Tuesday, January 13, 2015

Are falling fuel prices good or bad?

Yesterday in Automotive News, Richard Truett penned a piece titled, "Why falling fuel prices are bad, bad news."  His point was that lower pump prices make fuel-efficient vehicles a harder sell, risking the billions of dollars that automakers have recently invested in hybrids, electric cars and other alternatives as well as lightweight materials and advanced combustion engines.

The argument that high fuel prices are good for cutting oil use and carbon emissions follows directly from basic economics. Mr. Truett hopes that oil prices will head back up this year and, guided by economics, many conservation advocates have long called for higher taxes to address oil-related concerns. I'm certainly not one to argue with those principles, but I also believe that lower fuel prices are on balance a very good thing for American consumers and the economy.