As the summer driving season begins, we hear complaints about the price of gas, who's making money from it, and how government can "protect" us. In this week's syndicated column, I look at how what we think we know... is not so.
President Obama says, "Gas costs too much." So he announced: "We've put in place the toughest fuel economy standards in history. Over the life of a new car, the average family will save more than $8,000 at the pump."
Sounds good. But the magic of fuel economy standards is another myth.
Susan Dudley, who runs the Regulatory Studies Center at George Washington University, points out that many car buyers care more about safety, style, power, etc. than mileage.
"The problem with the government's rule is that they ignore all those other preferences ... assuming that the only thing we value is fuel economy."
Fuel economy sounds appealing when it's presented as something created at no cost.
But car dealers say it will make cars cost $3,000 more.
Also, as James Taylor, an energy expert at the Heartland Institute, pointed out to me, fuel-economy regulations kill.
"In order to make cars more fuel-efficient, auto manufacturers make them smaller - using lighter materials, they're less crash-worthy ... We're seeing thousands of people dying on the roads that shouldn't be."
You'd think automakers would strongly oppose these regulations - but if so, why, when President Obama unveiled the regulations, did the heads of 13 car companies shake Obama's hand and smile?
"Even if it is a $60 billion cost to them," says Dudley, "if everyone has to do it, they can pass it on to consumers."
In other words, normally companies compete to do things more efficiently than rivals, in order to charge lower prices and get the lion's share of customers. But there's no need to worry about jacking up your prices when your rivals must do so, too. Regulation makes companies lazier, not more efficient.
The rest of my column, here.