The Obama administration is moving forward with new regulations that would require car manufacturers to have “fleet wide” gas mileage of 54.4 miles per gallon by 2025 (the “0.4” is a nice touch — if you’re going to be arbitrary, best to be specifically arbitrary and give the impression you know what you’re doing). According to the National Highway and Transportation Safety Administration’s website, from 1983 to 2009, fines for not meeting CAFE standards totaled nearly $800 million across the industry. Functionally, the new requirements are a stealth tax on drivers (i.e., most Americans) as car manufacturers inevitably pass these costs on to consumers.
The EPA frequently underestimates the human and economic costs of its mandates. Despite conspiracy theories that car manufacturers for decades have been sitting on supercars that get 150 mpg, in real life the only way to get that kind of gas mileage is to strip down sturdier models and make smaller, lighter, and deadlier cars. The Insurance Institute for Highway Safety noted in a June 2011 status report that SUV drivers were least likely to die in a crash. They also noted a linear decline of over 50 percent in the death rate as vehicle weights increased from 2,500 lbs. to 4,500 lbs. In other words, the bigger the vehicles, the fewer people get killed.
In a free market, consumers would make the choice whether they want to spend money on larger and safer cars with less gas mileage, or more money on smaller and less safe cars with better gas mileage. In fact, people already made this choice when they avoided the Chevy Volt despite huge incentives from the government to purchase one. However, in the Obama economy, the EPA is overruling the people and making the choice for us. Sorry to all you soccer moms and corporate commuters; no more carpooling.
Aside from robbing consumers of choice, the mandate creates huge distortions in the market and promotes massive inefficiency. According to fueleconomy.gov, the Chevy Volt gets an “equivalent” of 94 mpg. This number is based on several questionable assumptions, but for the sake of the argument, let’s stipulate it’s correct. To achieve the required 54.4 “fleet wide” standard, a car manufacturer like Chevy would be required to produce nearly as many $40,000 Volts as $23,000 Silverados, $17,000 Cruzes, $24,000 Equinoxes, etc., combined. Companies will be following a production regime similar to the communist USSR’s government-mandated agricultural production schedules, which resulted in massive food shortages, in order to meet EPA requirements. Moreover, the requirements will force companies to raise prices on their more popular models in order to make up for the money spent on producing unwanted Volts.
In addition to these costly mandates on car companies, the EPA has spread its anti-Midas touch to fuel companies by implementing fines for not producing gasoline that incorporates cellulosic ethanol. What do cellulosic ethanol and pixie dust have in common? They exist only in people’s imaginations.
The new cellulosic ethanol mandates were part of a 2007 Democrat expansion of the 2005 Renewable Fuel Standard put in place by Republicans (yes, this is a bipartisan folly). At the time the mandate was created, cellulosic ethanol didn’t exist. Also eagerly awaited: Star Trek-style transporters, though according to Star Trek canon, these won’t be available until the early 22nd century, which means we can expect an EPA mandate for these around 2075.