Thursday, August 25, 2005

CAFE Overflow Seating

by Tom Bozzo

Addendum to the previous post: See also more concise discussions at MaxSpeak, Andrew Samwick's Vox Baby, and JustOneMinute (links via Max). A couple of MaxSpeak commenters raise points in favor of CAFE versus fuel taxation, including claimed effectiveness of CAFE and the incidence on poor drivers. Samwick also notes that the gas tax incidence can be set to one's liking by rebating the gas tax proceeds progressively through the income tax (i.e., via a refundable credit).

There's also a stylized fact — that at least passes the test of driving through upscale suburban neighborhoods and downscale apartment complexes — that the well-to-do buy new SUVs and the less-well-to-do buy used cars. An upshot is that while newer vehicles' engines may have lower specific fuel consumption than those in older vehicles, a fleet of older economy cars is likely more efficient than the relatively heavy and overpowered new production. (This is at a cost of performance and some measure of crash protection.)

I'm also not sure that the effectiveness of CAFE is being subjected to an appropriate counterfactual test. Remember that when gas prices spiked back in my tween years, little Hondas and Toyotas that were previously curiosities in many parts of the country suddenly became phenomenally popular. Who says people don't respond to incentives?

I'm not fundamentally opposed to regulating fuel economy, but I'll admit that I hit an economic libertarian streak after a fashion: if drivers were actually facing the total marginal social cost of fuel consumption at the pump, which I'd guess we aren't to the tune of at least a couple bucks a gallon, then I wouldn't care so much what people drove or how much. And there's just no way that CAFE makes drivers internalize the various external costs of driving.
We need to get off the Junk (oil)...

Question: Lee Sensenbrenner of The Capital Times,...related to the wackjob in DC?
From what I can tell from some quick Googling, Lee Sensenbrenner of TCT is not a close relation of either former Madison mayor Joe Sensenbrenner or nutjob F. Jim.
many thanks :)

Any thoughts on the smokefree fight in Madison?
Also, The production process of making a new car takes a lot of oil (energy) too...
The smoking ban is a subject for another post. There was a recent survey that supposedly wasn't funded by an interested party purporting to show the public closely divided on the ban. That's a surprising result, but I haven't seen the poll's internals to offer comment.
Hey tetricus,

You know what also uses a lot of energy? Your computer. Even worse, your internet usage as measured in units of insight per time spent online seems to be well below average :). Kind of like the Hummer of the computer world....

Your pal,
Bryan: Be nice, and judge not lest ye be judged. BTW, I think Tetricus's last comment was meant as a follow-up to his comment in the previous thread.
Yeah my computer at work has some funny refresh issues.

You've been quiet lately Bryan, did you get tired of supporting your president by standing under his falling approval ratings?
Heh, that's somewhat right. But when are you guys going to nominate someone worth voting for?

I already agree with you on a lot of issues, my only requirements are 1) the candidate is a big capitalist and 2) they will stay out of my life while achieving whatever it is that they deem necessary to waste time and money on.

As always, your good friend,
I will, of course, readily grant the Bozzo/Kyle argument that the full cost of gasoline is not reflected in the U.S. price-at-the-pump.

But I continue to note that, given the geographic and political situation, CAFE remains the way to go.

This could change, but it would require leadership from the top. As the old Vulcan proverb notes, "Only Nixon could go to China." (No one else was willing to sell out Tibet?)

If Bush and Cheney publicly got behind a major gas tax increase-- with the funds targetted to funding NCLB and the-abomination-that-is-DHS--it could happen.

Meanwhile, the Europeans, Asians, and others who charge the full social cost will continue to outinnovate and outperform, even as the Subaru in the U.S. has gone from Damaskas's send-up to the "SUV" of choice.
Ken: As I meant to imply at the end of the initial CAFE post (and said maybe a little more directly in the MaxSpeak comment), I do think that given the reality that a stiff gas tax is a policy for economist fantasyland, CAFE is better than nothing.

If the administration came out in favor of an increase in the federal gas tax in any amount and for any purpose, it would be interesting to see whether the first exploding head would be that of Grover Norquist, Stephen Moore, or a randomly selected member of the left-leaning econoblogiverse.
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