CAFE standards seem dumb

Congress has enacted a law which required auto manufacturers to have their fleet of models have a certain average MPG (miles per gallon). This is CAFE - Corporate Average Fuel Economy. This basically forces car companies to produce cars with higher MPG. The idea is that people will use less gasoline, but, as usual when the government dorks around with the market, there are a number of side effects.

First, freedom is taken away, as it always is, because the government knows that is best for us. The freedom to build whatever car the company wants has been removed. This reduces the choices available to the consumer. If the goal is to restrict the mileage people drive, then a higher tax on gasoline is a more logical choice. What's worse? A giant hummer that is driven 3000 miles per year or a Prius that is driven 30,000 miles per year? As far as fuel usage, the Prius is far worse than the Hummer. The government wants to take away the choice of buying a Hummer.

Actually, the law doesn't take away the choice, but it imposes a penalty of $5 per tenth of a mile under the target per vehicle. For example, let's say you want to start a car company that will only produce one model - a sports car that gets 15 mpg. With Obama's new CAFE standards of 35 mpg, you'd have to pay a $1000 ($5 * 200 tenths of a MPG) penalty for each vehicle. European manufacturers routinely pay penalties of up to $20 million per year for the cars they sell. US manufacturers could do the same, but they don't for political reasons.

So, how do you make a car with a high MPG? For easiest and most often used way is to make the car smaller and lighter. Unfortunately, smaller and lighter cars are much more dangerous if you get into an accident.

But the point is that the government shouldn't be meddling in such details. The right method to achieve what they supposedly desire is simply a higher gas tax. They don't choose this option because a tax isn't preceived as well as simply reducing choice.