June 13 2012
New CAFE Standards: Another Way Government Makes Us Poorer, and Less Safe
Carrie L. Lukas
I need a new car. I have four kids now, and though our current family car can seat that many, it isn’t particularly comfortable and means one kid is way in the back, which doesn’t seem like the safest situation.
The problem is, of course, new cars are expensive. We won’t get a “new” car, certainly, but will look for a used car that will be new to us.
Even though by going to the used car market I'll avoid the full cost of buying a new car, how much I will have to spend will still be affected by the price of new cars.
That’s because the pool of used cars that are available depends on people trading in their old cars when they upgrade to a new one. In my case, I have to hope that another family with a lot of kids, but with a larger car budget than mine, will go buy the latest minivan model so that they will then be willing to sell me their old one.
When the price of a new car goes up, fewer families will feel like they can afford that upgrade, or they will want to charge me more for their old car.
I thought of this process recently, not just because I’m considering entering the car market, but I recently saw a report about how more stringent government regulations (what’s known as the “CAFE standard”) for fuel efficiency will raise the costs of new cars by nearly $3,000 on average. That will price millions of would-be car buyers out of the new car market, and also impact all of us in the market for a used car.
This is bad news for car dealers who will sell fewer cars. It’s bad news for the car manufacturers and their suppliers all of whom will have less business and fewer jobs as a result. It’s bad news for families on a budget who need new cars, especially since newer cars also tend to be safer cars.
The idea behind the new CAFE standards is that the more expensive vehicles will pay for themselves over the years because they use less gas and they also cause less environmental damage.
The first claim may be a stretch. Perhaps a family may break even 5 to 10 years down the road because of slightly lower gas costs. Yet that hardly helps families struggling to make ends meet right now.
And on the environmental issue, yes, certainly it is a nice thing to reduce the environmental impact of driving, to burn less fuel, etc. But is the tradeoff worth it?
That’s something the American people will have to decide.
Yet most importantly, they should keep in mind that regulations all come with a price. In the case of CAFE standards the price of slightly reduced carbon emissions comes in more expensive cars and families trapped in older, less safe cars. Doesn't sound like much a deal to me.