CAFE Talk
Paul Ingrassia, who just signed on to write a book about the decline of Detroit, has an opinion piece in today’s WSJ. Like Holman Jenkins, he sees problems with CAFE–though not for the same reasons–and reinforces the need for higher gas prices as a market solution to building greener cars:
Congress must revisit one of its own special-interest shibboleths if it really wants to save Detroit. Requiring car companies to meet corporate average fuel economy (CAFE) standards forces them to lose money on small cars that people don’t want so they can sell big cars that people do want, at least until gas prices soar out of sight. Proof positive came last month, when the Toyota Sequoia and Honda Pilot SUVs posted big gains while sales of most other cars plunged. The obvious reason: gasoline prices plunged too.
The reason Europe has fuel-efficient cars is high gas prices, not CAFE laws. What’s more, the only times that Americans have switched to smaller cars is 1973, 1979 and the spring of 2008, when gas prices here were high. So the time has come for Congress to stop pretending that fuel-economy can be legislated and to put market forces to work. That means raising gasoline taxes — offset by cuts in income taxes and by gas vouchers for needy people. These measures would succeed at raising fuel economy and in reducing automotive emissions where the CAFE law has failed.
Source:
The Latest Song of Detroit
PAUL INGRASSIA
WSJ, December 4, 2008
http://online.wsj.com/article/SB122835159000377899.html
December 4th, 2008 at 3:21 pm
I agree with the recommendation to raise gas taxes. But, the “stop pretending that fuel-economy can be legislated and to put market forces to work” phrase strikes me as odd. Why? Well, since the car companies are complying with CAFE, then obviously legislating fuel economy standards did work. If we wanted better fuel economy, we could raise the standard.
The fact that Europe “did things differently” just shows there’s more than one path to the same goal. And the observation about consumer behavior just shows that market forces work and can be exploited. But, those two observations don’t disprove the proposition that CAFE legislation delivers the fuel economy legislated.
December 4th, 2008 at 4:27 pm
Right. Let’s back off on pushing vehicles with lower fuel economy, as the price of gas is low again. Let’s whipsaw a real need in the U.S. We need it, we don’t need it; we need it, we don’t need it….all based on fuel prices. This present bunch of spineless politicians do not have the gonads to increase gas taxes, because that is an obvious hit to the consumers and they would take a risk of not getting elected again. It is pretty clear, as evidenced by the auto and financial industries that leaving anything up to the executives to manage doesn’t work. Wynsacan is right in that they have been able to meet CAFE standards in the past. Their legacy wage, layoff and retirement plans is what is killing them now in a down-economy. Let’s hear from the unions on how they will get those programs down to comparable levels as the “other auto industry”.
December 4th, 2008 at 6:18 pm
This is one of those arguments that is probably right but which has 0% chance of ever passing. Please see We Should Stop Giving Money to Iowa to Grow Corn and Carl Levin Should Be Forced to Comb His Hair Like a Normal Person.
The Spotted Owl could ride the wave of Global Environmental Destruction across the planet as it destroys Western Civilization As We Know It and American voters will still reject massive gas taxation.
December 4th, 2008 at 6:18 pm
I’m in my mid 50’s, I remember the previous oil shocks. I know many of you will attack this next statement, but this time IS different. And I think the American people know it. The populace is aware of global demand for oil. We are living through multiple shocks to the economy, banking, housing and consumerism as we’ve known it. Also, demographically, we are an older nation. With many of my fellow baby-boomers nearing retirement, we’re increasingly, and painfully, aware that our savings are not robust enough to fund our twilight years. And who among us believes the stock market, or our homes, will be funding sources in the future? Americans will become more careful about many elements of life. In this regard, nothing makes us more aware of price and value as pulling into a gas station and watching the pump run. While its true that right now prices are deflating, and some are predicting more serious reductions in the future, I don’t think it will mean a return to the days when Americans bought SUV’s without blinking. In addition, I also think American car companies will increase CAFE standards now that their very survival has been threatened. We will find a balance. We have to.
December 4th, 2008 at 7:02 pm
RE: Ardano
I sure hope you are right, but the U.S. public has a short memory.
December 4th, 2008 at 8:48 pm
I grew up in the UK. A 2 liter engine in a car is a “big engine” there. You pay higher tax on a car over2 liters and if you have a company car, pay higher company car tax on anything over 2 liter. My “little” Camry here in the US has a 3.6 liter engine, go figure.
December 4th, 2008 at 10:53 pm
Paul Ingrassia is right on!
Dittos for Medicare and Medicaid. If patients, regardless of income level, were required to pay a scaled and reasonable co-pay, the unsustainable healthcare deficits would be significantly reduced.
December 6th, 2008 at 3:45 pm
Detroit would have us believe CAFE is the root cause. That is silly. Toyota and Honda have to abide by the same rules. They sell plenty of higher mileage cars. Get serious!