Tuesday, May 25, 2010

Math I don't understand

I applaud the EPA and NHTSA for increasing CAFE fuel economy standards (http://money.cnn.com/2010/04/01/autos/cafe_standards_final/index.htm). This may be surprising, given how much I prefer free markets, generally, but fuel economy is absolutely an externality-laden characteristic of a car, and under any carbon-reduction legislation, it'd have to go up a lot anyway. I'm not sure the life of the car in years (for the discount rate) and assumed mileage used in the calculation of $900 additional cost and $3000 savings, but it is entirely possible that this has been inefficient anyway.
My question is this: how is it possible to have both a combined MPG target and separate individual MPG targets on cars and trucks without mandating the maximum percentage of vehicles on the road that can be trucks? That seems silly... wouldn't it be better to place MPG standards on overall cars as a whole, and let allocations and MPG of each group fall where they may? You may even end up improving over your target this way as companies that sell more trucks than cars are forced to innovate cheaper ways of cutting emissions and fuel usage, and other companies copy them.
I also think it's silly that we don't have a gas tax as part of this - we'd be much better off instituting a gas tax and allocating that revenue to cutting the corporate tax, if it's large enough to make a dent.
I am also a little annoyed that these standards didn't extend to heavy vehicles, which are like 20% of emissions despite being a miniscule percentage of vehicles on the road, but that could be coming.

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