Fuel Economy Standards

On Aug. 23, Transportation Secretary Norman Mineta announced the first proposed changes to Corporate Average Fuel Economy Standards (CAFE) in 20 years. He arrived to the press conference, held at a Los Angeles gas station, in a Lincoln Navigator SUV.

 
  The Bush Administration claims that proposed changes to CAFE would save 10 billion gallons of gas over 20 years.

The proposal calls for raising overall CAFE standards for light trucks from the current 21.2 mpg today, to 24 mpg by 2011. The Bush Administration states that this could save 10 billion gallons of gasoline over 20 years.

Details of the proposal include:

  • No change in the average fuel economy standard for cars, which has been stuck at 27.5 miles-per-gallon for two decades
  • An extension of the loophole which exempts Hummers and other heavy vehicles weighing over 8,500 pounds from meeting any fuel economy standards
  • The creation of six categories for light trucks, allowing the fuel economy of full-size pickups to rise only to 21.3 mpg by 2011 (and the opportunity for auto companies to "game" the system by adding weight to various vehicles)
  • The ability for automakers to limit any efficiency improvements for light trucks to 22.2 mpg in 2007, and 23.5 mpg in 2010
  • Regulations to bar states from implementing their own stricter emissions and mileage standards, as California and other states have proposed
  • The creation of new loopholes permitting automakers to get credits for producing vehicles which can, but seldom use alternative fuels

The proposal was made in Aug., when gas prices increased to historically high levels.

Background
The enactment of Corporate Average Fuel Economy standards in 1975 resulted in a near doubling of cars’ average fuel economy, measured in miles per gallon. Light trucks have increased by over 50 percent. As a result, the United States saves over 55 billion gallons of fuel annually.

Proponents argue that raising CAFE is the single most effective means of reducing the dire consequences of America’s seemingly insatiable thirst for oil: national security threats, price shocks, air pollution, and global warming. They argue, furthermore, that existing on-the-shelf and in-the-showroom technology makes proposed increases in CAFE feasible, cost-effective, and appealing to consumers.

Opponents respond with a barrage of attacks, claiming that higher fuel economy requirements will result in loss of jobs, reduced car safety, increased roadway congestion, a cut in individual consumer rights, and no net environmental gains.

Responses to CAFE Opponents
The benefits of driving more fuel-efficient vehicles, including hybrid cars, are self-evident and well documented in other sections of this website. What about the points against higher CAFE standards? Do they make sense?

More Accident Fatalities: The most common argument against CAFE is that more fuel-efficient cars must be lighter and therefore are not as safe. Safety is a hot-button issue and has been very effective in putting the kabosh on higher CAFE standards. The downsizing of vehicles in the 1970s and 1980s has reportedly cost thousands of lives per year.

The flip-side argument is that, when measured by fatalities per mile driven, car safety has improved substantially over the past 30 years. Furthermore, 85 percent of fuel economy gains come from technology with no impact on vehicle size and weight—and that safety is a product of design, not weight. (Hybrid cars continually perform well in safety tests.) It’s argued that weight reductions should come from the heaviest and deadliest vehicles on the road.

Job Losses: American carmakers and labor unions argue that raising CAFE standards will increase the cost of producing vehicles, costing Detroit billions of dollars and thousands of jobs.

CAFE proponents respond that unless we shift to greater efficiency and new technologies, American car companies and their employees will fail to compete with more fuel-efficient Japanese cars—especially if gas prices continue to rise. If we continue to do nothing, they argue, the U.S. oil import cost (approximately $60 billion) will continue to climb, with severe consequences to all sectors of the American job force.

Environmental Washout: The anti-CAFE crowd reasons that consumers paying less per-mile end up driving more. Therefore, higher fuel economy standards result in more congestion and pollution. They also bring up that current CAFE standard actually create an incentive for carmakers to produce and market heavier less efficient SUVs and trucks, because the “light truck” CAFE standard is 20.7 mpg, while the car standard is 27.5 mpg. In addition, car manufacturers have an incentive to produce ultra-big vehicles (e.g. Hummer H2 and Ford Expedition) in the “heavy truck” category, because vehicles over 8,500 pounds are entirely exempt from CAFE standards. The net result of CAFE policy, they argue, is to give more momentum to the SUV explosion. The light truck market grew from 17 percent in 1975 to 47 percent in 2001.

Pro-CAFE advocates argue that people don’t drive more simply because they are saving a few dollars per tank—and that the loopholes for SUVs and vehicles above 8,500 pounds should be closed, at the same time that CAFE standards are raised. Closing the loophole for SUVs and light trucks alone would reduce carbon emissions by 240 millions tons per year.

Personal Rights and Market Interference: Is driving a gas-guzzling SUV an American right? Opponents of CAFE say yes. They claim that original CAFE mandates effectively outlawed large, rear-drive passenger sedans and station wagons with V8 engines (which in turn gave rise to the SUV). They say that a hike in required fuel standards would, in turn, kill the SUV. SUV-lovers claim that consumer choice is being threatened, and that the carmakers and car buyers can work this out in the marketplace.

CAFE supporters counter that the threats to our economy, security, and environment require decisive action. Again they repeat that the technology and market for greater fuel efficiency are ready, and need common-sense governmental guidelines to ensure that carmakers help us avoid an energy crisis of a magnitude never seen before. They also quote studies, such as a 2002 Sierra Club survey of Michigan voters and UAW families, that reveal overwhelming support of increased CAFE standards.

Prospects for CAFE
CAFE standards were enacted in response to the 1973-1974 Arab oil embargo. It took a severe shortage of oil (gas rationing), and a major geo-political event, to move Americans to greater efficiency. Despite the rapid recent rise of gas prices, and the return of lines at the pumps, the prospects for increasing CAFE are unlikely—given the vociferous opposition to CAFE, the strength of Detroit lobbyists, and the political consequences for legislators who show interest in anything beyond token increases in fuel economy levels.