Free Markets, Free People


CAFE standards, market distortion and the usual results

In light of the article below on the failure of communism (which, necessarily, relies on central planning and ignores markets), this is an interesting topic:

The CAFE rule is the fleet-wide average fuel economy rating manufacturers are required by Washington to achieve. The new rule — issued in response to a 2010 Obama directive, not to specific legislation passed by Congress — would require automakers to achieve a 40.9 mpg CAFE average by 2021 and 54.5 mpg by 2025.

Got that folks … your representatives had nothing to say about or do with this.  It was dictated from on high.

In case you’re wondering whatever happened to the National Highway Traffic Safety Administration, it has been supplanted in the CAFE process by the EPA. The proposed regulation was designed, according to the EPA, "to preserve consumer choice — that is, the proposed standards should not affect consumers’ opportunity to purchase the size of vehicle with the performance, utility and safety features that meets their needs." But the reality is that consumer choice will be the first victim.

And that essentially means that with the switch from the NHTSA to EPA, the auto industry most likely had no place at the table.  An agency with an agenda but little experience with the industry came up with the new rules.

Also note the usual pandering to choice.  They talk the talk, but reality shows they’re not at all sincere about it:

Getting from the current 35 mpg CAFE standard to 54.5 can be achieved by such expedients as making air conditioning systems work more efficiently. We have a bridge in Brooklyn to sell to anybody who thinks that’s even remotely realistic. There is one primary method of increasing fuel economy — weight reduction. That in turn means automakers will have to use much more exotic materials, including especially the petroleum-processing byproduct known as "plastic." But using more plastic will make it much more difficult to satisfy current federal safety standards. The bottom-line will be much more expensive vehicles and dramatically fewer kinds of vehicles.

They’ll have to be much smaller and much lighter and they’ll cost an average of $3,200 dollars more (and that’s the lowball estimate).  Yup, no intrusion into the market there.  They’ve given “choice” lip service – get over it.


The U.S. Energy Information Administration projects that there will be no vehicles costing $15,000 or less, the segment of the market that college students and low-income consumers depend upon. Altogether, an estimated seven million buyers will be forced out of the market for new cars.

Note, it’s the new car market at risk. 


Total costs, as calculated by the EPA, will exceed $157 billion, making this by far the most expensive CAFE rule ever. For comparison, the previous rule in 2010 cost $51 billion, according to the EPA. But the EPA doesn’t include this fact in its calculation: Annual U.S. car sales are 14-16 million units, yet over time, this rule will remove the equivalent of half a year’s worth of buyers.

But remember, to the sycophants, this is the crew that “saved” the auto industry.  Now you can understand that it was only for political reasons that was attempted.  Those jobs and industries, after this election year, are no longer critical.  In fact, they actually hamper the goal to “revolutionize” the energy sector.  That’s much more important than the middle class the left is currently and conveniently so fond of.

Put this one under “the law of intended consequences”.


Twitter: @McQandO