EPA’s Regs for Rigs – Next Phase of the Fuel Economy Fetish

Today at MasterResource.Org, the free-market energy blog, I offer comentary on the Obama Administration’s proposed rule to establish first-ever greenhouse gas (GHG) emission and fuel economy standards for semi-trucks and other “heavy duty” (HD) motor vehicles.

Although the rule’s ostensible purpose is to reduce carbon dioxide (CO2) emissions and oil imports, about 93% of the claimed net benefits have nothing to do with either climate change or energy security. Supposedly, truckers will make out like bandits by adopting fuel-saving technologies they would already have purchased if they were as smart as the bureaucrats at EPA and the National Highway Traffic Safety Administration (NHTSA).

Sound familiar? Just as cap-and-trade proponents tried to sell their stealth energy tax as a “green jobs” program when they couldn’t sell it as climate protection, so EPA and NHTSA now try to sell their save-the-planet-beyond-petroleum regulations as a fuel-savings bonanza for owners of big rigs, dump trucks, buses, pickups, and vans.

EPA and  NHTSA offer five possible explanations of why truckers “under-invest” in fuel-saving technology even though fuel is a major operating expense, the industry is competitive, and profit margins are often thin. As discussed in my MR column, the agencies provide no solid evidence of “market failure.” Indeed, two of their “potential hypotheses” suggest that truckers are just behaving like prudent buyers, waiting to see whether the technologies perform as advertized and don’t adversely affect truck reliability and maintenance costs.

So what’s really fueling the rule? Well, partly it’s the fuel-economy fetish that Congress has enacted into law, most recently via the misnamed Energy Independence and Security Act of 2007, which requires NHTSA to establish fuel-economy standards for HD vehicles.

Not to be underestimated, though, is the agencies’ organizational interest in expanding their bureaucratic empires. The joint rule will give EPA and NHTSA new control powers over vehicle manufacturers and the freight goods industry. Although the rule targets vehicles manufactured during model years 2014-2018, the agencies look forward to administering, and tightening, GHG/fuel-economy standards for HD vehicles from now through 2050.

What policy changes should free-marketeers advocate given the big shakeup that has just occurred in the composition and leadership of Congress?

In addition to overturning EPA’s Endangerment Rule, which would put the kibosh on all EPA global warming regulations, the 111th Congress should make NHTSA’s HD fuel-economy standards voluntary. Let the agencies make their case that every dollar truckers invest in fuel economy will generate returns of 140%-420%. But then let the trial-and-error process of the marketplace decide whether what EPA and NHTSA are peddling is smart advice or hype.