Fuel standards lawsuit is about politics, not consumers
LIBERAL politicians in five states are suing because the Trump administration isn’t doing enough to increase the price consumers pay for certain vehicles. That’s not how they phrase their argument, of course, but it’s their tacit message.
Officials in New York, California, Vermont, Maryland and Pennsylvania argue that the federal government must impose higher penalties for automakers that don’t meet federal fuel economy standards.
Last year, under the Obama administration, the U.S. Department of Transportation more than doubled civil penalties for fuel economy violations. That appeared excessive because Congress had ordered agencies to adjust their fines only for inflation. Given that inflation has been relatively low for some time, doubling a fine seems out of line with the directive given to the department.
Under the agency’s new fine system, automakers would have paid $14 for every tenth of a mile per gallon of fuel a vehicle consumes over its minimum fuel economy, multiplied by the number of vehicles sold. Automakers said the change would cost $1 billion annually.
Two points are worth nothing here. First, the cars that violate federal fuel standards wouldn’t be selling if consumers didn’t want them. Many people have valid reasons for trading off lower mileage in exchange for some other benefit, such as increased passenger space or safety. Second, the extra $1 billion is not really paid by automakers. It’s paid by consumers who buy the cars.
The Trump administration has since delayed the rule, saying the agency failed to consider the cost to automakers.
The five aforementioned states sued to force the fines to take effect regardless. New York Attorney General Eric Schneiderman declared, “Fuel efficiency standards are common sense, protecting Americans’ pocketbooks and reducing the emissions that undermine public health and drive climate change.”
The courts will determine if Schneiderman’s legal argument is sound or not, but his logic regarding fuel economy standards is certainly faulty.
As we noted, the fines he’s seeking would ultimately raise the price of some vehicles, which is hardly “protecting Americans’ pocketbooks.” But even if the fines lead automakers to stop selling such vehicles and instead sell higher-mileage cars, Schneiderman’s logic is still questionable.
In a 2009 paper, Yizao Liu, a professor whose research emphases include energy economics, summed up the matter simply. “When vehicles become more fuel-efficient, the cost of driving is lower, thereby providing an incentive to drive more and longer, which may actually increase total fuel consumption,” she wrote.
That statement isn’t controversial among those who have studied the issue seriously, a group that admittedly won’t include many politicians. Put simply, consumer savings from higher-mileage vehicles are at least partly offset by increased driving that also negates associated reductions in emissions.
It’s also conceded that higher fuel economy standards require automakers to use technologies that increase the price to car buyers, another hit for consumers.
So Schneiderman and his fellow litigants aren’t filing a lawsuit to benefit consumers, nor are they suing to benefit the environment. They’re suing in order to preen for the media and make an empty political statement.