Saturday, May 25, 2013

Fuel efficiency standards and holiday travel

Here is a link to an interesting article by the Union of Concerned Scientists. Note the highlighting of opportunity costs as well as the projected impact of new fuel efficiency standards.

These CAFE standards are a type of performance standard.

These standards set the minimum fuel efficiency for a fleet of vehicles. They are not without controversy. Improving fuel efficiency means a lower marginal cost per mile driven, which may induce people to drive more (at least partially offsetting the intended effect). Further, it can be argued that the same result can be achieved with a gasoline tax, but at lower total cost to society. A gas tax is of course the classic Pigouvian solution to negative externalities.

Here is more detail on the research noted above.

Here is more on the issue from Resources for the Future.

And even more RFF reading here.

If you have not yet been exposed to RFF, I highly recommend that you explore their website.


Troy Daniel said...

In the article about Obama finalizing the fuel efficiency standard was really good and it's good to know that the dependence on foreign oil is going to be reduced by "12 billion barrels" each year. I know that is going to improve the life of the people in the United States as well as the environment across the world for plants and animals.

Troy Daniel said...
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