Do Regulations Requiring Light Trucks To Be More Fuel Efficient Make Economic Sense? An Evaluation of NHTSA's Proposed Standards
AbstractThe National Highway Transportation Safety Administration (NHTSA) recently proposed increasing the fuel economy of new light trucks by 1.5 miles per gallon for vehicles produced in model year 2007. NHTSA's analysis of its proposal implausibly concludes that the benefits to consumers are more than twice the costs to manufacturers, ignoring effects on the environment or dependence on foreign oil. NHTSA's proposal has several serious flaws. It wrongly presumes that manufacturers cannot produce items that consumers are willing to buy, even though they could make money by doing so. Its analysis uses overly optimistic measures of net benefits. In addition, NHTSA neglects the adverse effects from the increased driving induced by the proposal. By lowering the cost of driving, NHTSA's proposal increases vehicle miles traveled, thereby boosting traffic accidents and congestion. The increase in the costs of accidents and congestion fully offsets and probably outweighs the social benefits resulting from greater fuel economy. If NHTSA is interested in a cost-effective way of reducing gasoline use, it should consider giving consumers better information about fuel economy of new vehicles, or suggest a modest gasoline tax. A penny per gallon levy would conserve more fuel in 2007 than NHTSA's proposal, while lowering, rather than increasing, traffic congestion and accidents.
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Bibliographic InfoPaper provided by Regulation2point0 in its series Working paper with number 223.
Date of creation: Mar 2003
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