Why The EPA’s Claim That Rolling Back Fuel Efficiency Standards Is Really For The Benefit Of Consumers Is Ridiculous
Even without looking at the EPA’s specific assertions (which we’ll do in a second) there’s one big overriding reason why what they’re saying is empirically false: American consumers will almost always be able to get a better deal on a car than on a gallon of gas. That’s because almost none of us have huge gasoline storage tanks in our backyards, so even if you had the money to stock up on gas when the price was low, you couldn’t. Even if you just wanted to buy enough gas in the winter to cover you for summer, when prices always go up, you can’t. So you don’t have much of a choice but to pay whatever the market will bear.
When you go to buy a car, there’s always a choice. It’s a big purchase, and often requires some level of enticement from the person selling the car. And that enticement often means getting a break on the price. And if you don’t like the deal — unless you’re really desperate — you can always walk off the lot without buying.
So let’s do a quick blow-by-blow of the EPA’s self-titled and mis-named “Fact Sheet” (since it pretty much only contains projections, which aren’t facts). We’ve linked to it here (we know it’s small but if you click on it you’ll get a bigger version).
First the EPA says by freezing fuel efficiency standards where they are now for the next 8 years, people on average will save a little over $2,000 each time they buy a new car: $1,850 in technology costs, $490 in financing, insurance, etc. So basically all they’re saying here is because you’re buying a cheaper car, you’re going to pay less for it.
Even if U.S. auto manufacturers do save money because the government won’t require them to develop new technologies (the EPA puts that amount at nearly $253-billion), we’re skeptical costs will go down that much. Because we think U.S. car companies are going to have to spend that R&D money anyway if they want to compete overseas. Most other countries in the world are ramping up fuel efficiency standards. And it’s likely, in order to be competitive in overseas markets (even with lower tariffs!), the U.S. car makers will have to spread the cost across all their product lines, including the less fuel efficient models they sell in the U.S. So American consumers could very well end up paying for something they’re not getting. In addition, keeping American-made cars competitive with foreign brands that will have better efficiency implies a continued commitment by the federal government in protecting the domestic auto industry for at least the next decade. So how much is that going to cost drivers (who are all also taxpayers)?
And what if gas prices start going up? And people start buying imports even though they’re more expensive? Just like Americans first started buying Japanese cars — despite big tariffs — because they were more reliable.
Then the EPA says it’ll save lives: 1,000 lives a year. How do they get to that? Mostly by arguing that if people have to spend more money for more technologically advanced fuel efficient cars, they’re likely to keep their older, more unsafe cars on the road longer.
We’re not sure that plays out either. Especially if you factor in Trump’s trade policies when considering it (which the EPA doesn’t). Because if Trump truly cares about Americans’ safety, and that’s why he wants to put everybody into newer cars, then why is he pursuing policies that could jack up both the price of imports, and also make domestically produced cars more expensive because parts and materials prices sourced overseas would go up too? Isn’t there a danger these trade policies will also delay people buying a safer new car? And if those higher tariffs should price imports out of the U.S. market, why wouldn’t American manufacturers then raise their prices as a benefit of less competition, even without the technological improvements to fuel efficiency that will no longer be required?
Another equally huge part of the Trump Administration’s new policy is reversing a policy that allows California to set its own fuel efficiency standards. And this goes a lot further than his typical M.O. of undoing everything President Obama did. In fact, it was then-Governor Ronald Reagan who set up the California Air Resources Board, which eventually gained waivers from the federal government to impose stricter tailpipe standards. And California’s been allowed to do that for decades; they’ve been so good at it, many other states have followed. For Trump to get his way, this would have to change. But the EPA says no worries: keeping cars at only 37 mpg instead of nearly 50 and reducing the number of hybrids on the road required from 56% to just 3% will only cause an increase in carbon dioxide concentration by 8/100ths of 1% by the turn of the next century.
To which we have only one retort: Remember smog?