According to the Detroit Free Press, a deal is near on fuel economy standards, one that ostensibly will satisfy both House of Representatives Speaker Nancy Pelosi and Michigan Democrat John Dingell, the chair of the House Energy Committee.
For the most part, it appears that Dingell wins: the deal will have different standards for cars and trucks, will give automakers credits for alternative fuel vehicles. Both were part of the proposals originally submitted to the House, but were not part of the bill passed in the Senate. Both were proposals opposed by Pelosi, whose tenure as Speaker has, to date, been one of the least effective of any Speaker since the founding of the Republic.
If the “compromise” does, in fact, pass the House, it will also mark a success for the Administration. A month ago, the President’s office announced that he would any energy bill that included the fuel economy standards backed by Pelosi and Senate majority leader Harry Reid, another Democrat.
If the proposal does pass, it will raise fuel economy standards for cars to 35 mpg by 2020. Whether this is a good deal for the car buyer, however, is open to question. The standards will be in line with those which had been supported by the major automakers, including Toyota – but excluding Nissan, which had backed a higher standard as a means of securing a competitive advantage. However, these standards are an imposition on the free market, one that is bound to reduce the choices available to buyers. To the extent that they raise fuel economy requirements above those that would result from a free market, they will also add to the costs of automakers and, thereby, to the price of new vehicles.
Thus, the standards to be adopted are, in effect, a new tax. The victory in all this for the automakers is merely that the tax increase on new cars and trucks will be less than Ms. Pelosi wanted it to be.