Share Button

New fuel mandates increase car insurance quotes

The Obama Administration decided last year that all new cars and light trucks must get an average of 35.5 miles per gallon by 2016. While this may seem like an environmentally friendly measure, experts from the Institute for Energy Research have found that this mandate will raise car prices and increase the number of deaths from traffic accidents.

Higher costs

Building cars that meet these new mandates will be more expensive for manufacturers, possibly resulting in higher prices for consumers. Making cars out of materials that are lighter will make them more fuel efficient, but these tend to be much more costly than their heavier counterparts.

The administration has estimated that these new mandates will increase the cost of cars by $1,100, but a study by Global Insight found that new regulations would raise the cost of a power train alone by $1,000 for small vehicles and $5,000 for larger ones. The higher cost of cars may also result in more expensive auto insurance quotes, as they typically reflect the expense of vehicle repairs.

Fewer jobs

With an increase in cost, experts believe there will be a reduction in the number of jobs in the auto industry. If cars become more expensive people may be apt to hold onto their vehicles for longer, translating to fewer sales. If companies sell a reduced amount of cars they may need fewer employees.

Reducing safety standards

While reducing the number of jobs, these new mandates may also cause more traffic-related deaths. In 2002, the National Research Council discovered that the federal government’s Corporate Average Fuel Economy mandate contributed to 2,000 deaths per year. Smaller, lighter cars are typically more fuel efficient than heavier models. Unfortunately, these cars are also more dangerous than their heavier counterparts in collisions.

Adrian Lund, president of the Insurance Institute for Highway Safety told USA Today, “leave the automakers the option of downsizing, clearly we’re going to have some safety consequences.” He added, “Smaller vehicles do not protect their occupants as well as large ones.”

In addition to reducing Americans’ safety, the Environmental Protection Agency also found that this mandate will have no impact on global warming. The regulations would reduce the global temperature by 0.006 to 0.0015 degrees Celsius by 2100.

Additionally, the President is now considering changing national mandates to 56.2 miles per gallon by 2025. This would likely raise the price of vehicles by several thousand dollars, according to the Wall Street Journal.