TCS Daily

Smell the CAFE

By John Merline - February 12, 2003 12:00 AM

Is there any public policy more durable and beloved by its supporters than CAFE?

For those not intimately versed with Washington-speak, CAFE is the acronym for "corporate average fuel economy." Under these federal standards, passed by Congress in 1975, automakers must sell a mix of cars that combined get an average 27.5 miles per gallon. The goal then was to cut gasoline consumption, and thereby relieve the nation of its unsafe dependence on foreign oil.

From the devotion to CAFE by its backers, one might easily conclude that the program has been a huge success. After all, in the 28 years since the law was enacted, lawmakers, environmentalists and Naderite groups have repeatedly mounted CAFE-boosting campaigns whenever the question of energy independence arose. It happened after Desert Storm in 1991 - with a Senate plan to boost the standard to 40 mpg - and again when OPEC production cutbacks caused a price spike in 2000.

Now with Washington threatening war against Iraq, CAFE advocates are once again out in force. As Sen. John Kerry, D-Mass., put it, boosting CAFE is "the most significant - immediate - step we can take toward reducing our dependence on oil."

But a closer look at CAFE reveals that is it has failed to live up to any of its promises:

  • CAFE hasn't improved energy independence. Fuel efficiency of cars on the road has climbed 52 percent since 1975, but that hasn't cut the nation's reliance on imported oil. Quite the opposite, in fact. Overall, the nation imports 51 percent of its oil, up from 36 percent in 1975. The share of oil from OPEC countries is now 27 percent, up from 22 percent when Congress passed the CAFE law.

  • CAFE hasn't reduced gasoline consumption. People are buying more gasoline today than in 1975, despite gains in auto efficiency. Average per person spending on gasoline is up 4 percent since 1975, after adjusting for inflation, according to data from the Bureau of Economic Analysis. One key reason: people are driving more. The number of miles driven by passenger cars and light trucks climbed 104 percent between 1975 and 2000, according to the Department of Transportation. At least some of this extra driving is the direct result of CAFE. "Increased fuel economy," the National Research Council noted in a 2001 report on CAFE standards, "also reduces the fuel cost per mile of driving, thereby encouraging faster growth in vehicle travel than would otherwise have occurred."

  • CAFE has cost thousands of lives. That same NRC report estimates that CAFE standards killed as many as 2,600 people in 1993 alone, thanks to the fact that the tighter fuel standards pushed automakers to downsize their fleets, forcing car buyers into smaller, less-safe cars than they would have otherwise purchased. In 1999, USA Today reported that CAFE had killed a total of 46,000 since the law was passed. That's equal, the story noted, to "roughly 7,700 deaths for every mile per gallon gained."

On top of this, CAFE is one of the most inefficient ways to get the country to reduce its gasoline consumption.

First, any boost in CAFE would require years to take effect. According to the NRC, increasing CAFE in a way that doesn't kill people would require a gradual phase-in of fuel economy hikes over a period of 15 years. Since it takes at least 10 years for the nation's fleet of cars to turn over, the full effects of such a program wouldn't be felt for more than a quarter century.

Second, increasing CAFE standards would affect just a minority of oil consuming products. According to the Department of Energy, motor vehicles as a whole account for about half of the oil used in the United States, and passenger cars only about 27 percent. The rest of it is used for home heating, jet fuel, lubricants, asphalt, and other uses unaffected by any increase in CAFE standards.

It seems that love of CAFE, like love itself, really is blind.

1 Comment

Weak arguments
CAFE has not helped fuel economy because SUVs fall under the "light truck" exemption, although most have never gone offroad or hauled anything but a couple of kids from the soccer team. That encouraged car makers to market them aggressively. Combine that with gas prices that until last August were below the inflation-adjusted prices of 1979, and you can see why people didn't much care that new cars guzzled gas.

With the SUV loophole, CAFE doesn't much matter at this point. Still, if you were making the case that CAFE should be abolished and market forces should prevail, I agree. Let's stop subsidizing petroleum producers with tax breaks. Let's put a direct tax on gas to cover the cost of fixing environmental damage such as MTBE and lead. Let's stop wasting money on the ethanol subsidy that is a net energy negative to produce auto fuel.

We don't need a federal energy policy. All we need is gas that's $5 a gallon and the market will sort out the details.

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