CAFE standards

Consumer Preferences Versus Energy Efficiency Regulations

by Brian McGraw on July 17, 2012

in Blog

Post image for Consumer Preferences Versus Energy Efficiency Regulations

The Mercatus Center released a paper (PDF) this month co-authored by Ted Gayer (an economist at the Brooking Institution) and W. Kip Viscusi (an economics professor at Vanderbilt), titled “Overriding Consumer Preferences with Energy Regulations” which questions the economic justification for various government schemes implemented to force energy efficiency improvements in consumer household products, automobiles, lightbulbs, etc. The abstract is below:

This paper examines the economic justification for recent U.S. energy regulations proposed or enacted by the U.S. Department of Energy, the U.S. Department of Transportation, and the U.S. Environmental Protection Agency. The case studies include mileage requirements for motor vehicles and energy-efficiency standards for clothes dryers, room air conditioners, and light bulbs. The main findings are that the standards have a negligible effect on greenhouse gases and the preponderance of the estimated benefits stems from private benefits to consumers, based on the regulators’ presumption of consumer irrationality.

The paper walks through the basic economic understanding of consumer rationality, and explains why behavioral critiques of consumer rationality fail to undermine the general conclusion that consumers are overwhelmingly rational and tend to act in their own best interest, and that “in most contexts consumers are better equipped than analysts or policymakers to make market decisions that affect themselves.” [click to continue…]

Politicians Continue to Confuse on Ethanol

by Brian McGraw on July 21, 2011

in Blog

Post image for Politicians Continue to Confuse on Ethanol

This time its former Rep. Jim Nussle (R-Iowa) writing in The Hill’s Congressional Blog:

But what people often forget is that the ethanol industry has been suggesting reform for more than a year. We recognized that the industry has changed, and that the policy must change as well.

The blender’s tax credit has been instrumental in developing the ethanol industry, but the most important challenge our nation faces today in securing our energy independence is not the continuation of this incentive, but access to a fair and open marketplace.

We have suggested a pathway that will not only create that market access but continue to provide the necessary incentives for developing the next generation of biofuels – cellulosic ethanol – to help our nation meet our stated goals of 36 billion gallons of renewable fuel by 2022.

Consumer choice at the pump is the most critical component of this plan to help us achieve this goal. Today there are about nine million Flex Fuel Vehicles in this country and the owners of these vehicles have a choice of fuel blends when they pull up to a Flex Fuel pump: E30, E50 or more. But unfortunately, there are fewer than 300 Flex Fuel pumps in the entire nation. Even as domestic automakers commit to making half their fleet Flex Fuel, the lack of pumps to serve this fleet means that most Flex Fuel Vehicles have never run on anything but gasoline.

[click to continue…]

Next Generation Fuel Economy Sticker – To Boldly Label What No Agency Has Labeled Before

by Marlo Lewis on May 25, 2011

in Blog, Features

Post image for Next Generation Fuel Economy Sticker – To Boldly Label What No Agency Has Labeled Before

Today, the U.S. EPA and the National Highway Traffic Safety Administration (NHTSA) proudly unveil their new, improved, long-awaited, supah-dupah, “next generation” fuel economy sticker. All model year 2013 vehicles will have to display the redesigned stickers.

“The new labels, which are the most dramatic overhaul to fuel economy labels since the program began more than 30 years ago, will provide more comprehensive fuel efficiency information, including estimated annual fuel costs, savings, as well as information on each vehicle’s environmental impact,” EPA’s press releaseenthuses. Only in the makework world of bureaucracy central would this “overhaul” of a label be hailed as “dramatic.”

As my colleague William Yeatman joked when I told him the news: “Anyone can have a sticker, but a next generation sticker — the future is here, my friend!”

In their original August 2010 regulatory proposal, the agencies wanted the new label to include letter grades based on the car’s fuel economy and carbon dioxide (CO2) emissions. Electric vehicles and plug-in hybrids would get an A+; the biggest, heaviest, gas guzzling SUVs would get a D.

However, in December 2010, 53 House Members sent a bipartisan letter to EPA Administrator Lisa Jackson and DOT Secretary Ray LaHood protesting that letter grades would “unfairly promote certain vehicles over others.” Indeed, that was the point. Stigmatize SUVs and other politically-incorrect vehicles by giving them bad grades.

Worse, grading cars implicitly means grading the people who buy them. People who buy cars with super-low or zero emissions are caring and ahead of the curve. Those who buy gas guzzlers are yokels who voted for Bush and wear baseball caps in restaurants. The South Park spoof on the “Toyonda Pius,” Smug Alert, all-too-accurately depicts the greener-than-thou pretension of EPA and NHTSA’s proposed grading system.

Rebuked by those wielding the power of the purse, the agencies relented and the “next generation” sticker does not include letter grades. To view the current sticker, click here. To see what the scolds at EPA and NHTSA originally planned to replace it with, click here.

Clearly, these folks are into behavior modification. How potent will the redesigned label be in modifying your behavior? [click to continue…]