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Raising Federal CAFE Standards
A Misguided and Costly Mandate

As the U.S. Senate prepares to debate energy legislation, lawmakers are wrangling over reducing America’s dependence on foreign oil. Some of the more astute are advocating increased domestic production, including limited exploration in a tiny sliver of land in the Arctic National Wildlife Refuge (ANWR) — an area specifically set aside by Congress for that purpose. Others, led by Senators John Kerry (D-MA) and Fritz Hollings (D-SC) have proposed raising the federal Corporate Average Fuel Economy (CAFE) standard, a mandate determining the minimum average miles per gallon (mpg) for vehicles sold in this country.

Kerry and Hollings argue that decreasing domestic energy consumption is the only viable way to reduce America’s dependence on foreign oil. If you buy into their argument, raising the federal CAFE standard from the current 27.5 mpg for car fleets and 20.7 mpg for light truck fleets (SUVs, minivans, pick-ups) to 38.3 mpg and 32 mpg respectively by 2013, as they have proposed, doesn’t sound bad. After all, consumers will be able to save money at the pump and reduce "harmful" emissions while at the same time reducing our dependence on foreign oil. These guys should be applauded for their efforts, right?

Wrong! Kerry and Hollings’ master plan starkly conflicts with what history tells us. The misguided CAFE standards became law in the 1970s in the midst of an energy crisis. The plan was intended to conserve oil to reduce America’s dependence on the Organization of Petroleum Exporting Countries (OPEC). The plan failed. At the time of the 1973 OPEC embargo, the United States was importing 30 percent of its oil from abroad. Today, with federal CAFE standards, we import more than 50 percent, and gasoline consumption continues to grow.

The reason is simple logic. The more fuel-efficient automobiles become, the more people want to drive. Instead of promoting conservation, CAFE standards have resulted in more people driving longer distances, consuming more gasoline. Even the Washington Post editorial page agrees. In fact, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics, Americans are driving more than twice as many miles as they did thirty years ago.

Beyond the fact that federal CAFE standards have done nothing to reduce domestic oil consumption, raising the standards would result in a de facto tax increase on consumers, significant job losses, a reduction in auto safety and, despite the arguments of the environmental lobby that support the Kerry-Hollings plan, it would have little, if any, positive impact on the environment.

If passed, the Kerry-Hollings plan would force automakers to develop and install expensive new technologies to comply with the higher standards. As with any government regulation, those costs will be passed on to consumers — in this case, at a rate of up to $2,750 per vehicle, according to estimates. Automakers have already said it would be nearly impossible to comply with the higher average standards given the current enormous consumer demand for larger vehicles in their "light-truck" fleets. As a result, the higher standards would lead to significant job losses in plants manufacturing such vehicles.

Moreover, automakers would be forced to further increase the price of the larger, less fuel-efficient, yet popular SUVs and minivans to offset their costs to promote smaller, more fuel-efficient vehicles to avoid paying the fines and penalties charged for violating the higher standards.

Senators Kerry and Hollings’ plan would also sacrifice auto safety. A 1999 Gannett News Service study credits CAFE standards with an astounding 46,000 traffic fatalities that could have been avoided, as consumers have been forced into smaller and lighter automobiles. An earlier study done by researchers at Harvard and the Brookings Institute found that for every 100 pounds trimmed off new automobiles to meet CAFE standards, 440 to 780 people were killed in accidents — a total of 2,200 to 3,900 per year.

Environmentalist groups support higher CAFE standards, claiming it will reduce "harmful" emissions into the environment. However, more people driving further distances will cause more traffic congestion than currently exists. In addition, a report from the National Academy of Sciences found that any reduction in greenhouse gas emissions that might result from higher CAFE standards would be offset by an increase in emissions from new technologies and manufacturing to develop more fuel-efficient vehicles.

Higher CAFE standards are a misguided and costly government mandate that will not accomplish the goals espoused by its proponents. For this reason, the Senate should reject the Kerry-Hollings proposal and focus on effective measures to reduce America’s dependence on foreign oil, including limited and responsible domestic oil and gas exploration.

[Posted on February 21, 2001]