The Flaw In Federal Vehicle Mileage Regulations

There's been quite a bit of media buzz regarding the new, accelerated vehicle mileage and emissions requirements announced unilaterally by the administration this week.

Even last night, on Bill O'Reilly's Fox News program, he argued for the new regulations, saying they would help decrease the country's dependence on foreign oil.

This is a good example of what a head fake this autocratic directive really is. Holman Jenkins, Jr., would agree, based upon this morning's topical Wall Street Journal editorial.

What O'Reilly failed to grasp, despite a clear explanation from one of his guests, Monica Crowley, is that mandating fuel efficiency revokes consumers' rights to choose what they want among transportation tradeoffs. Jenkins has written of this in prior editorials.

One critical piece of evidence that fuel efficiency supporters either dismiss, or fail to understand, is that, despite over 30 years of CAFE standards, US gasoline usage, on a per/driver basis, has not fallen.

Greater fuel economy simply results in people using more fuel! Wow, imagine that!

Further, as Jenkins has tirelessly noted, Americans don't want the kind of cars that meet the most extreme fuel efficiency standards. That's one reason why Chrysler and GM have gone bankrupt. They've been forced to produce and sell unprofitable small, fuel-efficient cars, to meet federal CAFE standards.

Linking those standards to emissions standards won't do much, either. Does anyone think driving a car so small, light and unsafe that you wear, more than drive it, is really going to offset China's and India's overwhelming expansion of coal- and oil-fired power generation plants in the next decade?

Americans innately understand this, and are unlikely to go meekly into the future in Euro-style mini-cars. Especially when their federal government officials are seen whizzing around Washington in large, inefficient vehicles.

How much simpler it would be for the government to simply set a variable tax on gasoline, equivalent to making the pump price, say, $4/gallon, then use the revenues to fund alternative transportation fuels with a steadily declining scale of subsidies, and an increasing required efficiency over time. Perhaps even fund a 'prize' for the first viable, scalable alternative technology to meet a set of practical requirements.

With a known, higher price of gasoline, consumers will then choose according to their preferences. Those wishing to save money might buy smaller, more fuel-efficient cars. Or they may keep to larger vehicles, but drive less.

At the same time, the remaining, non-government-owned auto makers would obviously compete to offer more fuel-efficient vehicles according to their reading of consumer preferences. Market-driven innovation is always going to be more effective than government-mandated regulations, if only because fewer of our brightest minds work in government bureaucracies than work in the private sector.

Jenkins' conclusion in his column today is correct. The administration can regulate all it wants, but US consumer behavior is going to find its way around regulations and eventually have what it demands. Either economically or, if necessary, through political/governmental change.