The Economic Costs of Fuel Economy Standards Versus a Gasoline TaxWord格式.docx

1、A recent Congressional Budget Office （CBO） study provided a qualitative comparison of the effects of three policies that could decrease gasoline consumption: an increase in the corporate average fuel economy （CAFE） standards that govern passenger vehicles, an increase in the federal tax on gasoline,

2、 and a cap-and-trade program for the carbon dioxide emissions that result when gasoline is burned.（2） That study weighed those policies against four major criteria: whether they would minimize costs to producers and consumers; how reliably they would achieve a given reduction in gasoline use; what i

3、mplications they would have for the safety of driving; and what effects they would have on factors such as traffic congestion, requirements for highway construction, and emissions of air pollutants other than carbon dioxide. This study extends CBOs previous work by providing a quantitative compariso

4、n of the costs that producers and consumers would bear as a result of two of the policies: an increase in CAFE standards and an increase in the federal tax on gasoline. A significant feature of this study is that it compares the costs of those policy options on the basis of a consistent set of assum

5、ptions-in particular, assumptions about consumers preferences concerning fuel economy and about the costs of technologies for improving fuel economy. Higher CAFE standards would reduce gasoline consumption by raising vehicles fuel economy, while an increase in the federal gasoline tax would discoura

6、ge consumption by raising the price of gasoline. The study considers two alternative designs for the CAFE program. The first, based on the existing design, would require each manufacturer individually to meet the standards. Under the second design, manufacturers could trade fuel economy credits; tha

7、t is, firms exceeding the standards could sell credits to firms that would otherwise fall short of the standards. The trading of fuel economy credits would lower the costs of raising the CAFE standards; this study estimates the resulting savings. The Rationale for Decreasing Gasoline Consumption Pro

8、ponents of higher CAFE standards point out that the standards are a way of improving energy security and reducing climate change. The energy-security cost of gasoline consumption can be measured as the risk of macroeconomic losses from higher oil prices due to disruptions in the world oil supply. So

9、me analysts argue that the United States would be less vulnerable to such disruptions if it used less oil.（3） The use of motor gasoline （which is derived from oil） accounts for about 43 percent of U.S. petroleum use and about 11 percent of world petroleum use. Gasoline consumption can contribute to

10、climate change because it produces emissions of carbon dioxide, the predominant greenhouse gas. Although climate change might benefit some regions, it could ultimately cause extensive physical and economic damage in others. That damage is uncertain, but it could include higher sea levels; wider rang

11、es for tropical diseases; disruptions to farming, forestry, and natural ecosystems; and greater variability and extremes of regional weather. Carbon emissions make up about 84 percent of U.S. greenhouse gas emissions, with motor vehicles accounting for approximately 20 percent of U.S. carbon emissio

12、ns. Reducing gasoline consumption could cut the amount of oil that the United States consumes and the greenhouse gases that it emits. But, as this study discusses, determining whether or not increases in CAFE standards would have the potential to improve social welfare-that is, including not only th

13、e value derived from the goods and services that people consume but also factors that diminish the quality of life, such as pollution-requires considering the role that the existing tax on gasoline plays in reducing gasoline consumption. Further, one must consider the increase in driving that could

14、result from higher CAFE standards （as people enjoyed the lower operating costs of higher-mileage vehicles） and the resulting social costs-such as greater traffic congestion and an increased risk of accidents. The Existing CAFE Standards and Gasoline Taxes The Energy Policy and Conservation Act of 19

15、75 mandated CAFE standards. Currently, those standards are 27.5 miles per gallon （mpg） for cars and 20.7 mpg for light trucks （which is due to increase to 22.2 mpg by 2007）. All manufacturers that sell more than 10,000 passenger vehicles per year in the United States must comply with the standards.

16、Firms must comply by ensuring that the average fuel economy of the vehicles that they sell each year meets or exceeds the applicable CAFE standard. Compliance is determined separately for each firms domestic and imported car fleets （a distinction no longer made for light trucks）. Producers that fail

17、 to meet a CAFE standard must eventually pay a penalty of $5.50 per vehicle for every tenth of a mile per gallon that their fleet average falls short. Firms have some leeway in complying over time, as they can undercomply in one year provided that they overcomplied by an equivalent amount during the

18、 three preceding years or that they overcomply within the next three years. Actual compliance, then, depends on firms fleet averages over several years. The federal government began levying a tax on gasoline in 1932. Historically, the tax has supported the Highway Trust Fund, providing a dependable

19、source of funding for the Interstate highway system. Today, gasoline tax receipts are also earmarked for mass transit projects. The federal tax has increased gradually over the years, from an initial rate of 1 cent per gallon to todays 18.4 cents per gallon. Including state and local taxes on gasoli

20、ne, which average 22.6 cents per gallon, the average tax in the United States is about 41 cents per gallon. Three Policy AlternativesIncrease CAFE StandardsCBO has modeled the effects of raising the car and light-truck CAFE standards in half-mpg increments up to 38 mpg and 31.2 mpg, respectively. Th

21、is study estimates the resulting reductions in gasoline consumption, estimates the overall costs of raising the standards and breaks out those costs for producers and consumers, and explores the concomitant changes in the composition of the new-vehicle fleet. An increase in CAFE standards would dire

22、ctly affect automobile producers and indirectly affect automobile consumers. Producers would face higher manufacturing costs from adopting new fuel-saving technologies in their vehicles and a reduction in profits if they adjusted their pricing to increase the sales of their higher-mileage vehicles.

23、While consumers with a relatively strong preference for fuel economy could come out ahead, on average consumers would face higher vehicle prices and, in effect, share compliance costs with the manufacturers. The CAFE program analyzed in this study differs from the actual program in several ways. Fir

24、st, while in theory manufacturers are free to pay a penalty in lieu of complying with CAFE standards, in fact, U.S. manufacturers invariably choose to comply. They do so, according to an automobile industry representative, to avoid or reduce the possibility of legal or public relations ramifications

25、. As a result, this study presumes compliance annually. Second, because relevant data are unavailable, this analysis does not distinguish between domestic and imported automobiles. Thus, CBO considers compliance based on the fuel economy of each firms domestic and imported vehicles combined. Finally

26、, in CBOs analysis, firms compliance is defined in terms of their production in a single year. The actual CAFE programs flexibility in allowing firms to comply on a multiyear basis is largely a response to the uncertainty inherent in sales forecasts and related production decisions and thus need not

27、 be a focus of CBOs analysis. Increase CAFE Standards and Introduce Credit TradingAllowing firms to trade fuel economy credits would lower the costs of improving fuel economy for any given increase in CAFE standards. Under a credit-trading system, firms that exceeded one of the CAFE standards would

28、generate credits that they could sell to firms that fell below that standard. The selling and buying of credits would be voluntary. A credit would be denominated in gallons of gasoline saved,（4） and its price determined by the dynamics of demand and supply. Each firms compliance would be based on th

29、e average fuel economy of the vehicles that it sold plus the fuel economy credits that it held. Aggregate cost savings would result when automakers with lower marginal compliance costs （the additional costs of achieving incremental increases in average fuel economy） exceeded the CAFE standards and s

30、old the resulting credits to firms with higher marginal compliance costs. A firm would buy a credit as long as the price was less than the cost of an equivalent increase in the firms average fuel economy. Essentially, firms would choose the means of complying that was least expensive for them. Increase the Federal Gasoline TaxThe gasoline tax could also be used as a policy tool for reducing gasoline consumption. By raising