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Candor on How CAFE Overrides Consumers’ Preferences



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Writing in yesterday’s Wall Street Journal, columnist Holman Jenkins relayed a priceless quote on CAFE from new Ford CEO and former Boeing executive Alan Mulally:

“For all you read about it, it was difficult to understand the degree to which the CAFE regulations distort the market . . . Ford had to put out two small cars and discount their prices to get people to take them, so that we could also make and sell cars customers really wanted.”

It’s not often you see such refreshing candor on how fuel-economy regulations actually work.

Environmentalists and their allies want us to believe that consumers really want high-mileage cars, but greedy automakers refuse to produce them. Hence we need regulators to force automakers to give motorists what they really want. Right. Automakers, in desperate, cut-throat competition for motorists’ dollars are nevertheless refusing to make cars that motorists would be more likely to buy.

This is what passes for reasoning in public debate over automobile fuel economy.

If you don’t think environmentalists really think this way (or at least claim to), then check out this report from the Natural Resources Defense Council, which asserts automakers are “withholding fuel-efficient technologies” that consumers want.

Then there’s Congressman Sherwood Boehlert stating that “the goal of fuel economy standards is to enable Americans to drive the cars they want—but that the automakers aren’t producing.”

Note to be outdone, the California Air Resources Board (CARB) went so far as to claim the net benefits to motorists of its fuel economy, er, greenhouse-gas emissions standards, will total $1,700 per new automobile. In other words, CARB is implicitly claiming that, right now, every time a new car is sold, greedy automakers and budget-conscious motorists are leaving $1,700 sitting on the table, and they need California’s environmental regulators to force them to claim this money. If you believe that, I’ve got a few million tons of carbon credits I’d like to sell you.

That’s not to say that motorists wouldn’t prefer greater fuel economy. It’s just that they’re willing to make only modest concessions on other priorities—like leg room, seating capacity, or cargo space—in order to get it. When automakers can deliver greater fuel economy at a competitive price and without forcing motorists to give up on other desirable amenities, then you’ll start to see lots of SUVs and pickups on the road with Prius-like fuel economy.

Environmentalists often respond that the popularity of the Prius proves that consumers want greater fuel economy and are willing to pay for it. But the Prius remains a niche player in a market dominated by much larger vehicles. Furthermore, if the Prius “sells itself” then it wouldn’t be necessary to offer tax credits, carpool-lane access for single-occupant hybrids, and other subsidies in order to get more people to buy them.

What’s really going on here is that environmentalists and regulators want to override Americans’ preferences and force them to buy things they wouldn’t choose to buy on their own. Admitting this would reduce support for their costly energy-rationing prescriptions. So instead, they shamelessly pose as consumer advocates, while all the while working against consumers’ interests.

If reducing greenhouse gas emissions would put more money in our pockets, we’d already be doing it. The fact that we need to be forced to do it by government regulators and environmental activists is a sign that there are real costs to be borne and real tradeoffs to be made. So long as activists can hide these costs and tradeoffs, they can avoid the more difficult task of having to convince people that their real energy rationing agenda would somehow make us better off.



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