To bring the dark lining to your silver cloud it’s still the case that as a policy matter trying to reduce fuel consumption purely through the limits of CAFE standards has some real limits. As I’ve said several times before, it would be better to have higher gasoline taxes as a complement or a supplement for tighter fuel efficiency standards. The reasons are twofold. One is that CAFE does nothing to encourage the purchase of more fuel efficient used cars except on a very long time horizon. The other, more important one, is that fuel consumption has two determinants—the fuel economy of the vehicle, and the number of miles the vehicle drives. And, clearly, different people drive different amounts. Some people’s commutes are longer than others. Some people people car pool. Some people walk or bike or use transit. And this stuff makes a difference to overall fuel consumption. Any policy that leaves this entire suite of issues off the table is distinctly sub-optimal.
I hate to pointlessly go after Matt on this one, but that really doesn't make sense. On the one hand, I can see that there is a widely understood correlation between the price of gas and the amount of travel that exists. Increase the price of gas, lower the total number of miles driven by cars in the U.S.
But lowering the amount of CO2 that cars emit is not meant as a strategy to descrease net driving. It's meant to be a strategy to make the miles driven less environmentally damaging. What Obama is doing is not attempting to clean the environment by pushing U.S. citizens out of cars and into buses and rail, he is trying to make the cars on the road cleaner.
Conversely, a tax on gas would impinge on personal economy, as evidenced by last summer's decrease in travel. A tax on gas unfairly hurts people not living near Matthew Yglesias' home in DC. Out here in the Midwest, a gas tax hurts a lot more than on the East Coast, where mass transit methods are in place. There is no practical way that mass transit could be implemented in the Midwest by 2016.
I am not accusing Yglesias of it personally, but if a decrease in gas usage via higher mileage standards results in decreased government revenue via gas tax...then an increase in gas tax would be less for the purpose of driving citizens into buses and rail, but rather as a method to shore up government tax revenue.
If the government's motive is to decrease CO2 emissions, as is suggested here, rather than to impel America to move back to cities and engage in mass transit, then a good alternative to increasing the gas tax would be to actually decrease it. This would be coupled with an increased "gas guzzler tax" which is in place in many states for cars.
Here's what I propose: Impose a gas guzzler tax on all vehicles that do not meet the CAFE standards for that year. The gas guzzler tax is added to the property tax package the citizen is required to pay to renew their tags. This would enable the government to tax people with used cars, who continue to obstinately drive their 2004 Hummer H2 despite the new CAFE mileage standard. It would also give owners the freedom to drive whatever vehicle they wanted, however much they wanted. They'd just pay a heavy penalty if that vehicle was a gas guzzler.
It would impel people to trade in their heavily-taxed, pre-2016 standard vehicle for a new one.
However, the major problem with my proposal is that used vehicles will effectively lose all trade-in value...who wants to buy a used, heavily-taxed fossil when they could as easily buy a new vehicle...? Oh wait, that's exactly what we're going for. In that case, I also propose a gas-guzzler tax on used vehicles that do not conform to CAFE standards.
One might argue that "CAFE standards are meant to be an average over the whole vehicle line, and should not penalize an individual model of vehicle if the car manufacturer increases mileage overall," but I disagree. Obama's point here is to get gas guzzling vehicles off the roads, and get people into new, safer, more Earth-friendly vehicles. That doesn't mean that he wants to get most people into cleaner cars, and let the rich keep driving their garbage truck-sized SUV's. It means all Americans should be driving cleaner cars.
Now, before the libertarians get all T'ed off at me for suggesting higher taxes, let me mention this: if we increase mileage by 30% overall by 2016, that represents over 1.5 billion barrels of gas saved in America by 2016, and is the equivalent of removing several million vehicles from the road. That translates to a sizeable decrease in demand for gasoline. Decreased demand equals decreased price. The price of gas will lower, and Americans will save money. Couple that with the fact that at current gas prices, the higher mileage cars will save the average person $2,800 over the life of the car (10 years) and you begin to realize serious savings. And if you are in one of these new cars, you don't pay the gas guzzler tax anyway.
And when we all stop driving the gas guzzler vehicles, that tax disappears, the government no longer has the revenue, and the government must decrease in overall size. This is like a libertarians dream!
Last but not least, I would suggest we all consider that not only are high mpg cars cheaper to operate, but they are typically smaller than our current vehicle fleet, and therefore usually have a lower sales price = lower monthly payment.
In short, everyone wins. Except me, because it just puts another roadblock between me and my Hummer HX.
UPDATE: In the previous post comments, reader B-I-L suggests we let the market decide. Where is the environmental advocate in the market? If there were a market for Atlantic cod, would we fish them to near extinction? (hint: we have.) If there were a market for bluefin tuna, would we fish them to extinction? (hint: we have.)
If there were a market for gas-guzzling cars, should we just let the United States smog itself into oblivion? Or should we let the government do what "the market" is too irresponsible and short-sighted to do on its own without intervention?
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