Gov't Offers Incentives to Push Hybrid Cars

With the average cost of a gallon of unleaded gasoline now at a near record, sales of hybrid vehicles have surged in growth. Yet their numbers still represent a blip on America's roadways

Lat year was a record year for the hybrid, with more than 80,000 vehicles sold. But hybrids are still scarce on the roadways — only 1 percent of the 17 million new vehicles sold last year. And consumers could face months of waiting for the vehicles because of limited production and high sticker prices.

Hybrid supporters argue that the vehicles are great for energy conservation and reduce dependence on foreign oil.

Click in the video box at the right to watch a report by FOX News' Jeff Goldblatt.

So, the federal government and a dozen states are offering some form of financial incentive or tax break to hybrid buyers, ranging from $300 in Maine to more than $4,500 in Colorado. The federal government offers hybrid buyers a $2,000 tax deduction this year and a $500 deduction next year. But that tax break gets phased out in 2007.

While some critics have questioned the need for financial incentives, others claim the hybrid incentives are necessary.

"We definitely need these hybrid incentives. If we are really serious about tackling global warming — tackling our oil dependence — we need better technology on the roads," said David Friedman, a senior analyst for the Union of Concerned Scientists (search).

Utah and Virginia agree that special incentives are needed. In those states, hybrids have access to high occupancy express lanes, or HOV (search) lanes, even if they don't meet the carpool requirements.

But after hybrid traffic more than tripled last year on highways leading into Washington, the privileges for hybrid drivers could be reaching the end of the road. A transportation panel recommended hybrids get the boot from Virginia's HOV lanes when the Legislature has the chance to renew the law next summer.

"Travel times for commuters are starting to break down. The lanes are simply getting too congested," said Joan Morris, spokeswoman for Virginia Department of Transportation (search).

In the meantime, hybrid drivers have another perk available — free parking at city meters in about a handful of places nationwide, including Los Angeles and Albuquerque.