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  • New Auto Efficiency Regs: Special Interests Win, Consumers Lose

    The federal government finalized new automobile efficiency rules today for cars and light trucks for model years 2017–2025. The rules require an average fuel economy of 54.5 miles per gallon (mpg) in 2025.

    Proponents of the rule advertise the more stringent mpg standard as a win for producers, consumers, and environmentalists. The fact is that top-down fuel efficiency standards are unnecessary and have numerous unintended consequences.

    The Administration is saying that the new standards will save consumers money, reduce emissions, reduce oil consumption, and create jobs. But will consumers actually save money? It depends on whom you talk to.

    The government acknowledges that increased fuel efficiency standards will increase the upfront cost of a vehicle but that these higher prices will be offset by savings on gasoline. Generally, these cost savings assume that the buyer keeps the vehicle for its entire lifespan, which usually doesn’t happen. Further, consumers tend to drive new, fuel-efficient vehicles more, which reduces the estimated price, oil, and emissions savings.

    These advertised savings also assume that the government’s increased price tag estimate for new vehicles is accurate. Automotive systems engineers argue that it’s not—the real price is much higher. Robert Bienenfeld, senior manager for environment and energy strategy at American Honda Motor Company, emphasized, “There is concern that if there is too much cost associated with it, we’re going to be hurting demand. It’s a challenge. You can get too far ahead. You can make too big of a leap and go for a higher fuel economy that maybe the market won’t bear.”

    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. Although not directly applicable to the Administration’s new rule, the Michigan-based consulting firm Defour Group projected that a 56 mpg standard would destroy 220,000 jobs.

    At the heart of the issue is consumer choice. Consumers have plenty of vehicles to choose from, including more than 160 different models today that get better than 30 mpg. While some may argue that the increased efficiency came as a result of mandated fuel efficiency standards that have been around since the 1970s, fuel efficiency has always been a top priority for consumers—whether they are purchasing compact cars, light-duty trucks, or heavy duty trucks.

    Producers have the incentive to make fuel-efficient vehicles without obligating consumers to make sacrifices for other vehicle preferences. Americans also need larger, safer vehicles for practical reasons: to take their kids to soccer practice, to tow their boats to the shore, or to haul equipment or produce on small farms. Those decisions should be up to the auto manufacturers to balance those tradeoffs to supply the vehicles that consumers demand. If they can’t, their sales will suffer as a result.

    It’s not the role of the government to determine this balance. In fact, the government could be backing the production of vehicles consumers do not want. For instance, GM is suspending production of its electric vehicle, the Chevy Volt, for a month because of slow sales.

    Even though President Obama stressed that he had “no intention” of running General Motors when he bailed out the company, these new fuel standards effectively foist a management decision on all automakers.

    Posted in Featured [slideshow_deploy]

    37 Responses to New Auto Efficiency Regs: Special Interests Win, Consumers Lose

    1. toledo says:

      Manufacturers are gearing up for ngv and electric in their future.They know how to slow production for a bigger demand and high price for the consumer. We middle class know what's going on and its called slavery. Too big to fail! Got it.

    2. Chris says:

      um, if it weren't for top down fuel efficiency standards, Japan and Korea auto companies would have slaughtered the "Big three", particularly during the last 12 yrs of high gas prices. It is those high mpg regulations that keep Ford GM and Chrysler competitive. And I will dismiss your argument because every time a boost in the regulation had been talked about in the past, your argument was always given in defense of the status quo. It's too hard, it costs too much, etc. etc. etc. Well, it didn't take them 4 yrs to reach an average 35 mpg from 25 mpg when that became the law. In other words, the engineering is mostly out there. The implementation is not.

      I also question if you believe this is good for national security. I do. I don't believe regulations on electricity will help us reduce the usage of foreign oil, because we don't use oil to create electricity. However, gasoline is directly made from foreign oil. Reduce the usage of gasoline on all vehicles, reduce the number of barrels of foreign oil purchased, which in turn reduces the amount of money given to those middle eastern countries that harbor terrorists.

      • Pappawtom says:

        If you had an automobile that got twice the mileage what your present vehicle gets now would your drive it more? Most people would do just that. They would think that now I can go twice as far on the same fuel as before and they would drive just to be driving.
        If that same automobile that was cleaner on the environment to drive and was driven twice as much would the damage done to the environment be the same as now? Probably, so what would we gain in the end? Nothing.

