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Obama's New CAFE Standards Will Cost Us All More Money

by: warner todd huston | published: 08 08, 2011

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The Obama administration has been touting new Corporate Average Fuel Economy (CAFE) standards to be imposed on America's automobile manufacturers saying that it will save all Americans money at the pumps. Unfortunately, there are all sorts of hidden costs of which the administration isn’t noting, costs that will drive up the price of driving in multiple ways for all of us.

The new standards are supposed to raise the miles per gallon requirements from the 2016 mandate of 35.5 mpg to 56 mpg by the year 2025. The administration claims that this would be a big savings and would serve to help get Americans off a reliance on foreign oil.

Curiously, as Obama touts his new CAFE standards as a way to get us off foreign oil, there is no talk at all of increasing domestic oil production which would help do the same thing. But I digress.

Still, even if raising the mpg standards is a good idea, at this time automotive technology can't reach that goal. Because of that, the car companies will have to spend billions in research and development to reach the new requirements. This will cause an added cost that isn’t being considered.

This new wave of R&D and the subsequent finished products based on that research is estimated to add up to $6,000 to the cost of every new car by 2025. Sadly, this would price low-end car buyers right out of the new car market.

Additionally, the rising prices of new cars would necessarily be followed by higher prices for used cars. This would also price those low-end buyers out of the used market.

But, let's say that the new mpg requirements will, indeed, save Americans money because they will be buying fewer gallons of gasoline per year. Even were that true these savings will have other "unintended" consequences.

The first thing that one has to realize is, if Americans are buying fewer gallons of gas, the intake of gasoline taxes would necessarily correspondingly fall with the fewer gallons bought. Naturally, the states would not want to follow that by spending less on the roads and transportation projects that those taxes are earmarked to fund.

Naturally, the first idea that the federal government and the states would resort to might be a hike in gas taxes. This would hit every driver on every gallon of gas somewhat mitigating the fewer gallons bought. And with the extra costs of the new cars this would wipe out any savings driver’s might find with their fewer gallons bought.

The idea of raising gas taxes has been a hard sell for quite a while, of course. AOL's AutoBlog addressed this subject last year with an interview with Michigan Democrat John Dingell.

Gas taxes are the single most unpopular tax an elected official can foist upon a voter according to elected officials. A couple of years ago, I had lunch with Rep. John Dingell (D-MI) who has held the Southeast Michigan seat since Eisenhower was President. Seriously. He agreed that it was a smart and sound policy, but one that "kills you with the voters."

Even if lawmakers balk at raising gas taxes, there are plenty of other ways that they could dip their hands deeper into your pockets.

One idea that has been floated by various lefty groups is to build more toll roads around urban centers. This, they clam, will help reduce "road congestion." In other words, they want you to stay out of your cars, they want as much as possible to limit your freedom of movement. But toll roads have other politically attractive components. New toll roads means building new tollbooths. It also means new state jobs, new union jobs, and more money and government control over your life. It also means enlarging the constituency for Democrats. Very attractive ideas, indeed.

Another idea that the Obama administration has floated is an annual vehicle mileage tax. A yearly mileage tax hits suburban and rural citizens hard because they drive so much more to get to work than city dwellers do. The low to middle-income folks outside of the big cities would find costs to get to work soar under this idea.

These are just a few ideas being floated by lawmakers to put a further burden on America’s drivers, new CAFÉ standards or no.

With our luck, with the Obama Administration's new CAFE standards we'll be hit by all these things in varying degrees costing us all more money in the long run. Like with most every scheme of “savings” the administration floats, they’re gonna cost ya.

 
 
 

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