OK, put one in the win column: Pres. Obama fiated that passenger cars must get almost 40 MPG by 2016 … cutting dependence on foreign oil and lowering greenhouse gases.
Not so fast.
Key questions: will Americans flock to buy premium priced mini-cars that have, shall we say, safety issues?
The price premium will be taxed away — take it to the bank that there will be a taxpayer subsidy for the purchase of Obamamobiles to neutralize the economic disadvantages (and make Obama Motors Inc. look like it’s turning a profit).
My opinion, the safety issue looms large. There’ll be plenty of SUVs on the road for the next couple of years. In a collision, Smart cars aren’t going to look that smart. (Note: most policy makers think only of major metro areas, not the open roads — where hybrids have insignificant fuel advantages).
Unmentioned in the press today, is the question: will higher MPGs actually cut gas consumption. That’s not obvious to me Gas consumption is a function of MPG and miles driven. Past history says that when MPG goes up, people drive more. Why not? They can stretch their fuel budget further.
So, how to reduce gas consumption and emissions? The proven answer is a gas tax. Works in Europe. When gas prices got to $4 in the U.S., folks slowed down and drove less.
Sure, a gas tax would be a political challenge. But, isn’t Obama supposed to be the agent of bold strokes and meaningful change.
If yes, why is he simply recycling and an old idea that probably won’t make a whit of difference?
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May 20, 2009 at 8:57 am |
“If yes, why is he simply recycling and an old idea that probably won’t make a whit of difference?”
It actually makes a huge difference to the government’s role in the private sector and the incentives for the auto industry – just not positive differences.
May 20, 2009 at 9:06 am |
Ken-
We discussed this back in 2005. Price elasticity of demand for gasoline is slightly inelastic (~0.7). MPG gains will increase miles driven but net, will decrease gas consumed.
Regarding safety: I suggest reading “High and Mighty” to learn about the safety impacts of SUVs. SUVs fare better when they are impacted by other vehicles, but have 3 other effects:
1) They have a much higher propensity for rollover accidents
2) Their higher weight increases the kinetic energy in an impact, typically causing more damage to whatever they hit (e.g. cars, people)
3) SUV drivers of tend to drive more aggressively because they have the feeling of security, leading to more accidents. SUVs are involved in accidents at a higher rate than non-SUVs.
Would you rather buy your 16-year-old a Toyota Highlander, or a Subaru Impreza that has front, side, and curtain airbags, a ring-shaped reinforced body and a collapsible steering column? What would you want the 16-year-old down the street driving?
May 20, 2009 at 10:59 am |
I would buy the Toyota Highlander because:
a) Quality, dependability, and resale value.
b) It will soon be built in the US
c) Toyota contributes more to this economy than any other auto maker (i.e. pays income taxes and keeps people employed)
d) Great gas mileage, and offers a hybrid model
e) I can afford it
July 3, 2009 at 10:05 pm |
Why is the Obama administration compelling auto manufacturers to increase efficiency? Who stands to benefit from this policy? Oil prises will unquestionably rise in the years ahead. Consumer purchase decisions will take big cars off the road. Look at Europe as an example. Does Europe have efficiency standards? Another way to get automobile manufacturers to produce more efficient cars is by slapping a huge tax on the price of gasoline – like in Europe.