Unintended Consequences: Gas mileage standards

| August 12 2012
Christopher Cook

In a previous post, we discuss the subject of unintended consequences of the minimum wage. Of course, just about everything that government does has unintended consequences, usually with a negative impact on those whom the government most purports to wish to help.

And here is example #4,391: the Obama Administration’s mandate to increase new car mileage standards from the current requirement of 35.5 mpg by 2016 to a whopping 54.5 mpg by 2025:

First, National Highway Traffic Safety Administration (NHTSA) analyses indicate that the mileage standards will add $3,000 to $4,800 to the average price of new vehicles for models from now until 2025. Moreover, this price increase does not include the $2,000 to $6,000 in total interest charges that many borrowers would have to pay over the life of a 36-60 month loan.

The consequence: 6 million to 11 million low-income drivers will be unable to afford new vehicles during this 13-year period, according to the National Auto Dealers Association (NADA). These drivers will essentially be eliminated from the new vehicle market, because they cannot afford even the least expensive new cars without a loan – and many cannot meet minimal lending standards to get that loan.

These drivers will be forced into the used car market. However, far fewer used cars are available today, because the $3-billion “cash for clunkers” program destroyed 690,000 perfectly drivable cars and trucks that otherwise would have ended up in used car lots. In addition, the poor economy is causing many families to hold onto their older cars longer than ever before.

Exacerbating the situation, the average price of used cars and trucks shot from $8,150 in December 2008 to $11,850 three years later, say the NADA and Wall Street Journal. With interest rates of 5-10% (depending on the bank, its lending standards and a borrower’s financial profile), even used cars are unaffordable for many poor families, if they can find one.

Not only will poor people get priced out of cars, but . . .

  • More people will be forced to hold onto (or buy) older, more polluting vehicles, thus negating some of the purported environmental benefits of the MPG standards
  • More people will be driving in smaller cars, increasing risk of death in auto accidents (previous mileage standards are estimated to have resulted in 3,000 to 4,000 more deaths per year)

Government, especially under the control of the statist left, hates people. What other conclusion is possible?

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