    3. ryanh says:

      yeah because saving the environment from what scientists and doctors see coming is such a bad idea. we should probably stop trying to make innovations as well because they "cost" too much. right?

      • John Locke says:

        Congratulations, spoken like a genuine Marxist. Never mind that "scientists and doctors" frequently disagree, and that the wisdom of millions of free market transactions is much more valuable to society that the opinions of a few central planners and elitist "experts."

        You would, however, make a great slave to Big Brother with that line of "reasoning" to compel you.

    4. This article is full Big Oil – Detroit spin.
      I am not the greenest person out there but here is what I know as an educated person. Cars are able to achieve much higher fuel effiancies. Especially if they drop the need to have them drive over 100+ MPH (which where is that legal?).
      The problem we have is that the government subsides larger less fuel efficient vehicles then greener versions. Which is better for me to drive in our society a Hummer H1 or Nissan Leaf? Check your local tax code at least here in MN the hummer is more subsidized.

      The cafe standards are the government nudging the market in the direction it can and should go in. I remember my friends CRX HF got 50+ mpg. How is it that we struggle to replicate those numbers in this day and age?

      We need smaller more efficient cars. We don't need the Big Three saying these trucks and SUVs are the cars you need.

      • Mike, Wichita Falls says:

        What other government "standards" are acceptable to nudge us subjects in the right direction? Do we need even more "standards" in areas of food, clothing, shelter, healthcare, etc.? What is the "right" direction? Who will determine it? Where is that authority granted under the Constitution? If flawed individuals can't be trusted to make these decisions for themselves, why believe that flawed elected individuals will do any better?

        Two of the "Big Three" would have gone bankrupt, splintered into multiple, leaner and more competitive entities had it not been for Bush and Obama's unlawful meddling, bypassing of bankruptcy laws and misappropriation of taxpayer funds.

    5. Scott L says:

      I could almost take this article seriously until you threw out the "Americans need bigger cars" argument. We don't and never did. 90% of people will never use their grossly over sized vehicles for any of the purposes you cited.

      • Dan Poole says:

        Americans love big SUV's and big vans because they need to transport their families! You're totally out of touch with suburban and rural American families. We wouldn't buy large vehicles if we didn't have a purpose for them. It must really irk you that American consumers choose to buy things (SUV's, gasoline, extra large orders of food) that you anti-human Stalinists on the left don't approve of! You're such a grotesque little slave, Scott! Please ship your totalitarian-loving ass to North Korea and leave us real Americans the hell alone!

      • Mike, Wichita Falls says:

        Who are you to say what someone else wants or needs? Are you imposing your morality on others?

    6. pghdave says:

      Nicolaus, your argument does not take many things into account. First and foremost, take into account that the 1908 Ford Model T averaged between 20-25 MPG (depending upon which sources you are using). You're trying to tell me that 104 years later, we have a vast majority of vehicles to choose from that average a whopping 5 MPG better than the Model T? With our increase in technology in aerodynamics, tires, and computer controlled components, this is unacceptable. Surely we can do better than the 30 MPG average that exists today.

      • Guillermo says:

        Of course the model T got 20-25 MPG, it weighed about 1/3 or less as comparable cars from today and made about 1/10th the HP.

        You can thank countless government regulations with making cars much heavier for that.

    7. pghdave says:

      Secondly, while there may be a slight upfront cost in the technology at the beginning, over time that cost will decrease. Simple example, look at cell phone technology. Enough said.

      Thirdly, your argument that consumers always put fuel efficiency first and foremost when choosing a new vehicle is amusing. If that was true, people wouldn't be purchasing Hummers and full size trucks to get them back and forth to their office jobs. The truth is in this country is that we are still under the "I'll drive whatever I want" mentality. Go to Europe. Most people drive fuel efficient, smaller cars, most with diesel engines that easily average over 50 MPG. Look at the Blue-Motion VW Golf, of course not offered in the States, which averages 73 MPG.

    8. pghdave says:

      Finally, the less gas we use, the cheaper gas will be for everybody. Using fuel, and driving in general is a privelage, NOT a right. It should be done responsibly. That includes driving a vehicle that makes sense, Not a 3 ton Hummer to drive ONE person back and forth to work, that averages 8 MPG. Just because people can afford to waste gas on inefficient cars doesn't mean they have a right to.

