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  • Obama Shouldn’t Decide Your Truck’s Gas Mileage

    Tom Pennington/Getty Images

    Tom Pennington/Getty Images

    It shouldn’t be President Obama calling the shots on the range for gas mileage for trucks.

    The President has instructed his Administration to foist a management decision on manufacturers of trucks and other heavy duty vehicles by directing the EPA and National Highway Traffic Safety Administration to tighten fuel efficiency standards by March 2016 for model years after 2018. The new regulations will be yet another piece implementing his Climate Action Plan end-run around Congress, which involves Obama implementing policy not by signing congressional legislation, but by agency regulations

    Sure, fuel efficiency is good. But there’s no reason to believe that Americans, even without regulation, wouldn’t push the marketplace to create high fuel-efficiency vehicles. The setting Obama chose for his announcement is telling: the Safeway distribution center in Maryland, like any other major company, likely invests significant resources to maximize efficiency. That’s because they’re trying to maximize their profits, not because the government mandated that they do so.

    And in calling for new efficiency regulations, Obama has made the decision to prioritize fuel efficiency over other preferences customers and businesses might have – safety, size, performance, or price, to name a few. A business, for instance, might be willing to spend more on gas if it means their products will be delivered more safely.

    Limiting customer choice in this way is unlikely to create many benefits if previous experience holds. The President purports that fuel efficiency standards will save consumers money and improve the environment. Instead it’s likely the regulations will increase upfront costs for customers – since manufacturers will have to spend to get the higher mileage rates, regardless of whether customers want to pay for that or not — without any meaningful environmental benefit.

    Government analysis of efficiency standards for smaller passenger vehicles finalized in 2012 showed that the rule would increase the cost of a new car by an average of $3,000 by 2025 .Consequently, the Energy Information Administration projected that a new car for under $15,000 will no longer be an option and that the average car buyer will never realize the savings from fuel efficiency. This hits poor Americans hardest, as will the regulations proposed today, as costs imposed on businesses must be passed onto their customers.

    Even aside from the cost, the new fuel efficiency standards will not make a meaningful dent in global carbon dioxide levels, regardless of whether or not carbon dioxide emissions are a problem. Global warming, after all, is a global issue. The new standards will, however, leave all of us with fewer resources with which to dedicate to improving the environment.

    Congress rejected cap-and-trade in 2009, but is watching by while the Obama Administration implements it through the back door with regulatory action. The Climate Action Plan was a warning shot. It’s high time Congress get back in the game of legislating.

     

     

    Posted in Economics, Front Page [slideshow_deploy]

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