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Thursday, April 24, 2008

CAFE Mandates and Costs

On Earth Day, April 22, the Bush Administration announced stricter CAFE standards for cars and trucks.

The Wall Street Journal noted the following on April 23:

• “U.S. auto makers must increase the average fuel efficiency of their cars and trucks to 31.6 miles per gallon from today's 25 by 2015 under new rules issued by the Bush administration. The pace of the increase is somewhat faster than was mandated in last year's big energy bill. The rules are the first step toward meeting a congressional mandate that U.S. cars and trucks average 35 mpg by 2020.”

• “The big question for the auto industry is whether the proposal will bring any closure to the issue. Amid a continuing debate over how to curb oil consumption, gas prices and greenhouse-gas emissions, California and more than a dozen other states are pushing to adopt regulations that would essentially require fuel-economy improvements faster than legislation Congress approved last year.”

It is important to be clear about what government CAFE mandates actually mean. As history shows, they do not lead to less oil consumption. And they will make no difference if one is trying to battle global warming.

But higher CAFE mandates do accomplish three things. First, vehicles will be made less safe, as size and weight retreat due to government demands. Second, autos become more costly, as government regulation always comes with a price tag. Third, they take away freedom of choice from consumers.

In the end, government should not be dictating what types of vehicles individuals and businesses buy.

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