The Environmental Protection Agency (EPA) is suffering policy schizophrenia. On the one hand, it has ordered automakers to increase fuel efficiency to save the planet from global warming. On the other hand, it is setting higher quotas of ethanol in gasoline, which will decrease fuel efficiency and increase emissions of the greenhouse gases that the EPA claims cause global warming.

Both actions will cost consumers and the economy a bundle.

The stricter fuel-efficiency standards require automakers to attain a fleet-wide average fuel economy level of 34.1 mpg by model year 2016 for passenger cars, light-duty trucks, and medium-duty passenger vehicles. The rules—running some 300 pages—dictate fuel efficiency standards by model type, weighted by sales volume. The re-engineering required for compliance will add $1,000 or more to the sticker price of passenger cars.

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