Obama's Plan: Who's Saving Whom From What?

May 20, 2009

GreenCarReports.com, a partner site to TheCarConnection, carried this story yesterday regarding the new federal economy standards. Editor-in-Chief John Voelcker cleaved through much of the rhetoric to highlight some important points overlooked by many media outlets.

- That California retains its rights to set its own standards after 2016.
- That a new energy policy is coming, and that this is code speak for a huge new gas tax.

The first point clearly contradicts one of the main goals of the new regulation, that is to have one national standard. At least there will only be one set of rules for the next six years ... that gives automakers some breathing room for one round of new products. That's a good thing.

The second point highlights that along with paying more for more fuel-efficient vehicles, we'll also likely be paying more for gasoline, about $3.50 per gallon according to a report in Automotive News. We don't know whether this will be a market-directed price or whether the federal government will impose a new floating gas tax that will artificially keep the price of fuel at that level. Many in government and the auto industry see that approximate price point as the tipping point that inflicts enough economic pain on drivers to make them want the more fuel efficient vehicles that the new emissions regulations require.

So the reality is that we'll be paying more to drive, even if you don't own a new car.

More Added Costs

When you do go to buy a new car, the cost will jump substantially over current prices. It is interesting to note that President Obama said that new vehicles will cost more (the figure  $1,300 was called out in the President's speech yesterday), but that a figure from a 2006 EPA study cited by a noted industry analyst (who wasn't trying to sell a government program) came in at $2,176. So which branch of the government do you believe?

Frankly, your author's gut tells him to look at the relative cost differential between today's conventionally powered internal combustion engine powered vehicles and their hybrid or diesel counterparts. Full hybrids generally run $4,000 more, and diesel variants cost anywhere from $900 on up. Mild hybrids are less expensive (reference the Honda Insight as a good example). The bottom line is that driving is going to get much more expensive, but we can't pin down a single figure as the increases will fall into a range.

Again, Why Are We Doing This?

At times like this, it is often good to pause and go back to the basics. Ponder the core reason for the new rules. The question is why are we doing this? Will these steps really save the earth or move the U.S. away from Mid-East oil?

I hate to be a naysayer, but China and India will gladly burn all the fossil fuels we don't, and they'll pollute much more in the process. Sorry, it's going to be a net loss for the earth realizing this truth. It may be counter intuitive, but it's better for the earth to burn fuel here than in third-world countries that have little regard for ecology. So, tell me again, where's the net gain?

Second, once enacted, we will consume less fuel in our vehicles, but the U.S. transportation sector consumes only a quarter of the fossil fuels used in the country, and this new legislation will have a mere 2.5-3 percent impact on CO2 (based on  Congressional Research Service findings), which works out to be a scant 0.6-percent impact on CO2 levels globally. The logic behind these new regulations is vacuous.

In a national move that will have no impact on the planet, U.S citizens are going to be forced to drive more expensive vehicles that provide no greater utility. The proverbial emperor is buck naked.

Oh well, plenty of people didn't like GWB's politics...

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