Monday, December 17, 2007

CAFE Carnage

One great example of regulations with horrible unintended consequences is CAFE standards. Congress and the President recently agreed to increase them.

The stated goal of Corporate Average Fuel Economy standards, to improve gas mileage, is laudable. But Congress cannot magically change the laws of Physics. They could pass a law requiring that all cars run on magic pixie dust, but that doesn't mean that it would happen.

So in the real world, what will be the effects of this law? Small vehicles have lower gas mileages than large vehicles. To meet the standards, automakers will have to sell relatively more small vehicles than large ones. To do this, they will have to raise the prices of large vehicles until many people cannot afford them.

This is what happened when these standards were first passed. This is why there are no large cars on the roads like there were in the 1950's and '60's, except for luxury cars. SUVs have become popular because they are considered trucks, and so are exempt from the standards.

The problem with small cars is that they are less safe than large cars. In fact, some studies suggest that more than a thousand people are killed in car crashes each year because of them. More people will die because of this agreement.

Government kills again.

1 comment:

Adam said...

Those Japanese companies figured out a way to "change the laws of physics" and seem to be burying the US car companies.

The US car companies did this to themselves. They thought that gas would remain at 1.25/gallon forever and refused to adapt.

A lot of people can't afford to pay $75 to fill up their SUVs anymore and would rather save the money with a more efficient car.

Gas is never going to go down below $2/gallon again. So they just have to deal with it and change.

And as for the whole... more people die in smaller cars and since the government is forcing smaller cars on people and therefore murdering people....

WTF kind of logic is that? You're starting to sound like a liberal.