New Fuel Economy Proposal Could Raise Costs More Than A Gas Tax

[Bruce Levinson]

According to the Bureau of National Affairs' venerable Daily Environment Reporter, A Congressional Budget Office (CBO) study has found that "If the government raises the corporate average fuel economy standards for cars and trucks to curb oil and gas consumption while improving air pollution, industry and consumer costs would be greater than if government imposed a gasoline tax."

The CBO study, The Economic Costs of Fuel Economy Standards Versus a Gasoline Tax an increase in the "gasoline tax would be an even less costly way to reduce gasoline consumption. In fact, a tax increase would have a significant advantage over more stringent CAFE standards in the initial years because, while consumers would only gradually buy new, more fuel-efficient vehicles, they would reduce their driving immediately in response to the tax. That change would not only reduce gasoline consumption, but it would also lower other social costs of driving, such as traffic congestion and the frequency of accidents. In contrast, higher CAFE standards would tend to encourage driving (by lowering the per-mile cost) and would thus increase those social costs."

Forum readers should consider the CBO study before informing NHTSA of their views on overhauling CAFE.

Read CBO Study