UL- "Fuel costs: More than meets the study"

The Union Leader editorializes about a new study from Carbon Solutions New England, a partnership of UNH and environmental groups that favor federally mandated carbon caps. The paper doesn't buy the study's results showing massive economic savings coming from proposed increases in fuel effeciency.

They acknowledge that the new standards will have a net negative economic effect in 2011 -- a cost of $180 million. But that figure is not multiplied (as dollars saved are) to account for spending and investments not made because of the higher costs. They assume that no one will keep an older car rather than by a new one that costs an extra $2,100 thanks to the higher fuel standards. And they fail to account for increased deaths and injuries that will occur when more people buy smaller, lighter cars.

Maybe New England will benefit economically from the new CAFE standards, but this study doesn't prove it.

Here's the full report. The study's conclusions are based largely on assumptions about the future price of gasoline. The study assumes that fuel prices rise slowly and steadily after inflation. Recent experience shows that such projections are little more than wild guesses.

All regulations have benefits. Even the rent-seeking and corrupt regulations have benefits. But their costs are usually much higher. We favor free-market solutions because the trade-offs tend to be lower, and the benefits more widespread. By choosing to quantify only the benefits of the CAFE regulations, and assuming away some of the highest costs, this study missed a chance to give the public some good information about the consequences of a sweeping change in federal policy.