Nothing good in this old CAFE

Published December 1, 2001

Government rules requiring higher gasoline mileage for cars and light trucks have the superficial appearance of a good deal. Who wouldn’t want better fuel economy?

What the political sponsors of government-mandated mileage improvements fail to tell the public is that these regulations have harmful consequences. They restrict the choice of vehicles their constituents may buy. They do more serious harm by degrading vehicle safety and undermining the national economy.

Restricting choice

Vehicle fuel economy regulations, called CAFE (corporate average fuel economy) have been around for a quarter of a century . . . and nothing good has come of them. They have not and cannot cut the flow of cheaper foreign oil into the United States, the reason for which they were enacted. (Only trade barriers can do that–and who would want to have less energy available today?)

Not only are CAFE advocates unconcerned about restricting the choice of vehicles, that is their intent. But they do it by stealth, requiring carmakers to achieve higher average fuel economy. To do this, manufacturers have had to cut down on the size and weight of their cars–and, thus, the utility of their vehicles (unless, like some European manufacturers, they are willing to violate the rules and pay fines).

CAFE supporters also give no importance to the increase in vehicle costs as manufacturers substitute costly light weight materials and add expensive technology. They want people to buy smaller, lighter cars and use them less. Their attitude is not unlike that attributed to the Duke of Wellington, who opposed the construction of railroads in Britain because they would, he said, “only encourage the common people to move about needlessly.”

Our modern-day political elitists may also believe this, but they do not have the courage to tell their constituents so. Instead, they promise, in effect, a free lunch and brag about holding the carmakers’ feet to the fire. It is the manufacturer, not the member of Congress, who feels the heat because he cannot provide vehicles of the size and performance people may want to buy.

Driver safety

Disregard for how CAFE affects occupant safety is much more important. It is well established that, all other things being equal, a larger, heavier vehicle offers more occupant safety protection in a crash than does a small, lighter car. More vehicle structure absorbs more injury-producing energy in crashes. Unfortunately, carmakers have had to make significant reductions of fleet average weight and size to achieve the large increase in fuel economy necessary to meet existing CAFE rules.

More stringent standards will mean more cuts in size and weight and, therefore, even less safety for the occupants. Insurance industry studies have demonstrated these facts repeatedly. Are their studies to be discounted because, admittedly, the industry has more interest in reducing fatalities than saving perhaps a few gallons of gasoline?

Fuel cells

The greatest technological hope for vehicles powered by non-carbon based fuel is the fuel cell, the Holy Grail of “clean” motor vehicles. All major carmakers are pouring major resources into fuel cell development but, as reported in Science magazine recently, fuel cell research dates back 150 years and “high costs and practical difficulties (such as sizzling operating temperature of some designs) have confined them to use in spacecraft, the occasional power plant, and a few prototype vehicles.”

We should all hope that the fuel cell or another technological fix will emerge, but those who believe it is at hand need only to look at consumer rejection of the electric vehicles offered in recent years to know hope doesn’t always become reality.

Loss of jobs

It is difficult to understand how politicians are willing to ignore the increase in fatalities CAFE requirements have caused. Perhaps because constituents are mostly ignorant of CAFE and its consequences, members of Congress supporting more stringent CAFE are able to ignore these unpleasant facts.

But there is another “unintended consequence” of CAFE that could get the political attention necessary to turn off this political attraction to auto fuel economy regulation. Simply put, it is unemployment.

Thousands of jobs are at stake as Congress and the administration consider higher CAFE standards. Today, Americans buy more light-duty trucks (minivans, SUVs, and pickup trucks) than passenger cars. In the year 2000, we bought 9,114,412 light trucks, while buying 8,863,274 passenger cars. These light-duty trucks are assembled in 34 plants located in 18 states from California to New Jersey and from Texas to Wisconsin.

More than 117,000 people work in these light truck plants, and many thousands more work in plants around the country making component parts for these vehicles. There is absolutely no doubt that the kind of direct or indirect increases in light truck CAFE, included in many bills being proposed in Congress, would cause serious disruptions in production, and possibly shut down at many of these plants.

The unions representing these workers are well aware of the possible impacts.

In testimony before the National Research Council in March 2001, a representative of the United Auto Workers said, “If the product mix had to be changed, phasing out production associated with family-sized, larger, and less fuel-efficient cars, it would lead to plant closings and job loss for workers in those plants and in related industries. We oppose increases that would place the jobs of our members and other workers in serious jeopardy.”

The UAW spokesperson went on to say: “Therefore, the financial condition of the companies in the auto industry must also be taken into account.” Then, unusual for the UAW, the representative added, “The American public would not derive long-term benefits from the adoption of standards that resulted in the financial decline of the auto producers.”

Who will stand up?

Could it be that the customers of auto-producing companies may be rescued from destructive CAFE increases by the auto workers? The UAW, which also has opposed the Kyoto global warming treaty for similar reasons, appears to have a clear vision of the dangers to its members posed by CAFE. They may find the car companies are too divided and disorganized to be counted on to save the jobs of the union membership threatened by CAFE.

While the auto industry does not have “new economy” glitter, it remains an integral part of the “real economy” that is critical to the economic health of our country. As they have in the past, the UAW may have to fight to save their jobs.

There is another group that has a direct and deep interest in this matter: the automobile and truck dealers. They certainly gain nothing from Congressional or administrative action that would restrict the availability of the most popular and profitable models selling today.

The National Automobile Dealers Association has taken an active role in fighting more CAFE in past years. They know what the American car-buyer wants . . . and it isn’t smaller, lighter vehicles with lower utility and performance and less safety. Unlike our elected officials, the dealers will have to respond to unhappy customers faced with the news they can’t buy the larger, family-size minivans, pickups, and SUVs because they can no longer be made.

Auto workers and dealers may find it’s up to them to carry the message to Congress with some vigor and determination. If they do so, they just might carry the day.

James D. Johnston is a resident fellow with the American Enterprise Institute and author of Driving America: Your Car, Your Government, Your Choice (Washington, DC: AEI Press, 1997).