When Congress and the Obama administration passed and implemented extremely strict fuel economy regulations, the Environmental Protection Agency (EPA) claimed that it would save consumers a few thousand dollars on gas and only add $948 to the price of a new car.
Three teams of independent economists and engineers went up against the EPA’s analysts—finding much larger costs and smaller benefits. The most modest of the independent estimates works out to $3,800 per vehicle, even after the fuel savings are taken into account.
So whose predictions were more accurate?
Although we don’t know how prices would have changed if regulations had been left alone, there are several trends that all moved together before the law was changed in 2007.