      And no, I am in no way an Obama supporter, just a person who appreciates common sense.

      • Guillermo says:

        So it's up to you what people have a "right" to drive?

        You say you are not an Obama supporter but sure sound like a "control everything" liberal.

      • John Locke says:

        Obviously you didn't pass your Econ 101 class… and your idea of common sense is nonsense. Your rant fails to consider that driving in the US versus driving in Europe is an apples-to-oranges comparison. A big part of the force behind fuel efficiency in Europe is due to the exorbitant, government-regulated tax structure for petroleum products. Nor I do not know of anywhere in western Europe with the vast empty spaces typical of the western US.

        Given the impending failure of the imploding European social model, I reject any attempt at trying to make that analogy with the US – unless Obama is re-elected.

      • Mike, Wichita Falls says:

        Yes. Driving is a privelege…administered by the state government not the federal government. Again, the Constitution devolves this right to the states. Maybe you have heard of the 10th amendment which is just as sacrosanct as speech, religion, press, arms-bearing, private property, voting, etc.

        The "problem" with a free country is living with people who don't make sense. NASCAR races don't make sense to me. After all, at the end of the day, haven't they just gone around in circles a few hundred times? So, let's ban them. While we're at it, let's ban musicians from doing world tours. They sure do waste a lot of fuel flying and driving themselves around. Can't they just sell their music online? While we're at it, let's ban movie-making. What a massive carbon footprint to move sets and people around the world, blowing up buildings and cars, etc.

        What else can we ban for the betterment of the state and planet? Share your ideas.

    9. PaulE says:

      The 54.5 mpg CAFE standard is designed to accomplish one thing and one thing only. That is to force the public into electric vehicles. Typical government intervention into an areas that should be all about personal choice and free market decisions is once again being skewed towards what those in power in Washington deem best for the unwashed masses.

      By the way, look at how many in Washington are personally invested in various "green economy" companies to see that this is all about their personal enrichment while they pretend to be concerned about the environment and the middle class.

    10. Bill says:

      Did anyone of these commenters even bother to notice that these regulations were made illegally since the Congress is supposed to make them, according to previous law?
      How about no subsidies and letting people decide which car they want to drive? In other words, liberty and capitalism.

      • Mike, Wichita Falls says:

        Right on, right on! Congress makes laws that seem to put these bureacracies on auto pilot which encroaches ever more on liberty and the individual. They have abdicated their Constitutional duties for far too long.

    11. Amala says:

      This is the best the republican party can come up with?

    12. Aaron says:

      Consumers lose? Really? Reduced emissions will save thousands of lives every year.

      There are plenty of jobs in "green" technologies. Emerging technologies are employing thousands of people and creating jobs.

      I would rather not continue to give over $2 BILLION in subsidies to the oil companies for something we can solve ourselves with technology.

      • Guillermo says:

        Reduced emmisions will save thousands of lives? Got any REAL proof?

        Plenty of green technology jobs? Have you been paying ANY attention at all?

      • Mike, Wichita Falls says:

        Where is the evidence that reduced emissions save thousands of lives each year? Can you adjust for all other health factors in the lives of people that supposedly die from GHG emissions? I could more justifiably say that stricter abortion laws would save that many lives per day.

        Where are all of these green jobs? The green companies of which the President has boasted have gone bankrupt which means job losses. If there were really successful green companies, even on their own without subsidies, this President would certainly take credit for it.

        I don't believe in subsidies either…of any kind whether farm, green energy, oil, etc. However, taxes not collected due to lawful deductions are NOT the same as subsidies. If so, then everyone with a mortgage, kids at home and charitable contributions are being subsidized by the government.

    13. Special Interests Win (Read, special interests we oppose win but the special interests we support do not.)
      Consumers Lose (Read, we plan to do what we can to make the change as expensive to the consumer as we can.)

