The Obama administration’s focus on fuel economy standardsis less effective at reducing greenhouse gas emissionscompared to an oil tax

In recent years, part of the Obama administration strategy for reducing greenhouse gas emissions has been to increase fuel economy standards for new cars and light trucks. In new research Eric O’Rear examines the economic impacts of these new standards, compared with the introduction of an oil tax. He finds that stronger fuel economy regulations will not only burden the economy with the added costs of investment in more energy-efficient vehicles, but that they are also less economically efficient, and will result in smaller reductions in carbon emissions and net oil imports compared to an oil tax.