Friday, January 30, 2009
The President signed a bill that allows states to set individual regulations on car emissions. This is a worthy goal but it is consistent with many government actions in that the consequences are not considered. The immediate result of this one is that there are 10-12 states that are poised to write their own regulations. Each is guaranteed to be different. These differing standards will have to be met in a combination of ways. Car emission systems will have to be different from state to state. Detroit will have to make different versions for each state. Auto manufacturing will become less efficient and more expensive. The companies suffer and the buyer will pay more. The other thing that will change is gasoline production. Without having any sympathy for the oil companies, it is clear that a limited number of refineries will have to make more different types of gasoline. This will make that process even less efficient and it is a certainty that these companies will simply pass along any additional expense. Regional shortages are also a probability as it will be impossible to reallocate gas to where it is needed because it will not be the same product.