The corporate average fuel economy (CAFE) was established as a means of ensuring that the cars sold in the country used gas more efficiently. This would have several benefits to the consumers and to the country. First, consumers would spend less money on gas. This would increase their disposable income. Secondly, it would reduce the amount of fuel consumed. For a country that depends heavily on foreign oil, this is highly beneficial. In addition, less use of gas means that there are fewer emissions and this is good for the environment, as it would contribute greatly towards reducing pollution. The setting of fuel standards was a way of increasing innovation in the country. Because of the new laws, people would find newer and better ways of manufacturing vehicles. This would be good for the country’s economy. Therefore, when considering the increased CAFÉ standards on vehicles, one has to consider the socioeconomic, technological, and environmental factors, and not just the cost of purchasing the vehicles.
The increase in CAFÉ standards means that car manufacturers have to invest greatly in technology so that they can increase gas mileage. The companies will spend many resources to achieve this, and they will pass the cost to the consumers. Therefore, the consumers will have to use more money to purchase the cars. The government justifies the decision to increase the CAFÉ standards by noting that the consumers will end up saving more in the end, since they will not have to use a lot of money for gas. Moreover, this decision is likely to develop new technologies and increase job opportunities (Snavely, 2012). Despite the many arguments advocating for the increase in the CAFÉ standards, some people are skeptical concerning their effectiveness and intended benefits. For instance, since the first implementation of the CAFÉ standards, the government has not been able to realize its objectives of reducing the dependence on foreign oil or improving the environment. Instead, more people have continued to purchase cars, and this has increased the purchase of foreign oil (Coon, 2001).
The increase in CAFÉ standards is not too high. The marginal utility for the consumers is bound to increase. The high costs of the new vehicles will not discourage consumers once they learn how much they can save in future. Instead, they will enjoy buying the newer vehicles. Many people look for ways of increasing their income. They want to do more with what they have. On the other hand, fuel prices tend to be very volatile. Hence, it becomes hard for people to plan their money. Most of them have budget constraints, which prevent them from buying all that they would want. With the savings realized from fuel, many people would find it easier to budget their income.
It is important to note that some car manufacturers have already used technology to increase the gas mileage of their vehicles. Some have opted to manufacture electric cars, which already surpass the recommended standards. Others are creating hybrid cars that are already using less fuel. The high competition in the auto industry means that manufacturers have to look for ways of attracting more customers. They have taken advantage of the concerns that people have concerning their environment. They market their cars based on the idea that they are friendly to the environment in terms of producing few emissions and using less fuel for more mileage. Such marketing tactics are appealing to many people.
The car manufacturers have already developed the technologies they need to increase the fuel standards (Healey, 2012). Therefore, they might not even increase the price of their vehicles considerably once they have implemented the standards. Moreover, it is important to note that the auto industry is a perfectly competitive market. The country’s car manufacturers have to compete with other foreign car companies. If the foreign car companies are able to deliver the same technologies without increasing their prices, then American car companies can do the same thing. The manufacturers have to ensure that they capture a wide market and they can do this by ensuring that their cars are affordable.
In the short run,
the increase in CAFÉ standards might seem high and some might consider this as
a bad thing for the business. However, it is important to realize the benefits
that people seek to gain in the end. They will end up consuming less fuel; hence,
they will spend less and increase their savings. The cars will be beneficial to
the environment. People will be able to use their cars while at the same time
play their part in protecting the environment. Technology will also improve and
this will lead to the creation of better and more effective vehicles. With
these benefits, it is clear that the increase in the fuel standards is not too
high. Moreover, it is achievable because some car companies have already
managed to develop vehicles that are already use fuel more efficiently.
However, with an increase in population, the government has to find other ways
of ensuring that it reduces its dependence on foreign oil.
Coon, E. C. (2001). Why the government’s CAFÉ standards for fuel efficiency should be repealed, not increased. The Heritage Foundation. Retrieved from http://www.heritage.org/research/reports/2001/07/cafe-standards-should-be-repealed
Healey, R. J. (2012). Government sets strict fuel-economy goal of 54.5 by 2025. USA Today. Retrieved from http://usatoday30.usatoday.com/money/autos/story/2012-08-29/fuel-standards/57383050/1
Snavely, B. (2012). U.S. announces tough new 54.5-mpg CAFÉ standard for vehicle fuel economy. Detroit Free Press. Retrieved from http://archive.freep.com/article/20120828/BUSINESS01/120828029/CAFE-mpg-fuel-economy-standards-ray-lahood