Brad DeLong, the Berkeley professor, star blogger and occasional FT contributor, has taken issue with a piece by my colleague Clive Crook on the US CAFE (Corporate Average Fuel Economy) standards.

Prof DeLong’s argument is that, while Clive may be right about the economics - you get an awful lot more fuel efficiency bang for your buck from taxes than you do from CAFE standards - he is being "naive" about the  realities of US politics.

He may have a point that unlike a higher fuel tax, a tighter CAFE standard could actually pass into law. Certainly it will be hard to rally opposition against a strategy that even the White House backs.

But on the other hand, the cost-effectiveness of a fuel tax is so much higher, at least if the figures from Mark Jakobsen of the University of California at San Diego are to be believed, that it is hard to give up on the politically unrealistic option. (Paper courtesy of the excellent blog Econbrowser, from two other economists, James D. Hamilton and Menzie Chinn, who add their own thoughts on the debate.)

Perhaps both sides should agree to rally around the powerfully-argued case for higher gasoline taxes made by Greg Mankiw, who is among other things a former chairman of the council of economic advisers for George W Bush.

October 14th, 2007 in Energy efficiency, Gasoline, US | Permalink