Author Erick, Published on newspaper September 7, 2008
The standard for CAFE (Corporate Average Fuel Economy) on cars and light trucks continue to rise each year.
After 2004, cars had to exceed 27.5 miles per gallon and light trucks, 20.7 mpg. Trucks under 8500 pounds must average 22.5 mpg in 2008, 23.1 in 2009, and 23.5 in 2010.
The theory behind this government hijack is that CAFE forces the auto industry to produce fuel-efficient vehicles. Defendants of CAFE claim these regulations are responsible for more people choosing smaller, more efficient automobiles.
However, basic economics suggest current fuel prices force buying habits into this direction, not CAFE standards.
If the government regulates the auto industry more and more, then new costs in research, development, and production will be passed onto the consumer.
Many automakers fail to meet CAFE standards and pay corporate fines for doing so. These fines and taxes imposed by the government are transferred to buyers in the market as well.
Our gas prices are an equivalent of this too: politicians interfering with the economy cause prices to soar.
Will an additional $5,000, $10,000, or $15,000 tagged to a new car's sale value be worth the fuel efficiency standards? CAFE affects the poor and middle class the most. Can consumers keep dishing out dough when increased regulation causes higher priced vehicles?