3/15/2011

If you are worried that high gas prices will dislocate the economy, why not put on regulations that make the disruption even worse?

Anne Jolis writing at the WSJ's Political Diary:

As Libya burned and oil prices edged up, Madrid reduced Spain's maximum highway speed limit to 110 kilometers per hour (68 mph) from 120 kilometers per hour. Ostensibly, the forced deceleration is intended to save Spaniards money and reduce oil imports, on the claim that cars will consume roughly 15% less regular gasoline when moving at the lower speed. The BBC reports that the government has deployed workers across Spain to change 6,000 road signs to reflect the new speed limit, which will last at least until the summer.

"Sometimes you have to adopt measures, even if they are unpopular," Spain's Socialist Deputy Prime Minister Alfredo Perez Rubalcaba told journalists. "With the price of a liter of gasoline at its highest in history, we have to save because what is at stake is the economic recovery."

Not all studies agree that driving more slowly means driving more efficiently. Car type, road conditions and other factors play key roles. But forcing drivers to slow down isn't Madrid's only play to cut fuel use and "save" people's money for them. The government will also be dropping fares on state-owned rail networks, subsidizing the purchase of energy-efficient tires and requiring oil companies to use 7% biofuels in their diesel and gasoline, rather than 5.8% currently. . . .


It is bad enough that Spaniards are already bearing the burden of higher cost gas, but now they are limited in figuring out the best way to bear those costs.

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