Chasing the Rabbit: Official Blog by Author Steven Spear

For the laudable goals of fewer green house gases and less foreign oil dependence, why promote convoluted supplier mandates for corporate fleet fuel economy (’CAFE’) standards (NY Times–How Many Miles Per Gallon, Jan. 11, 2009)?  We typically influence behavior better by focusing on consumers.  To reduce smoking, we tax cigarettes and decrease purchase and smoking opportunities.  To increase home ownership, we subsidize mortgages.  To increase learning, we provide educational loans.

Simpler and more effective would be targeting consumers in three phases to drive up disincentives and drive down need.  Short term, raising gas taxes would have impact–Summer 2009’s price spike changed purchase behavior (fewer SUVs) and use (more carpooling, biking, and mass transit).   Short to intermediate term, we can fund mass transit in places already prepared–urban centers, commuting corridors like Boston, New York, Washington and the like.  Longer term, we can change our urban planning and zoning schemes.  Housing, work, commerce, and education are zoned to be fragmented and distributed, so people have to drive far and carry lots of stuff.  Reducing sprawl will allow less frequent trips of shorter distances in smaller cars.

CAFE standards–like many other supplier mandates–look easy but their effects are likely indirect, ineffective, and often carry substantial unidentified hidden costs.

Related posts:

1. Zero Sum or Grow the Pie in Supplier Relationships…
2. Why Bailout Chrysler/Cerberus? The Times Gets it Right