Recent reports confirm that the administration is bowing to left wing pressure groups like the Natural Resources Defense Council (NRDC) and has directed EPA and the National Highway Traffic Safety Administration (NHTSA) to consider a new fleet-wide fuel economy mandate in the range of 47 miles-per-gallon to 62 miles-per-gallon by 2025.
To put 62 mpg in perspective, the 2011 Toyota Prius, the most fuel efficient vehicle on the road, only gets 50 mpg combined city and highway. With the NRDC advocated CAFE mandate, the average fuel economy of the entire fleet of cars from each car manufacturer will have to average one-third better than the most efficient car on the road.
Meeting the numbers close to the NRDC endorsed efficiency mandate would require a reliance on hybrids not supported by market projections. According to a study conducted by the Center for Automotive Research, such a mandate could eventually cost consumers an additional $9,000 for each new vehicle, essentially imposing a new car tax.
The news could be even worse for small business owners, farmers, and tradesmen that rely on trucks for their livelihood. Cost increases for trucks tied to these new proposals could be much higher than $9,000 per vehicle. These new costs would be alarming for car owners and potentially devastating for light-truck reliant businesses.
These fuel economy mandates create a hidden tax and would also have far-reaching consequences on the labor market. The same study predicts the move to 62-mpg could cost 1.3 million American jobs, which would be catastrophic when added to the current unemployment rate of nine percent.
The auto industry should not be forced to make cars that American drivers don’t want or can’t afford. Such a strategy rejects the free enterprise philosophy that made this country the most prosperous in the world. As gas prices continue to rise, consumers will naturally respond to market forces and place a premium on fuel efficiency. The automakers that best meet these changing demands will be successful and the ones that do not will fall behind.
Instead of assuming automobile consumers are not sophisticated enough to consider fuel economy when making decisions about what car to buy, levying a hidden and burdensome tax on cars and trucks, adding to the costs of families and small businesses, and putting millions of jobs at risk, the administration should let car makers build cars that the American people want at a price they can afford.
The only thing worse that paying more each time you fill up the tank is being forced, through government regulation, to pay more money for smaller, less capable, less powerful, less comfortable, and less safe cars. But that is exactly what the federal government is contemplating with its new hidden car tax.
Tom Pyle is the president of the Institute for Energy Research.