With all the partisan gridlock in government today, you?d think any policy proposal with wide bipartisan support would have to be a really great idea.
But you?d be wrong ? at least when it comes to the ever-popular policy of forcing car companies to make cars that get better gas mileage.
Originally enacted in response to the 1973 Arab Oil Embargo, Corporate Average Fuel Economy standards require all vehicles sold in the United States to meet certain standards for gas mileage ? right now 27.5 mpg for cars and 22.2 mpg for trucks. As scientists have learned more about automobile emissions and how they affect the environment, politicians have come to view CAFE standards as a key tool in combating global warming.
Both Sens. John McCain and Barack Obama have bragged to the rest of the country about going to Detroit and making the case for increased fuel economy standards. In December, President Bush signed a law that will increase CAFE to 35 mpg by 2030. Sen. Hillary Clinton wants standards set at 55 mpg by then.
Lost in this rare display of bipartisanship are some potential problems with using increased standards as the main policy to target vehicle carbon emissions. The first is that better gas mileage ? as a goal in itself ? isn’t the same thing as reducing people’s gasoline consumption or the amount of carbon emissions they produce.
Because better gas mileage makes driving cheaper, it also makes people tend to drive more. This dampens the effect mandatory increases in fuel economy have on emissions; some economists have estimated that increased driving offsets 20 percent or more of the initial reductions in gasoline consumption.
It also adds to other problems. There are already all sorts of “external” costs to driving that you and I impose on other people every time we drive ? namely pollution, more traffic congestion and a greater likelihood of accidents. They’re external because the decisions you and I make about whether or how much to drive end up affecting every other driver on the road, and vice versa.
Mandating better fuel efficiency also increases the number of traffic accidents; as the number of drivers on the road increases, so do their odds of bumping into each other. Not only that, but because increases in fuel economy often come at the expense of safety ? bigger, heavier cars and trucks use up more gasoline, but also fare better in collisions ? the severity of these accidents could increase.
Another common misconception about increasing fuel economy standards is that it’s a way to get automakers rather than consumers to pay for reducing carbon emissions. This is demonstrably false. Making more fuel-efficient cars costs money, and this is reflected in price of cars. According to a study by the Congressional Budget Office in 2004, raising CAFE standards to reduce gasoline consumption by 10 percent will add about $900 to the sticker price of vehicles. Of course, getting better mileage means drivers can spend less on gas, which brings the true cost down, but even after taking this into account, the same study estimated, the average driver would still pay $150 more per vehicle.
So far, all the science suggests global climate change is a serious problem, and there’s no doubt that we need to address transportation emissions. Despite some of their drawbacks ? such as safety concerns, or the fact that better gas mileage actually gives people incentives to drive more ? global warming is such a serious problem that raising fuel efficiency standards is probably preferable to doing nothing. But what’s really too bad about this situation is that there are other, better policy ideas out there.
Consider a gas tax. Not only do higher gas taxes provide people with incentives to buy more fuel-efficient vehicles, but they also actually encourage people to drive less, which ? for a policy meant to address gasoline consumption and fuel emissions ? seems like a good idea.
Another benefit of a higher gas tax is that it produces immediate results: If the price of gasoline went up by a dollar tomorrow, we?d see people change their behavior. On the other hand, if CAFE standards went up tomorrow, they?d apply only to vehicles built from then on and would have absolutely no impact on all the cars on the road today. That brand-new Chevy Behemoth XL I bought last week? I?ll be able to drive that baby for years.
No one is suggesting that advocates of increased CAFE standards don?t have good intentions. People are in favor of mandated fuel economy standards because they realize climate change is a real problem that requires urgent action. But it?s precisely because climate change is such a serious problem that we owe it to ourselves to enact the best possible policy available. And no matter how broad or bipartisan the support, increasing CAFE standards isn?t it.
Nathan Braun ([email protected]) is a junior majoring in economics.
