Congress Increases Fuel Efficiency

By: Brian Sikma

Yes, you read the title correctly. Congress just increased the fuel efficiency of American automobiles. That news comes straight from a very reliable source: Rep. Baron Hill’s occasional e-mail newsletter titled “Baron’s Briefings.” Prepared and sent at taxpayer expense, it amounts to nothing more than a press release that starts with the words “Dear Friend”.

According the letter, the recently passed H.R. 6 will “increase American energy independence, strengthen national security, lower energy costs, grow our economy and create new jobs, and reduce global warming.” Now, apparently all of these good results come about because of one main thing that Rep. Hill (D) is very proud of: the new CAFE fuel standards.

Established in 1975 under a Democratic Congress and a big-government Republican president, CAFE standards mandate that a particular manufacturers fleet of vehicles meet a specific standard for fuel efficiency worked out from a weighted formula. H.R. 6 mandates a 40% increase in CAFE fuel efficiency standards by 2020.

Increased fuel efficiency sounds like a good thing, and in many cases it is. But as is typical with any effort to centrally plan an intricate portion of an economy, merely mandating that fuel efficiency will be raised does not mean that the consumers will benefit. Certainly there has been a trend towards increasingly favorable views of more fuel efficient vehicles since gas prices started their rise a few years ago, but that trend has been market driven. That’s a key concept: Market driven. What it means is that the individual choices of hundreds of thousands of consumers are collectively having an impact on the way businesses work. It means that the people, and not the bureaucrats, are deciding how much they are willing to pay for more fuel efficient vehicles.

(Read more below the fold)

With a mandate to increase fuel efficiency, automotive manufacturers could be forced to engineer their vehicles to meet federal standards and not market desires. Why is this a bad thing for consumers? Well, it means that although you may be willing to pay $2,000 extra for a more fuel efficient car, if the technology for making that vehicle meet federal fuel efficiency standards costs $4,000 and increases the price of the car by a corresponding amount, you lose. Either you pay the extra money now or go without a new car.

Don’t misunderstand me, I’m not against fuel efficiency because we certainly need to reduce our dependency on foreign oil, but it’s one thing for the consumers to make their demands heard through the marketplace and another thing for the federal government to come in and arbitrarily determine what automakers have to do.

Until Baron Hill learns that people, and not the government, can best make their own economic choices, southern Indiana will continue to have a Congressman with misguided good intentions.