Can CAFE Save the Day? Gas Prices Put Pressure Congress

With gas prices on the rise, members of Congress are expecting to hear from their constituents soon. Once everyday driving becomes prohibitively expensive, people start calling their representatives.

Generally speaking, lower gas prices will result from increased oil supply and/or decreased oil demand, and politicians are already working on both of these strategies in hopes of pushing down prices.

On the supply side, the prospect of drilling in the Arctic National Wildlife Refuge (ANWR) has become likely since the Senate passed a provision that will permit drilling with a simple majority vote. For more on ANWR, click here.

But no one knows how much oil ANWR would provide - drilling there may not affect gas prices at all and certainly not for years.

That’s why many groups are pressuring Congress for stricter Corporate Average Fuel Economy (CAFE) standards. Since gasoline consumption amounts to about half of the total petroleum usage in the U.S., making more fuel-efficient vehicles would greatly decrease our demand for oil, both foreign and domestic.

These days, it’s not just the usual suspects pushing for stricter CAFE standards: conservative Christians have joined traditionally less-conservative environmentalists in support of more fuel-efficient vehicles. The Evangelical Environmental Network website asks, "What would Jesus drive?"

Under increased pressure, Congress will begin to deliberate fuel efficiency standards. But oil and the environment aren’t the only factors to consider. CAFE standards also affect highway safety and the economy.

What are CAFE standards?

In response to the 1973-74 oil crisis, Congress enacted the 1975 Energy Policy Conservation Act (EPCA), which established CAFE standards for passenger cars and light trucks.

CAFE requires that any vehicle weighing 8,500 pounds or less that is manufactured for sale in the United States must meet an average fuel economy rating of 27.5 miles per gallon. Average rating means that a manufacturer’s entire fleet of cars must come to an average 27.5 mpg.

If a manufacturer does not meet this standard, it is liable for a penalty of $5 for every 0.1 mpg that falls below it, multiplied by the total number of vehicles it produces. This penalty can amount to hundreds of millions of dollars.

Many SUVs and minivans have a lower fuel-economy standard of 20.7 mpg because they are considered light trucks, although they are mainly used as passenger vehicles.

Larger trucks and SUVs like the Hummer H2, the Ford Excursion, and the Chevrolet Suburban have no fuel economy standards at all. Currently, vehicles like these that weigh 8,500 to 10,000 pounds are not regulated.

Since SUVs and large trucks have become enormously popular over the last decade, the fuel economy average for all vehicles has actually dropped 6% since 1988.

The National Highway Traffic Safety Administration (NHTSA) is responsible for establishing and amending the CAFE standards, but Congress has the power to step in and demand changes.

Industry v. Environment

Automakers complain that higher CAFE standards would cost them too much. Instead of incorporating new and expensive fuel-efficiency technologies, manufacturers say that they would build lighter cars and trucks, which get better gas mileage but are less safe.

A 2002 report by the National Academy of Sciences explains that increased traffic fatalities are an unintended cost of raising CAFE standards. In addition, the strain of stricter requirements on the auto industry can lead to loss of jobs and slower economic growth. In European countries gasoline is much more expensive and trains and subways are much more modern and efficient. Europeans wonder why Americans spend their transportation money on highways that use up so much scarce fossil fuel.

While considering the environment, our representatives must evaluate tradeoffs like safety and the economy when debating CAFE standards. Does it make sense to compromise safety for fuel efficiency? What about the greater national security that would come from less dependence on foreign oil? Is traffic safety more urgent than environmental safety? What are consumers willing to give up to pay less at the pump?

What do you think?

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Article Posted on: 4/19/2005