Monday, March 3, 2008

Who needs CAFE standards?

The Wall Street Journal reports that a weakening economy coupled with high gas prices has started to quench America's thirst for gasoline. High gas prices have even started to push consumers to smaller, fuel-efficient vehicles. It seems that high gas prices do have some positive effects. As long as prices stay high, investment in alternative technology may become attractive. Additionally, when shopping for a car, consumers will prioritize fuel efficiency far higher than they do when gasoline prices take up less of their discretionary income. There is already evidence that Americans are choosing cars with higher fuel standards. In real terms, the free-market is efficiently doing what CAFE standards are meant to accomplish through government mandates and regulation.

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