Tired of having to drive safe, affordable vehicles? Can’t make a decision at the car lot and want the government to narrow down the decisions for you? Well then you’re in luck. The Environmental Protection Agency (EPA) has a great new regulation in store for you.
The agency is intending to use the Clean Air Act to improve the fuel efficiency to 35.5 miles per gallon fleetwide by 2016 - four years ahead of schedule when President Bush signed into law the Energy Independence and Security Act of 2007.
Sounds like a good deal. Most everyone wants his or her vehicle to get more miles to the gallon. It’s one of the things people first inquire about when buying a car. But there are many other reasons people choose certain vehicles: safety, reliability, horsepower, style, price, comfort, handling, and environmental impact. For instance, Americans use larger vehicles for practical reasons: to take their kids to practice, to tow their boat to the shore, or on small farms to haul equipment or produce. Of course, to meet these new standards, cars and trucks will need to be lighter, making them less safe. The National Academy of Sciences study pegs the cost of downsizing at 1,300 to 2,600 lives per year.
But we’re saving the planet, right? Touted as a measure to curb global warming, fuel efficiency standards have very little environmental impact. Newer vehicles with better efficiency standards may emit less carbon dioxide per mile, but increased fuel efficiency often leads to more driving and new cars “constitute a miniscule source of overall carbon dioxide emissions.” Our friends at the Institute for Energy Research note that “the rule will lead to global mean temperature being 16 thousandths of a degree Celsius lower (0.016°C) in 2100.”
But we’ll save money, right? The initial price of the vehicle may be more expensive but over time better gas mileage will negate the increase in sticker price and eventually save money. That’s what President Obama says. George Mason economist Don Boudreuax has some reservations:
We Americans are lucky. President Obama, although having zero experience as an entrepreneur or in the automotive industry, has designed fuel-efficiency standards that (he assures us) will save the average car buyer $2,800 over the life of his or her vehicle. What a deal!
No one in Detroit, in the U.K., in Japan, in Germany, in Korea, in Sweden, in Italy, in France - no one anywhere, not even persons with decades of experience producing and selling automobiles - has figured out how to devise vehicles that are so obviously attractive to American consumers — and, therefore, so rich in profit-earning potential for manufacturers — as are the ones now promised to us by the Obama administration. And we can admire not only Mr. Obama’s industrial and commercial genius, but also his magnanimity in offering to the public, free of charge, his money-saving idea. He could have earned billions of dollars in profit by putting his idea to the test in the market. But no: by simply forcing us to use his idea and charging us nothing for it, he’ll forego this profit. We Americans are lucky indeed.”
Make your voice heard. And IER has done the leg work for you. Visit their site and submit a comment today. The deadline is November 27th. Tell the Obama Administration that America needs affordable transportation to get the economy going again—not more job-killing regulations.
Green Jobs? Mandated Wind and Solar? Cap & Trade? We’ll Pass on that Showcase
Author: Nick LorisMembers of Congress like to play games and they like to spend money. What better analogy to use to describe Congress’s proposed green energy policies than the Price is Right? As Congress seeks to implement policy that would create green jobs by mandating renewable energy projects, three cautionary European tales suggest the U.S. should take a second look at cap and trade and renewable energy mandates. We’ll take you through a Price Is Right showcase style tour of three failed renewable energy initiative.
Our first stop takes us to Germany where think tank Rheinisch-Westfälisches Institut für Wirtschaftsforschung just released its study on the economic impacts of the country’s green energy initiative. Commissioned by the Institute for Energy Research (IER), the report finds with per worker subsidies for solar industry jobs are as high as $240,000. Last year, “the price mark-up attributable to the government’s support for “green” electricity was about 2.2 cents US per kWh. For perspective, a 2.2 cent per kWh increase here in the US would amount to an average 19.4% increase in consumer’s electricity bills.” Government subsidies for wind and solar are projected to be over $100 billion from 2000-2010 and, to make matters worse, as the subsidies run out, so do the jobs.
Our next stop on the trip brings us to Denmark, and if you don’t mind a brief layover in Oslo, you’ll receive a complementary Nobel Peace prize. President Obama stresses we should be more like Denmark since 20 percent of the nation’s electricity comes from wind power. But is that really the case? According to a study from the Danish Centre for Political Studies (CEPOS), also commissioned by IER, the road to increased wind power is less traveled for a reason. The study refutes the claim that Denmark generates 20 percent of its power from wind stating that its high intermittency not only leads to new challenges to balance the supply and demand of electricity, but also provides less electricity consumption than assumed. The new study says, “wind power has recently (2006) met as little as 5% of Denmark’s annual electricity consumption with an average over the last five years of 9.7%.” Furthermore, the wind energy Denmark exports to its northern neighbors, Sweden and Norway, does little to reduce carbon dioxide emissions because the energy it replaces is carbon neutral. The study goes on to say that absent of government subsidies, Denmark would be absent a wind industry.
The third and final destination on our green energy tour takes us to Spain, another country Obama says the U.S. should replicate when it comes to energy policy, saying, “they’re making real investments in renewable energy.” But real investments aren’t necessarily good investments. Another IER-commissioned study coming out of King Juan Carlos University in Madrid by Gabriel Calzada found that, for every green job created, 2.2 jobs in other sectors have been destroyed. Furthermore, Spain’s government spent $758,471 to create each green job and used $36 billion in taxpayer money to invest in wind, solar, and mini-hydro from 2000-2008.
Which brings us back home to the United States where our government wants to create green jobs by subsidizing windmill and solar projects as well as cap carbon dioxide in what they call a pollution reduction bill. But there are two fundamental problems with this: First, as shown in the Spanish study and explained by Heritage analyst David Kreutzer: “Environmentalists do not see government expenditure as having a cost. They employ the same free-lunch fallacy that underpins essentially all the analysis showing green-energy subsidies increase employment.
The first week of every principles of economics class goes over the problem with free-lunch assumptions. The labor and material used to make windmills or solar panels or to install insulation cannot simultaneously be used to make refrigerators and automobiles. When government spends more money, it necessarily diverts labor, capital and materials from the private sector. Dr. Calzada simply calculated how many jobs, on average, would have been supported with these resources had they been left to the private market.”
Secondly, with cap and trade Congress is mandating higher energy prices and killing many more jobs throughout the process. Consumers spend less. Businesses, faced with higher prices, are forced to make production cuts and reduce labor or they will move to another country where the costs of operation are cheaper without cap and trade and renewable energy mandates. Our analysis of the proposed green energy economy will destroy 1.9 million jobs in 2012 and 2.5 million by 2035 – after accounting for the green jobs created.
George Mason economist Tyler Cowen writes, “We’re dealing now with something beyond the Keynesian short run and so those extra jobs are a drain of resources from elsewhere. If you wish, sub out the word “energy” and sub in the word “agriculture” and then reevaluate the sentence from the vantage point of 1900. Would it truly create net jobs — much less good jobs — to trash tractors and industrial fertilizer? The ideal situation would be a technology where very few jobs were required to create and distribute the nation’s energy supply.”
Heritage energy expert Ben Lieberman sums it up well, saying, “Real-world experience bears this out. Governments that subsidize or mandate green jobs reap fewer overall jobs and a weaker economy.”
When it comes to green energy economies and green jobs, the price is wrong. When the price is right, the market will invest in alternative energy technologies without help or mandates from the government. But as it stands now, we’ll pass on that showcase.