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Tuesday, May 19, 2009

The New Emissions Standards and the Intent of Regulations

If you every watch or listen to Judge Andrew Napolitano, he explains the original intent of regulations in a very clear cut way. The root of regulation is regular. In other words, from time to time the market gets out of whack and it is the job of regulations to put things back into whack. Regulations are supposed to be meant to curb greed, excess, and make sure that things don't get out of control. Now, we all know that in fact they almost never actually do this. That is however their intent. That's why they are called make things regular.

So, we have yet another example of regulations doing anything but making things regular with President Obama's proposal for new mileage standards.

With two of Detroit's Big Three automakers no longer able to resist, the Obama White House will announce sped-up fuel economy standards that will require all auto-makers, including Detroit's foreign competitors, to increase fleet fuel efficiency by 5 percent per year starting in 2012.

The new rules will require a fleet fuel efficiency standard of 35.5 miles per gallon by model year 2016, a big jump from the 2009 model year requirement of 25 mpg. A senior administration official said the changes (when compared to current pollution and vehicle use totals) will have the effect of removing 900 million metric tons of carbon dioxide from the air, taking 177 million cars off the road, and shutting down 194 coal-fired power plants.

Let's just think about all of this. Car makers aren't making cars nearly as fuel efficient as the president wants. It isn't that they aren't fuel efficient enough, but that they aren't fuel efficient enough for the president. As such, he will impose that they become more fuel efficient by the will of the government.

This is of course the exact opposite of the intent of regulation. The market has set fuel efficiency at something near 20 MPG. That's about what the sum total of all the consumers want. That's not what the president wants. So, the president will override the entire market and force fuel efficiency on every, whether they want or are ready for it.

As such, instead of these regulations fixing an excess to make the market regular, then instead purposely make the market irregular to just about everyone but the president and those he supports on the issue of climate change.

1 comment:

Anonymous said...

If its MPG you're looking for, you're going to need either smaller aluminum block engines, or relax the Tier II Bin 5 standards so more people can buy diesels.

That being said, is it possible that the only reason people like driving SUVs and trucks is because that's all Detroit is good at building? You could probably pick up some savings just by switching from a truck or suv to a big car.