Monday, August 29, 2005

On Point on Fuel Economy

This last Thursday, NPR's OnPoint had a show titled Economics of Fuel Economy. If you listen to the show, it might help explain why I get sometimes get frustrated with environmental advocates. David Friedman on the show tries to propagate a myth that American can have their cake and eat it too (drive bigger, faster vehicles which are also more fuel efficient). When confronted that higher fuel taxes may be a smart way to encourage people to purchase more fuel efficient vehicles, Friedman notes that it is a more painful approach than increasing CAFE standards. By regulating fuel economy, entire burden of saving gas is placed on the shoulder of the vehicle manufacturers. I am all for increasing CAFE standards, but it will make much more sense to raise gasoline tax along with increases in CAFE standards. The fact of the matter is that American consumers are not yet willing to accept this reality, and I am sorry to say that well-intentioned environmental advocates such as Friedman are not helping by arguing for a very stringent increase in CAFE without providing a stick for the consumers.

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