Economics Professor David Ross Testifies Before EPA in Support of New Fuel-Efficiency Standards

Posted January 26th, 2012 at 1:54 pm.

3309998374_abf8666692_mBryn Mawr Economics Professor David Ross recently testified before officials from the U.S. Environmental Protection Agency and National Highway Safety Administration arguing in favor of increased fuel-efficiency standards for U.S. cars and trucks.

In his remarks, Ross argued that the new standards, which would start to take effect in 2017, are the single most effective policy option on the table for dealing with greenhouse-gas emissions.  He went on to refute claims that the new standards would raise the cost of new-car ownership, promote the design of less-safe vehicles, create job loss, or represent untoward government intrusion in the free market.

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“In a perfect world, with the price of gasoline reflecting the environmental, national security and public health externalities of fossil fuel consumption, consumers would demand the most fuel efficient vehicles and major auto makers would be rushing to provide them,” Ross told the officials.

However, as Ross explained in an interview this week, when it comes to the price of gas, those realities aren’t reflected in the price consumers pay at the pump.

“Quite frankly, and this is a point I sort of hinted at in my testimony, the biggest thing the country could do to deal with greenhouse gases is get the price of carbon up to the right level so that it reflects the true social costs that are involved. If gasoline cost $6 a gallon, I guarantee there’d be a strong demand for more fuel-efficient vehicles,” said Ross.

“The free market only works if all of the conditions for a functioning market are there.  What you have in the case of climate change and health effects relative to the price of gas is a classic example of externality market failure. That is, the decision each of us makes to use gasoline doesn’t take into account factors like the costs to others in terms of health care and climate change. You’re not paying anything to the citizens of Mauritius because the sea levels are rising,” added Ross, who drives a 40-mpg Toyota Echo and takes the train back and forth from his home in Chester County to Bryn Mawr’s campus.

Ross made his remarks in Philadelphia at the invitation of the Union of Concerned Scientists. Philadelphia was one of three cities chosen to host public hearings to allow comment on the new rules, which will be decided upon by the agencies this summer.

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