Obama’s New Regs Could Drive Up Car And Energy Costs

Obama plans to increase costs of cheaper fossil fuels so alternatives can compete.

Observers of the beleaguered American auto industry say that taxpayers will pay through the nose due to President Barack Obama issuing new regulations Monday, allowing several states to set tougher car emissions and fuel efficiency standards, US media and congressional officials said. There are worries that more regulation will drive up costs and prices, drive down sales and result in job loses and demand for even more taxpayer bailout money.

The dramatic federal action granting California and 13 other states the right to regulate tailpipe emissions is a sharp departure from former George W. Bush’s environmental policy, and has been sharply opposed by auto companies.

According to The New York Times, Obama is to issue a directive to the US Environmental Protection Agency to immediately begin work on granting the so-called California waiver, which allows the state — long in the vanguard on environmental matters — to set its own standards for automobile emissions.

In his White House announcement, Obama is expected to issue a directive requiring federal agencies to immediately begin work on making all government buildings more energy efficient.

The new US administration hopes to achieve energy savings of up to two billion dollars per year, as well as a reduction of emissions of carbon dioxide and other gases blamed for global warming.

The presidential orders will require car manufacturers begin producing and selling cars and trucks that get higher mileage than the national standard, and on a faster phase-in schedule, the media reports said.

Obama also is expected to announce that he is moving forward with nationwide regulations requiring improved fuel efficiency standards.

“If we don’t put a price on carbon,” said Democratic Senator Barbara Boxer of California, the chairwoman of the Senate Environment and Public Works Committee, “we’ll never get these clean energy sources online.”

Obama also will direct the Department of Transportation to immediately begin drafting automobile fuel-economy regulations to comply with a law enacted in December 2007.

Former president George W. Bush delayed implementing the law and left office saying there was not sufficient time to write the rules.

The anticipated greenhouse gas restrictions will be part of a larger effort by the Obama administration to stimulate renewable energy supply.

Obama’s stimulus plan calls for investing heavily in wind and solar power as well as biofuels. The administration also plans to help that power compete with cheaper fossil fuels by raising the coast of fossil fuels to reflect the potential economic damage from a warmed Earth.

However, critics argue those moves will increase energy prices and further weaken the economy.

Peter Orszag, the former head of the Congressional Budget Office who now heads the White House Office of Management and Budget, warned Congress last year that emissions limits would reduce long-term economic risks but “also impose costs on the economy … in the form of higher prices for energy and energy-intensive goods.”