Wednesday, December 10, 2008

Do green cars make sense?

Wall Street Journal:
The fuel-efficient "green" cars GM, Ford and Chrysler profess to be thrilled to be developing at Congress's behest will be unsellable unless gas prices are much higher than today's.

"Very few people will want to change what has been their 'nationality-given' right to drive big and bigger if the price of gas is $1.50 or $2.00 or even $2.50," Mr. Lutz [Bob Lutz, GM's vice chairman] explained. "Those prices will put the CAFE-mandated manufacturers at war with their customers -- and no one will win in that battle."

Translation: To become "viable," as Congress chooses crazily to understand the term, the Big Three are setting out to squander billions on products that will have to be dumped on consumers at a loss.
That is unless Congress and Obama join Mankiw's Pigouvian Tax Club. Mankiw: "The scientists tell us that world temperatures are rising because humans are emitting carbon into the atmosphere. Basic economics tells us that when you tax something, you normally get less of it. So if we want to reduce global emissions of carbon, we need a global carbon tax. Q.E.D."


Anonymous Anonymous said...

True, but on the other hand if the cost of buying green energy for their cars is even cheaper (per mile) than todays low oil prices, customers would choose green. Furthermore can the government make it mandatory to produce green cars? That would then give the customer no choice but to accept.

3:32 PM  

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