    14. Been There says:

      We need to go back to basics here: the "problems" in gaining high mpg capable vehicles, is the cronyism that exists…..it is foolish to believe that Big Oil/Detroit spin is the problem. The issue is truly the breadth of crony-capitalism that exists. That is the culprit. New ideas & technology relative to energy, vehicles, etc. have zero chance of success -unless born within the Big Oil/Detroit cabal. And support for additional regulkation by our government is EXACTLY what they desire! These businesses and their government "partners" (i.e., regulators) set & reset a bar to entry on an as needed basis. This allows them to maintain their old-boys network as status quo.
      Don't think that to be the case?
      Just try making changes to your OWN vehicle which push the limits of technology ….and then tell someone about it….
      Shortly thereafter, representatives from the Fed-Gov A-B-C's (irs/epa/dot/etc) will be stopping by for a visit.
      And you WILL believe them when they say: "…..these are not threats- just facts…"

    15. Champ says:

      I just want to state that i would like to have a say in what car i am buying. Who wants to drive a little tin can? What if you forgot to plug your car in? what do you tell your boss? "the dog pulled the plug out" I mean come on people. I know what they are trying to do here with these efficiency standards environment , etc, etc . Who doesn't like a gurgling V8? I for one will spend my hard earned money on the car i want and the gas it takes to make it go. Could you imagine a 4 cylinder Mustang with an electric motor? Not Me!

    16. David Hyatt says:

      You know this article must have been written by someone so young they don't remember 3 years ago when we were told we'd all be driving an Obama car with hard tires, no power and 2 seats.. but what happened? We got examples like the Ford V8 putting out 300hp to the next year putting out over 400 while getting better gas mileage.. even the new V6 has more power then the old V8. Use the facts to write a story, not your hate brother.

      • Guillermo says:

        None of that had anything to do with the government, it was all due to free markets. Gas prices went up and manufacturers answered the call to improve efficiency.

    17. Chad says:

      I don’t know what is worse, the comments that support such regulation, or the lack of commitment to personal liberty of which such comments are indicative.

      The consumer should decide upon vehicle characteristics, not government.

    18. Roads by No Design says:

      How do you think our local roads and highways and interstates get funded? Is there a light going on anywhere???? As the gas tax diminishes (higher fuel efficiency cars, electric cars, hybrids) so goes road maintenance and capacity improvements on our nation's highways. Are our "so called leaders" thinking about that??? No!!! As usual, we must all be forced to live with the unintended consequences of their policy decisions. Let's always put the cart before the horse! Have fun driving on dirt and dodging pothols on your way to work. (If you are lucky enough to have a job!)

    19. Roads by No Design says:

      Great, we'll all be forced to drive a higher fuel efficiency car, electric car or whatever, but won't have any roads on which to drive. How do we pay to maintain our roads and highways??? The gas tax. How do we pay for new capacity to decrease congestion in our cities? The gas tax. How do we pay for transit? The gas tax. How do we pay for bike lanes??? The gas tax. As usual, our "supposed leaders" have put the "cart before the horse" and" we the people" will bear the brunt of unintended consequences of their dumb policy moves. Less gas, less money to maintain our roads. I wonder how we'll all feel trying to get to work dodging potholes on dirt roads? Oh well, who wants to have good roads anyway? Oh, and is anyone in government putting an alternative in place to fund our decaying roads? Nope!

    20. Bobbie says:

      well, of course? Isn't that exactly the job America has come to know from this unknown man voted in as president with his ill thoughts mentioned of America and his unwarranted manners? His interests win by his abuse of authority, Americans lose! Sounds like, feels like, looks like the goal! …or one of them…

    21. Mike, Wichita Falls says:

      "Americans also need larger, safer vehicles for practical reasons: to take their kids to soccer practice, to tow their boats to the shore, or to haul equipment or produce on small farms."

      Come on, Nick. Get your mind right. Taking kids safely to soccer practice? Having fun at the lake? Making a living with a small farm? These may be consistent with the pursuit of happiness, but they are not in the states best interest. Furthermore, is it even fair that you have a boat and someone else doesn't?

    22. Brad S., Detroit says:

      The article is missing a major point of the "unintended consequences" of the CAFE legislation. An article ran in the USA Today a while back that calculated as many as 1300-2600 more people died per year due to the reduced size and weight of the vehicles to meet this standard. I don't think Physics cares if your car gets better gas mileage than the truck that runs over you. Never mind that all the auto companies were scrambling to better their fuel economy due to the oil crisis in the 1970's. The free market had already forced the hand of the producers. There was no need to set an arbitrary standard. When the price of gas came back down, you still had the specter of CAFE looming over the manufacturer's heads. The result – Large SUV's that consumers wanted and small cars to balance out the average. Now this silliness. You cannot legislate technology. The best part of the unintended consequence with government intervention ? This hurts the poor and middle class the most because if they struggle to purchase a new vehicle now – just wait until it is 25% more costly.

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