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CAFE + Cash for Clunkers: The One-Two Punch to Your Wallet Page 2

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Duck Punch

President Obama's new fuel-economy rules are a Solomonic solution to a vast legal and moral and ethical question of how to wean ourselves from imported energy. It's not a permanent fix, though. While the Alliance of Auto Manufacturers suggests that the new rules will end the debate between states over who sets air-quality standards, there's no legislation to back that up. Any future governor of California could seek a 50-mpg standard, or 100-mpg standard--and then we'll be back where we are today.

It all comes down to CAFE. Badly written from the start in 1975, CAFE is at best, a fig leaf for Congress to hide behind while it declines to make us all pay a universal carbon tax that tapers our desire for energy from crude oil and points out the cost of national defense, dollars to donuts. Obama's update of the policy solves a couple of political problems, but it doesn't change the basics of a poorly written set of rules that now are poised to nail car shoppers in both directions, new and used.

[New York Times, Detroit News, Detroit Free Press, Green Car Reports; photo, headexplodie]

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Comments (4)
  1. "A more realistic alternative"

    Given the need to fix both the US car manufacturers and deal with global warming we have to say is CAFE the right answer? I say not. I agree with the analysis above, certain used cars will become a premium and there will be a lot of importing of second hand cars from Canada and Mexico that cannot be sold in the US because of the stupid rules.
    My alternatives?
    As others have said raise the petrol tax, this will have three enormous benefits,1) more so than any regulation it was high fuel prices that drove Americans out of their trucks, the only way to keep this up is to keep the price of fuel high. 2) it will reduce the US addiction to oil and 3) the US is facing a massive budget deficit, this cannot go on. It has to be pared back and the only way to do that is to increase tax's live with it unless you want the whole US to end up like California, technically bankrupt.
    the second thing I would do is rather than set a mandatory MPG for all cars is to set up a Cap and trade system. This would say ok we want 40 MPG average, but not every car will get it. So for cars that make 40mpg there is no enviro credit or debit. Then for each 1 MPG below that target a negative credit of $200. For each MPG over 40 the owner of the car gets a credit of $100. You then create a market for swapping credits. Thus a person with say a 25 MPG Corvette would need to find a prius or Volt owner to purchase 15MPG of credits ($1500). The benefit of this system is that it allows people to drive the cars they want, but at a price. Car makers can still make corvettes and Camaro's but the owners will have to stump extra money each year for the privilege. It wil also be a bonuse to early adopters of VOLT etc in that they can make back money on the extra cost of their vehicle by getting annual MPG credits. This system would ensure that car makers can make cars people want, but still drive most consumers to smaller and more economical cars, while giving a benefit to those who bear the extra costs of having super effecient cars.
    It may seem complex but actually it is not hard to set up electronic trading systems that would automatically match credits against debits.
    Furthermore it should be on all cars every year. This will get rid of the perverse effect of CAFE in that it encourages people to keep old clunkers that spew out gases and get terrible MPG.
    Manufacturers would still have a driving force to lower average MPG becuase the less debits people have to trade off the beter and the more people will want to have cars that create credits for them.
    To me this is a betetr way because it will be the action of consumers that will dictate the actions of car manufacturers, not polticians and bureaucrats.
    It is better to let the market handle things than short minded politicians who know nothing about the industry they are making rules for.
    I think if the US adopted both of these approaches you would see a reduction in imported oil, increased effeciency in cars, money to pay off the US debt's while maintaining the ability of US car makers to make US style cars (and getting old rust buckets off the street and thus promote people to buy newer cars).

  2. "correction"

    sorry should say $100 negative credit for each 1 MPG under the target.

  3. "Well..."

    @Reese: I agree with much of what you've said--especially the gas tax. However, I'm not so sure about this: "It is better to let the market handle things than short minded politicians who know nothing about the industry they are making rules for."
    The main problem being that (a) the free market system and deregulation of various industries (finance included) is essentially what led us to our current predicament, and (b) the system of debits and credits would have to be overseen by the aforementioned "short minded politicians". It's interesting, but I dunno; it sounds like it could devolve really quickly into a total Kafka-esque bureaucratic nightmare.
    But gas tax? Totally.

  4. "Count me in"

    I have a 1998 Windstar with 150,000 miles on it that qualifies for the credit. Too bad it has a lot of life left in it. Guess I'll run the heck out it in the next few months before trading in, rather than use my more fuel efficient car, because hey I still get $4500 for it and I hate to see those good tires and maintenance go to waste. And then I'll see what I can sell for parts, like hood, doors, fenders, radio etc before I drop it off because the government does not care.

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