Rooted in Reason: Nurturing the Seeds of Liberty


Driving Up Our Costs by maliab
July 28, 2011, 6:56 pm
Filed under: Limited Government | Tags: , , ,

I just bought a new car.  Well . . . new to me, anyway.  It was about as fun as a root canal and took much longer.  And if you’re not fortunate enough to be able to walk onto a car lot and pick something out without regard to price, room for car seats, gas mileage, probable maintenance costs, or any of the other hundred things that make a car purchase a difficult and stressful process for us ordinary folks, then you probably don’t have much to worry about with regard to the Obama Administration’s new federal regulations on fuel efficiency standards.  Unless you’re also concerned about the economic future of our country and automobile safety.  As the Heritage Foundation’s Mike Brownfield explains:

The Washington Post reports that the Obama Administration and the auto industry have reached agreement on new federal regulations that would raise fuel efficiency standards for cars and light trucks, hitting an average of 54.5 miles per gallon by 2025—a 40 percent reduction in fuel consumption compared to today.

Those new standards, though designed to reduce greenhouse gases, bring with them significant costs. Fourteen of Michigan’s 15 representatives in Congress—including Democrat Senators Debbie Stabenow and Carl Levin—wrote a letter to the President warning him of the consequences that draconian fuel efficiency standards could have for their state, the home of General Motors, Ford, and Chrysler, citing a report by The Center for Automotive Research which warned that overly stringent standards could add $10,000 to the cost of a new car. Heritage’s Nicolas Loris explains how those higher costs can lead to job loss:

Higher prices reduce demand and force people to hold onto their older vehicles longer. Reduced demand means fewer cars produced, which means automakers have to shed jobs. The Michigan-based consulting firm Defour Group projected that a 56 mpg standard would destroy 220,000 jobs.

In addition to lost jobs and costlier cars, forcing automakers to achieve those standards could result in a loss of life. In order to make cars more fuel-efficient, automakers reduce the weight of vehicles. As Reason reports, “a 2002 National Academy of Sciences study concluded that CAFE’s downsizing effect contributed to between 1,300 and 2,600 deaths in a single representative year, and to 10 times that many serious injuries.”

All the costs of the new CAFE standards aside, can the auto industry even achieve the high-mileage goals? Not without massive government subsidies. Reason‘s Shikha Dalmia explains:

[E]ven the Environmental Protection Agency admits that the market share made up by hybrids and electric plug-ins will have to touch 49 percent if the industry is to come anywhere near compliance. Given that these vehicles now occupy only 3 percent of the market despite hefty subsidies, it is a foregone conclusion that expanding their presence will mean massively expanding subsidies to them.

And, as always, these kind of increased costs always hit Hawaii a little harder.  After all, we already pay a little more for everything except leis and aloha spirit.

Is the Autoworker’s Union involved in this change?  Does the sun rise in the east?  Is the Pope Catholic? Does Donald Trump buy his hair in bulk?  The UAW actually reversed its earlier position on such regulations (previously based on the fear that the damage to SUV and truck production would cost jobs), teaming up with environmental groups to lobby for regulations that (not coincidentally) will require major retooling of the industry and major subsidies from the federal government.  Brownfield concludes:

And there you have it. The Obama Administration is issuing rules—without congressional approval—to significantly change the way the auto industry is doing business, forcing it to make vehicles that few are buying today (only 2,745 Chevy Volts have been sold this year). And in order to achieve that compliance, the Administration will likely have to fund the retooling plants and subsidize consumers’ purchase of the high-mileage cars. Meanwhile, the cost of gasoline is going up, yet the President has restricted drilling in the Gulf, leaving the United States unable to tap its domestic oil reserves.

The President’s environmental and energy policy is driving in circles. The costs are high, and the American people and businesses will pay the price.

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