ICYMI: Today The Wall Street Journal published an essay from IER President Thomas Pyle outlining why federal fuel economy mandates should be relaxed. Pyle’s essay is part of the WSJ‘s “Big Issues in Energy” debate series. Below is an excerpt from the piece:
Should Federal Fuel-Economy Standards Be Relaxed?
YES: They Make Cars More Costly, With Little Environmental Gain
By Thomas J. Pyle
Buying a car is one of the most important decisions a family makes, and for many it’s a struggle to balance safety, affordability and their preferences for looks, size and other features.
Unfortunately, federal fuel-efficiency mandates are making these decisions more difficult by driving up the costs of new vehicles by thousands of dollars.
Indeed, in many cases it is now impossible for people to buy the car they want or need—or, in some cases, to buy a new car at all. They simply can’t afford it.
In effect, bureaucrats in Washington have decided for them what kind of car they can drive.
It’s time to scale back the regulations and return the decision of what type of vehicle to buy where it belongs—with the consumer.
Cars that consume less fuel are a great choice for many people, but for others, especially for families with small children, larger vehicles like minivans and SUVs are a necessity, not a luxury. These vehicles give families much more transportation flexibility, which is critical when trying to balance caring for children and work responsibilities.
For others, whose livelihood depends on their vehicle, power and durability make the most sense.
How much of an effect have the fuel-efficiency mandates had on those choices?
In publishing its mandates, the administration has acknowledged that they would cause the price of an average vehicle to increase by nearly $3,000 by 2025. A study by the National Automobile Dealers Association found that an increase of that size could price nearly seven million drivers out of the new-car market.
The administration’s estimate, however, appears to be a dramatic understatement, as new research suggests the cost increases for new vehicles are much higher.
Economists Salim Furth and David Kreutzer looked at the average price of new vehicles over several years, adjusted for changes in various measures of the vehicles’ quality. They found that prior to 2008, the price of new vehicles was falling, but after the first round of the new fuel-economy mandates, those prices dramatically increased.
Today, new vehicles cost over $6,000 more than they likely would have without the Obama administration’s mandates, the study found.