the root of many geopolitical problems. Here are some examples:
Although predictions about oil running out keep turning out to be premature, there is no doubt that oil is scarcer than other fossil fuels. At the moment, oil prices are low for a number of reasons, most of which could reverse at some point.
Therefore, we should take steps to phase out oil as a fuel source. The simplest solution would be to simply increase fuel excise. Unfortunately, that solution has a problem which is that there are a lot of people in fringe suburbs and regional areas for whom public transport is not practical and who therefore drive a lot without being particularly wealthy. So while we can do some minor adjustments to general fuel excise, such as linking indexation to the minimum wage rather than CPI, drastic increases are not realistic.
My proposal is to introduce a fuel excise surcharge which only applies to new cars. Any future increases, other than indexation, would only apply to cars bought after the increase. For every car a swipe card would be issued which would be presented when paying for fuel. This would allow the fuel retailer to determine the correct excise for each car.
A good initial level for the surcharge might be 30 cents (27 cents for E10) per litre, increasing by 10 cents a litre a year in monthly or more frequent increments.
Criminal penalties would apply to moving fuel between cars for the purpose of evading the fuel excise surcharge. Odometers would be read at least yearly. For cases where fuel transfer is probable but can't be proven, the fuel excise surcharge exemption would be limited (as in the total exemption per year), reduced (as in the exemption per litre) or cancelled.
In time the fuel excise surcharge scheme could also be applied to off-road uses, many of which are tax-exempt. But it's probably best to try it for vehicles first.