Tuesday, November 27, 2012

Fuel-Efficiency Standards Have Costs of Their Own... but lower costs than alternatives do

An article in the New York Times is, I suspect, entirely wrong about fuel efficiency standards as opposed to gas taxes.
They use an example of increasing fuel standards on cars in the 1970's resulting in people driving trucks instead.  The argument being the people will spend much, much more on fuel if you regulate some vehicles to be fuel efficient - so making fuel more expensive would be smarter.
It would not.

Fuel-Efficiency Standards Have Costs of Their Own - NYTimes.com:
The original standards for fuel economy in the 1970s exempted light trucks, which were a small share of the market. That decision was critical to the explosive growth of the S.U.V. In 1973, light trucks amounted to 3 percent of new vehicle sales. Today they account for half.
Who knows what distortions the new rules will bring? The standards vary according to the footprint of the car — the length between the axles multiplied by the width. So maybe cars will be boxier in the future.
Automakers will make the most efficient cars they can that customers will buy. A gas tax that goads drivers to choose gas-sippers takes advantage of this fact. A mileage standard does not.
The Entire Article can be read at the NYTimes.com:

Their evidence includes the period of rising gas prices after 2008 - a period where CAFE standards were becoming more rigorous and people were keeping their cars longer (those that kept them at all) - as well as a period of falling average income.
Not exemplary and irrelevant to CAFE standards.

A better take, from an article by Aldyen Donnelly:
Generally, when governments elect to tax energy consumption they are pursuing new revenues. Generally, when governments introduce vehicle weight and emission-rating-weighted taxes on annual car registration, they are pursuing energy efficiency and emission reduction goals.

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