EPA's unrealistic rule won’t reduce carbon, but will raise car prices dramatically

DALLAS, Texas—The Obama Administration is mandating that each automaker’s line-up of cars, light trucks and SUVs have an average fuel economy of 54.5 miles per gallon (MPG) by 2025. Like so many of the administration’s reforms, this one is imposed by executive fiat rather than approved by Congress—and the incoming Republican Congress should try to roll it back.

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The stated goal for pushing the new standards—known as the Corporate Average Fuel Economy, or CAFÉ, standards—is to reduce U.S. dependence on oil, especially foreign oil, and improve the environment. But the mandate won’t achieve those goals. Suppose that car manufacturers are able to reach the 54.5 MPG goal—the prior CAFÉ standards set by Congress required 35 MPG by 2020—a goal that is by no means certain. Doing so makes it cheaper to drive a car. It’s basic economics: When the cost of driving a car declines, people will likely drive more rather than take public transportation, walk or telecommute. So much for the goal of significantly reducing oil consumption. And if people are driving more, they’re putting more carbon in the air—undermining the administration’s second goal. Now, improving fuel efficiency is a great goal; we all like going further on a gallon of gas. But the Obama Administration is imposing a vision, whereas most people choose fuel-efficient cars so that it costs them less to do all the driving they want. So while the new CAFÉ standards are unlikely to help the environment, they will certainly hurt consumers in upfront costs. The Environmental Protection Agency (EPA) concedes that the new standards will force consumers to pay about $1,800 more for a car. The agency justifies the increased cost by boasting that consumers will save between $3,400 and $5,000 in gasoline over the life of the car; but those alleged savings will disappear if consumers drive more. And speaking of saving money on gasoline, the recent dramatic fall in gasoline prices creates another problem for the administration’s goals: cheaper gas means people will drive even more. The real question is: If more fuel-efficient cars are such a great financial deal, then why aren’t consumers demanding them? Why does the government have to mandate that manufacturers make them? It’s an Obama Administration pattern: The government forces consumers to buy what it thinks people should have, even if it costs them more, not what consumers choose to buy with their own dollars. Can you say Obamacare? And again like healthcare reform, expect a lot of gaming the system. The CAFÉ mileage standards allow some flexibility across a manufacturer’s fleet. And so the automakers add a few models that are very expensive to build and very few people want to buy, like electric cars. But placating the government with some very fuel-efficient cars allows the manufacturers to build more of what people really want, and what’s profitable: trucks and SUVs. Finally, when Obama announced the new CAFÉ standards he claimed, “These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil.” Nonsense! The important step the country has taken to reduce our dependence on foreign oil is the adoption of new, innovative drilling techniques. Crude oil production is up 16 percent over 2013, and oil imports dropped 6.2 percent in August, the lowest August-import level in 18 years, according to the government’s Energy Information Administration. And the irony is that Obama generally opposes more U.S. oil production, even as that production has helped him reduce our dependence on foreign oil. Congress has supported CAFÉ standards in the past, but Obama bypassed it—yet again—to get what he wanted. Congress should roll back those mandates and stop forcing consumers to buy what the administration wants.