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June 06, 2004

CAFE, ANWR and SUVs

Outside the Beltway looks at raising the CAFE standards as a political trade off for opening up the ANWR, an idea first proposed by Kevin Drum.

If government is going to get deeper into the fuel conservation business, I’d far prefer an approach that incentivizes conservation more directly, such as tax write-offs for the purchase of high fuel economy cars and/or hybrid vehicles; grants for R&D on more fuel efficient engines, and so forth.

There seems to be a little cognitive dissonance here. High gas prices are already having an effect, raising the average mpg of the US fleet. SUV sales fell 15% last month. Nothing special, just a market economy working just like it says on the box. You want to reduce consumption? Raise the price. Don't mess around with tax breaks and all that, just stick 50 cents on the Federal gasoline tax.
James' other idea,a move to a four day working week, well, don't forget that at one stroke you have also reduced production, and thus living standards, by 1/5 th overnight.

June 6, 2004 in Economics | Permalink

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Comments

Your idea of gasoline tax is no good because it works with the market and therefore is suspect. In order to obtain the required result it is necessary that the governments prefered solution is incentivised, even if it doesn't work. Solving the problem comes second.

Posted by: Jonathan | Jun 7, 2004 7:05:25 AM