Friday, September 14, 2012

Economists: Fuel economy standards: more expensive even than climate change

Environmentalists are "proud" of the onerous new fuel-efficiency standards for automobiles but new economic studies say the damage they cause will outweigh any benefits, environmental or otherwise.  Defending these standards, Pres. Obama, AKA the Empty Chair, said:
“It’ll strengthen our nation’s energy security, it’s good for middle class families and it will help create an economy built to last,”
Reality is otherwise, says the New York Times:
What the government didn’t mention is that these improvements come at a high cost for drivers, automakers and society in general.…

The new mileage rules are so expensive, in fact, that even if one factors in all the expected gains from the policy — like less damage from climate change and fewer deaths from respiratory disease — many economists think that the costs actually outweigh the benefits.  [Emph. added]
 Some more details:
According to the government’s analysis, the additional production and maintenance costs made necessary by the mileage rules will rise gradually to about $31.7 billion in 2025 — which will add about $1,900 to the average price of cars and light trucks. There are other costs, too. Some Americans will not be able to afford a new car. Profits of some automakers and dealers are likely to decline. Greater congestion will impose an added burden on health. 

According to economists crunching the numbers, this makes mileage standards somewhere between 2.4 and 13 times more expensive than a gasoline tax as a tool to reduce our use of fuel. Indeed, by some calculations, raising fuel-economy standards is more costly than climate change itself.  [Emph. added]
Let that sink in a moment.  The New York Times, a paper that liberals consider 'unbiased,' admits that "raising fuel-economy standards is more costly than climate change itself."

One of the studies supporting this article was written by the Congressional Budget Office and is available online (full text, PDF).

Hat tip:  Greg Mankiw.

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