Repairing The American Automobile Market

Investor’s Business Daily posted an editorial today about President Trump’s visit to Detroit to talk to auto manufacturers. The editorial reminds us of some of the policies initiated by the American government that have created problems for the auto industry. The editorial also suggests some solutions for these problems.

First, the editorial examines the history of CAFE Standards:

For those who don’t know, the federal government first imposed the “Corporate Average Fuel Economy” standard in 1975, in response to the government-caused energy crisis. The standard requires automakers to meet annual fuel economy targets based on the fleet of cars they sell in a year, or pay stiff penalties.

By the time the standards started to bite in the early 1980s — which forced a radical (and deadly) downsizing of the domestic fleet of cars — President Reagan had deregulated the oil industry, thus ending the energy crisis. And now, with fracking, the country is awash in domestic oil supplies.

But the CAFE standards persisted, and President Obama hiked them in 2009 and again in 2011. If left in place, cars will have to get an average 54.5 mpg starting in 2025 — less than eight years from now.

This was a thinly disguised effort by the Obama administration to force electric cars onto the market, since not a single conventional vehicle comes close to that mileage standard today.

This is just another example of the government interfering with the free market to the detriment of the American consumer.

The Standards were supposed to be reviewed in 2017, but the government, under President Obama, reneged on its promise:

Detroit signed on to this idiocy in 2011 in part because it reformed the existing CAFE regulations, but mainly on the promise that they’d have the chance to review and amend the standards in 2017. But just before leaving office, Obama’s EPA regulators reneged on their end of the bargain, locking the 54.5 mpg mandate in place without even a cursory review.

In a recent letter to Pruitt, the Auto Alliance — which represents Ford (F), GM (GM), Fiat Chrysler (FCAU), Toyota, Volvo and other carmakers — pushed him to allow the 2017 review to go on as promised, so they at least can make their case on why the 2025 standard should be eased. Trump announced his plans to do so on Wednesday at an event in Detroit.

The Standards did encourage auto companies to design cars that got better gas mileage. However, now it is time to let consumers make their choices as to what cars and what efficiency they want. The CAFE Standards have raised the price of cars for everyone and not really accomplished much. It is time to encourage auto makers to make cars that get reasonable gas mileage, but not hold them to unreasonable standards. The CAFE Standards need to go.

Lied To Again

The Daily Signal is reporting that thanks to more government regulations (courtesy of the Environmental Protection Agency) a new car will cost you at least $3.800 more (even after fuel economy is considered).

The article reports:

When Congress and the Obama administration passed and implemented extremely strict fuel economy regulations, the Environmental Protection Agency (EPA) claimed that it would save consumers a few thousand dollars on gas and only add $948 to the price of a new car.

Three teams of independent economists and engineers went up against the EPA’s analysts—finding much larger costs and smaller benefits. The most modest of the independent estimates works out to $3,800 per vehicle, even after the fuel savings are taken into account.

The chart below is included in the article:

CarPricesBig government and government regulations impact all of us.

The article concludes:

In a recently released Heritage Foundation research paper, we’ve compared the recent price trends to the scholarly predictions, and found that if U.S. vehicle prices had followed one of the comparable trends, cars would be between $3,975 and $7,140 cheaper today than they are. This massive expense buys very little change in global warming: less than two hundredths of a degree according to the Obama administration’s own estimate.

Congress should scrap Corporate Average Fuel Economy (CAFE) standards entirely—they cost consumers dearly while having a negligible impact on carbon emissions. Failing that, a new administration can freeze the standards at 2016 levels to prevent the Corporate Average Fuel Economy tax from doubling by 2025, as the Obama administration has planned.

It is time to get back to the concept of laws made by Congress outlined in our Constitution, so that we can hold our lawmakers accountable. The EPA and similar organizations have become the fourth branch of government, and they need to be put out of business.

The Cost Of ‘Green’ For The Consumer

Yesterday CNS News reported that the Center for Automotive Research has released a study stating that the Obama Administration’s new fuel economy standards will result in a retail price increase for the average car of $11,000.

The article reports:

Zoe Lipman, the National Wildlife Federation’s Senior Manager for Transportation and Global Warming Solutions argued on a conference call held Thursday that the estimated fuel savings due to these standards will outweigh the “modest” motor vehicle price increases for consumers.

I pointed out in a story Tuesday that there are some valid questions as to whether or not these new fuel standards are being legally implemented. CAFE standards have been set by Congress–not by the executive branch. There are also some valid questions as to whether or not global warming is man-made. I support the idea of fuel efficient cars, but I also support the idea of America developing her natural resources and technology to make cleaner running cars.

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Freedom Is Part Of America

Yesterday The Hill reported on a statement made by President Obama at a town hall forum in Cannon Falls, Minnesota.

The article reports that the President stated:

“You can’t just make money on SUVs and trucks.  There is a place for SUVs and trucks, but as gas prices keep on going up, you have got to understand the market. People are going to try to save money.”

Not only is this an amazing statement in view of the freedom Americans have to drive what they want to drive, it is an amazing statement to be made by someone who is traveling the country in three totally fuel inefficient buses.

The article reports:

The White House unveiled first-ever fuel efficiency rules for heavy-duty trucks last week. The standards come after the administration ratcheted up fuel economy standards for cars and light-duty trucks.

The administration negotiated the standards in a series of high-stakes closed-door meetings with industry. In the end, the White House won the endorsement of major automakers and truck companies.

Fuel economy standards are not up to the White House–the are established by Congress. On August 11, Congressman Darrell Issa wrote a letter to Attorney Kathryn Ruemmier, Council to the President,  stating:

It has come to my attention that the new Corporate Average Fuel Economy (CAFE) and EPA vehicle greenhouse gas (GHG) standards announced by President Obama and select automobile manufacturers on July 29, 2011, were negotiated in secret, outside the scope of the law, and could generate significant negative impacts for consumers. Specifically, I am concerned about the lack of transparency in the process leading up to the agreement, the expected increase in cost per vehicle, and the negative impact these standards could have on the safety of automobiles. Moreover, I remain concerned that the government’s ownership interest in General Motors and Chrysler at the time these negotiations were conducted creates a troublesome conflict-of-interest.

This letter may be an example of why the liberal press is running attack pieces on Darrell Issa. (see Rightwinggranny)  Anyway, this needs to be looked into. This is another power grab by the Obama Administration and needs to be turned back. CAFE standards were first enacted by Congress in 1975 in response to the Arab oil embargo of 1973. The auto manufacturers have been able to circumvent the CAFE standards by declaring Sports Utility Vehicles (SUV’s) to be trucks. SUV’s have been selling well, regardless of their low gas mileage, because consumers like the feeling of safety with an SUV and because SUV’s can carry more passengers.

The obvious answer here is to develop America’s fuel resources while allowing the private sector to explore alternative energy. If there is a practical fuel alternative out there, private industry will find it (if they are allowed to make a profit on it). Profit motive works–it provides incentive for progress. The answer to the transportation energy problem (as in many other problems) lies in less government involvement–not more.

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