Friday, January 8, 2016

"Market Forces" Aren't Boosting SUVs - Congress is Subsidizing Them

driving in the land of giants

With gas prices plummeting below $2 a gallon, SUV and pickup sales are skyrocketing while sales of fuel-efficient and electric cars stall. The conventional wisdom among auto writers is that greenie efforts to cut gas consumption are failing in the face of the Free Market:
It’s the classic battle between market forces and regulators. [...]

Even if you’re a die-hard green car person—or at the very least, someone who sees the long-term value in weaning cars off fossil fuels, as I certainly can—you can see what a tough situation this is for automakers. Standards are forcing them to make cars that people may not necessarily buy, and that they may not necessarily profit from. But what’s the alternative, the government backs off on making cars more efficient? That’s not likely to happen anytime soon.
It is completely false to call this a battle between “market forces and regulators.” The free market hasn’t kept the gas tax artificially low - Congress has done that.

Congress hasn't raised the federal gas tax in more than 20 years. Since it's a set rate of 18.4 cents a gallon that's not indexted to inflation, the tax has effectively fallen 34 percent since 1993. It’s now totally insufficient even to cover the costs of building & maintaining highways, never mind the social costs of burning gas, from local air pollution to global warming.

That low gas tax acts as a subsidy for SUVs and a disincentive for buying electric cars, one it has nothing to do with the free market and everything to do with oil companies’ friends in Congress.

On top of that, the Obama administration has adopted a drill baby drill stance, with active US oil rigs more than doubling under his watch. Again - regulators, not "market forces," putting a thumb on the scale for flooding the market with cheap gas.
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