Friday, April 5, 2013

Another Hidden Tax

A few days ago the Environmental Protection Agency (EPA) proposed new rules requiring lower-sulfur fuels for motor vehicles to reduce smog-causing emissions.  The rules would take effect in 2017.  Articles from and USA Today give the details.  The minute my readers see these headlines, versed as they are in the fact that there is no magic money tree, they understand that we are going to be paying the cost of this change.

Some people will say, “I am willing to pay more for my next car and for gasoline if it means cleaner air.  That’s fair, but let’s look into all the questions associated with the proposed change.

There will be a cost.  The EPA estimates that gasoline will be about 1 cent per gallon more, and add about $130 to the cost of a car by 2025.  Their justification is that full implementation of the rules “will help avoid up to 2,400 premature deaths per year and prevent 23,000 cases of respiratory ailments in children.”  Note the use of “up to” in the last quote.  As I’ve pointed out before, up to means no more than, and very possibly fewer.

Fuel industry experts estimate a 6-9 cent per gallon increase and say that the extra refining “would actually increase greenhouse gas emissions because of the energy-intensive equipment required to comply.”

If I take a conservative estimate of 16 million vehicles sold per year by 2017 and 3 cents per gallon at current gasoline consumption of 134 billion gallons per year, our annual bill comes to $6.1 billion.  That’s a hidden tax of $200 per person per year, which hits the less wealthy people the hardest.  It works out to more than $2.5 million per life saved and reinforces my earlier posting  about how agencies pass rules without any real standards for cost justification - the old if-it-saves-just-one-life argument.

Beyond cost are the considerations of marginal improvement in air quality.  When it comes to air quality, water quality or the purity of anything, the question must be: how much is enough?  It is either impossible or prohibitively expensive to achieve 100% clean water or air.  There must be, and is, a set level of acceptability.  Unfortunately, government agencies and advocacy groups want to push that standard to the next level and the next.  It is easy to argue that if x parts per billions is good, then x-1 parts per billion is better, but there is a point where there is no discernible difference in terms of comfort and safety.  Where is the debate on what is acceptable and at what point this incremental raising of standards should stop?

So when you see or hear headlines about an agency setting a stricter standard, you should automatically ask:  how much will it cost me, is the cost justified and is the increased level of purity scientifically justified or is it just another idealistic step toward unachievable perfection?

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