CAFE Debate Looms in Congress

Published October 1, 1999

The FY 2000 Transportation Department Appropriations bill ranks high on the Senate’s early fall agenda. The pending debate is expected to include heated discussion of increasing corporate average fuel economy (CAFE) standards, which have been “frozen” since 1995.

The House version of the appropriations bill (H.R. 2084) was passed on June 23 on a 429-3 vote. While the bill specifically provides that CAFE standards may not be increased, several senators are prepared to offer a non-binding resolution that would end the five-year freeze.

In late May, 31 senators fired the first volley, sending a letter to President Clinton urging him to “work with Congress” to tighten CAFE standards. Days earlier, 36 senators had signed a letter to their colleagues urging them not to sign the letter to Clinton.

The UAW and Alliance of Automotive Manufacturers are among those who oppose CAFE standard increases, contending that increasing the standards will benefit foreign automakers who sell smaller, more fuel-efficient vehicles. They contend additional gains in fuel economy can and should be achieved through research and development.

“This approach can help to produce the breakthrough technologies that will achieve significant advances in fuel economy, without the adverse jobs impact that could be created by further increases in CAFE standards,” wrote UAW Legislative Director Alan Reuther in a June 30 letter to senators.

On the other side of the debate are the Sierra Club and other anti-auto environmental groups, who contend that the growth in truck sales–now accounting for about 50 percent of all vehicles sold in the U.S.–has dropped average fuel economy back to 1980 levels.

The stakes in the CAFE debate are high. The National Highway Safety Administration estimates that the CAFE-induced downsizing of cars since the mid-1970s has cost 2,000 lives and 20,000 injuries every year. A recent USA Today analysis came to a similar conclusion, saying that in the 25 years since CAFE standards went into effect, 46,000 people have died in crashes they would have survived in bigger, heavier cars.

CAFE’s Beginnings

In response to the Arab oil embargoes of the mid-1970s, Congress passed and President Gerald Ford signed into law the Energy Policy and Conservation Act of 1975. Designed to help Americans reduce their demand for foreign oil and promote energy conservation, the law established a new federal scheme for regulating the average fleet fuel economy of cars and light trucks (i.e., pickups, vans, and sport utility vehicles) sold in the U.S.

CAFE standards have undergone some modification over the years; currently they are 27.5 miles per gallon (mpg) for cars and 20.7 mpg for light trucks.

In order to meet those standards, U.S. auto makers were forced to downsize their models. Out went the roomy “dream boats,” much beloved by an older generation of drivers, and in came hordes of less-flashy compacts and sub-compacts. Even today’s “full-sized” cars are noticeably smaller than their pre-CAFE counterparts.

The new offerings also are lighter than older models, and therein lies the safety problem CAFE has created.

In any collision, whether with a tree, a wall, or another vehicle, the laws of physics come into play. The smaller the vehicle, the more damage it will incur, and the more harm those inside will suffer.

Making a Bad Program Worse

In light of the carnage CAFE continues to leave in its wake, it’s amazing the misbegotten program is still around. What’s even more troubling is that some want to make a bad situation worse.

While the Senators who wrote President Clinton in May had the presence of mind not to say that a tougher CAFE would save lives (indeed, they didn’t mention safety at all), they still made claims on behalf of the program that don’t hold up.

“The program,” they wrote, “is critical to reducing U.S. dependence on foreign oil, cutting air and carbon dioxide pollution, and saving consumers money at the gas pump.” CAFE does none of these. Imports of foreign oil have risen from 35 percent of total U.S. supply to 50 percent since CAFE was imposed over two decades ago.

As for the claim that higher CAFE standards will cut carbon dioxide (CO2) “pollution,” which the senators say “causes global warming,” it is worth noting that CO2 is not considered a pollutant by the Environmental Protection Agency (EPA), which regulates auto emissions. According to EPA estimates of carbon dioxide emissions from cars and light trucks, doubling CAFE levels for these vehicles will decrease worldwide greenhouse gas emissions by less than 1 percent.

Finally, the price consumers pay at the pump is determined by the global supply of oil and the domestic demand for it, not by CAFE standards. The U.S. economy is booming, oil producers are hustling to get their product to eager consumers, and gas prices at the pump are remarkably stable.

There are other problems with CAFE. Meeting the standards is not something auto makers can do on their own. Because the standard measures sales-weighted fleet fuel economy, the result depends on what the consumer purchases. And American consumers are voting with their checkbooks for larger, heavier, safer vehicles. SUVs, minivans, and pickup trucks now account for nearly 50 percent of vehicle sales. The SUV has become the station wagon of the nineties, and its growing popularity has not endeared it to those who would confine the public to smaller vehicles. But smaller cars are what the public doesn’t want.

Learning from Our Mistakes

Making mistakes is only human. America was unprepared for the oil shocks of the 1970s, and lawmakers of that era were reacting to public pressure “to do something” about the “energy crisis.” We now know there was no energy crisis, but rather a temporary shortage of fuel resulting from OPEC’s decision to reduce oil production. That situation was made worse by Congress’ decision to impose domestic price controls and rationing on crude oil and refined products in the misguided pursuit of price stability. But when the U.S. later lifted those price controls, and non-OPEC countries started pumping more oil, the “energy crisis” went away.

Unfortunately, CAFE stayed. And with each day the law remains on the books, more Americans pay for this folly with their lives.

Bonner R. Cohen is a Senior Fellow at the Lexington Institute in Arlington, Virginia.