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Automakers claim new fuel economy ratings will put hundreds of thousands out of work  (Source: Business Week)
Supporters of increased efficiency standards claim the numbers are inflated

The battle between the auto industry and the federal government over changes to fuel economy regulations is exploding. Lawmakers in Washington want to impose much more efficient standards on future vehicles that could see a fleet wide fuel economy average of 62 mpg in effect by 2025.

Some in the automotive industry argue that the costs to reach the lofty 62 mpg fleet wide average will be much higher than the cost of burning more fuel in less efficient vehicles for consumers. Automakers have previously claimed that the costs would have a dire impact on the industry.

new study by the Center for Automotive Research has been published and the study claims that the rise in efficiency standards by 2025 to 62 mpg could add up to $9,790 to the cost of a new vehicle and will reduce sales by 5.5 million units. The report also claims that the resultant price increase would force a reduction of 260,000 automotive industry jobs due to reduced demand for vehicles by consumers.

On the other side of the battle, those pushing for the increased efficiency standards claim that the tech needed to meet the efficiency standards would only add $770 to $3,500 to the price of a new vehicle.

David Friedman, deputy director of the Union of Concerned Scientists' Clean Vehicles program and supporter of the new efficiency mandate, said, "The Obama administration should ignore this industry-advocate propaganda piece and focus on setting the strongest vehicle efficiency and global warming pollution standards based on credible scientific analysis."

President and CEO of the Union, Jay Baron, says that the main difference in cost between the industry and government studies depends on how much the price of the technology will come down over the next 15 years.



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By RussianSensation on 6/15/2011 2:52:29 PM , Rating: 2
In a free market without gov't interference, the price of gasoline would continue to rise, making it more costly for consumers. Some manufacturers would use this as an opportunity to create more efficient vehicles. As those vehicles start to sell well, other competitors will follow.

Let's consider an alternative scenario. Let's say most manufacturers won't produce more efficient vehicles due to low demand from consumers. Eventually, gasoline prices will continue to rise since oil is a scarce commodity. So at some point alternative technologies will become less expensive than internal combustion engines. Then, we will have replaced the internal combustion engine just like it replaced the steam engine.

In both cases, the market will correct itself, even if it takes longer. What you are proposing is to speed up this process through gov't interference. Unfortunately, this isn't the time to do it - unemployment is near all-time high, economy is weak, there are fears of inflation, etc. The economy is too fragile to force consumers and business to subsidize these increases in efficiency at this time, unless the cost of the investment is offset by the benefits, which doesn't sound like it will be.


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