Monday, June 25, 2007

Like the idea of paying more for less? If a certain piece of legislation just passed by the Senate becomes law, we might have no choice.

Despite having the words “consumer protection” in its original title, the Senate energy bill would actually boost the cost of gasoline, electricity, food, cars and home appliances. In fact, virtually everything touched by the Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007 will go up in price and down in quality.

Notwithstanding public outcries over $3-per-gallon gas, the bill’s main provision would increase Americans’ required use of costly ethanol and other renewable fuels. The 2005 energy bill mandated that agricultural-based renewable fuels — mostly ethanol made from corn — be mixed into the gasoline supply. Ethanol usually costs more than gasoline and dramatically lowers fuel economy, so the mandate has hurt drivers. And the competition for corn has driven up prices of food items such as sweeteners, corn-fed meat and dairy products.

Despite this, the Senate now wants to expand the mandate fivefold, from 7.5 billion gallons this year to 36 billion gallons annually by 2022. The price for fuel and food, already higher under the current mandate, would likely skyrocket. In addition, the heavy government subsidies for renewables, including a 51-cent per gallon tax credit, would rise with the mandate. They would soon reach $10 billion and eventually exceed $20 billion annually. In effect, taxpayers would pay nearly $200 per household for the privilege of higher fuel and food prices.

The bill also sets new federal efficiency standards for a number of home appliances such as refrigerators, clothes washers and dishwashers. The goal is to reduce energy use by setting arbitrary limits on electricity consumption by these appliances. But past appliance regulations have actually hurt consumers.

For one thing, mandatory improvements in efficiency usually raise the purchase price of appliances. Sometimes the increase more than negates the energy savings. These regulations can also hamper product performance. Consumer Reports has documented some of the technical glitches in high-efficiency appliances, most recently finding new ultra-efficient clothes washers meeting the latest standard “left our stain-soaked swatches nearly as dirty as they were before washing,” and suggesting that “for best results, you’ll have to spend $900 or more.” Yet the Senate would impose new rounds of such standards.

Far more troubling than efficiency standards for appliances are those for cars and trucks. In theory, we can all save big at the pump by switching to more efficient vehicles, and at the same time cut down on oil imports. But to meet any tough new Corporate Average Fuel Economy standards, cars and trucks need to be made lighter, which also makes them less safe in collisions. According to a 2002 National Academy of Sciences study, vehicle downsizing has cost 1,300 to 2,600 lives per year. The far tougher miles-per-gallon requirements in this bill would likely add to the death toll.

Beyond safety concerns, there is the consumer choice issue. A variety of smaller but more fuel-efficient vehicles are already on the market. Does the car-buying public — including parents who need the capacity and safety of a bigger vehicle — really want Washington essentially forcing smaller vehicles on everyone?

Consider, too, what the bill doesn’t do. There are no provisions for even one drop of additional domestic oil. America remains the only nation that has placed a significant amount of its oil potential off-limits, both offshore and onshore. But this bill does nothing to change that. Nor does it streamline other energy constraints, such as the red tape that has limited refinery expansions and contributed to the 2007 jump at the pump.

A “consumer protection” bill that’s anti-consumer. An “energy” bill that’s anti-energy. Too bad the laws against false advertising don’t apply to Congress.

Ben Lieberman is senior policy analyst in the Roe Institute for Economic Policy Studies at the Heritage Foundation.

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