More expensive cars running on more expensive fuels, plus a
boost in food prices -- believe it or not, that's Washington's
latest answer to America's energy woes.
Just about everything Congress' new energy bill touches will go
up in price. And not by accident either. For example, the bill
requires that cars and trucks be more fuel efficient by an
additional 10 miles per gallon. But these government standards have
a history of raising the sticker price of vehicles and there's no
guarantee that the fuel savings from the latest increase will
offset the costs.
Worse, the bill mandates that more ethanol be added to the
gasoline supply. Of course, the only reason this supposedly
eco-friendly alternative needs to be mandated in the first place is
that it's too expensive to compete otherwise. In effect, Washington
is forcing more expensive energy choices on a public already facing
The proposed fivefold expansion of the ethanol requirements --
from 7.5 billion gallons to 36 billion annually -- is particularly
inexcusable, considering the bad experience with the current
The 2005 energy bill required that so-called renewable fuels
(chiefly ethanol derived from corn) be mixed into the gasoline
supply. Not only has this requirement contributed to the high cost
of driving but the diversion of corn from food to fuel use has
raised prices not only on corn but on many related items, such as
corn-fed meat and dairy. In other words, if the increase goes
through, expect higher costs at the supermarket as well as at the
It's not easy to determine what the final price tag will be --
these measures go well beyond anything currently on the books, so
we'll find out the hard way what this unprecedented level of
government meddling in energy markets will do.
But a National Academy of Sciences study suggests a $75 to $100
price rise for each mpg increase in fuel-economy standards. Thus
the proposed 10-mpg increase here could add $750 to $1,000 to the
cost of a new vehicle. Some auto-industry sources predict
sticker-price shocks into the thousands for some models, especially
since the fuel-economy increase is far steeper than past ones and
may require costly technologies to be employed.
The increased ethanol mandate, along with other provisions in
the bill affecting gasoline, could cause the price to increase by
50 cents per gallon or more within a decade. And that's just the
hike at the pump.
An Iowa State study estimates that the current mandate has
already raised food prices by $47 annually per capita, so a
five-fold increase could easily cost several hundred dollars per
household annually in higher food bills.
One industry-funded study by Charles River Associates puts the
overall price of an earlier version of the energy bill at $1,700
per household annually by 2030. It also predicts the loss of nearly
5 million jobs, both those lost completely and those outsourced to
other nations with relatively cheaper energy.
Washington's past energy bills have never been good news for the
American people. But the latest one may be the most anti-consumer
Ben Lieberman is
a senior policy analyst in the Roe Institute for Economic Policy
Studies at The Heritage
First appeared in the Pittsburgh Tribune-Reveiw
More expensive cars running on more expensive fuels, plus a boost in food prices -- believe it or not, that's Washington's latest answer to America's energy woes.
Senior Policy Analyst, Energy and Environment
Read More >>
Heritage's daily Morning Bell e-mail keeps you updated on the ongoing policy battles in Washington and around the country.
The subscription is free and delivers you the latest conservative policy perspectives on the news each weekday--straight from Heritage experts.
The Morning Bell is your daily wake-up call offering a fresh, conservative analysis of the news.
More than 200,000 Americans rely on Heritage's Morning Bell to stay up to date on the policy battles that affect them.
Rush Limbaugh says "The Heritage Foundation's Morning Bell is just terrific!"
Rep. Peter Roskam(R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."
Sign up to start your free subscription today!
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with hundreds of thousands of individual, foundation and corporate donors. Heritage, founded in February 1973, has a staff of 275 and an annual expense budget of $82.4 million.
Our mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Read More
© 2013, The Heritage Foundation Conservative policy research since 1973