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Congressional Budget Office Weighs in on CAFE Standards

January 12, 2004

The U.S. Congressional Budget Office (CBO) indicated January 9 that simply raising fuel economy standards may not be the best way to reduce fuel consumption and could encourage more traffic and increase accident fatalities, according to a report in Environment & Energy Daily.Examining three different approaches to decreasing fuel consumption by 10 percent, a recent CBO report indicates that the cheapest and most effective path - a substantial increase in the fuel tax - was virtually impossible to achieve, based on political considerations. Simply raising the corporate average fleet economy (CAFE) standard would be the most costly to consumers, adding an average $153 to the cost of a new vehicle. Boosting the CAFE and adding an emissions-trading scheme was deemed the most cost-effective way to achieve reduction in fuel consumption.
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