With the announcement of final rules for corporate average fuel efficiency of 54.5 mpg by 2025, the NHTSA and EPA have done two things.
The agencies have given carmakers both a major technological challenge--double the effective gas mileage of your vehicles in 12 years--and something they have long wanted: regulatory certainty.
If the definition of a good compromise is that no one is entirely happy with it, then perhaps the new, stiffer CAFE requirements are good indeed.
But many economists, industry executives, and policy wonks feel that stiffer gas-mileage rules are not the best way to reduce gasoline consumption.
The problem is that they throw the entire burden onto carmakers, rather than getting consumers to change their behavior to demand less of the commodity.
If gasoline prices in the U.S. were in line with those in almost every other industrialized country--closer to $8 a gallon than $4--consumers would be incentivized to cut their consumption, both by buying different cars and by driving less.
You can argue that we've now spent 60 years designing a built suburban environment that requires a car to survive.
Already, Federal gas-tax revenue isn't nearly adequate to cover the road repairs it's supposed to fund to make that suburban Utopia possible.
Advocating raising any tax for any reason, in fact, appears to be roughly equivalent to proposing government-sponsored matricide.
Nonetheless, yesterday an economic analysis in The New York Times made the case that higher gas taxes would be a better, and more cost-effective, way to cut gasoline consumption than are the new CAFE rules.
It's a well-reasoned case, with lots of data.
Read that article here, and then give us your reactions. Are the current CAFE regulations really the best way to cut our gasoline use?
Would a predictable, gradual rise in the gas tax be better (especially if the revenue raised were rebated directly to the drivers who paid it)?
Or are the new 54.5-mpg rules the only thing we can practically enact in the current political climate?