User:HybridBoy/Vehicle regulation

Existing regulations

Detroit automakers say that CAFE did not work to reduce fuel consumption. They point out that the price of oil was spiking in the late 1970s and early 1980s, at the same time that CAFE was being implemented, and that therefore fuel economy would have increased anyway. Let’s review the facts.

After Congress set fuel economy standards for vehicles in 1975, our dependence on oil imports decreased very quickly from 46 percent in 1977 to 27 percent in 1985.

After 1981, however, the price of oil fell rapidly.

CAFE standards continued to be increased after 1981 and the actual fuel economy for cars and trucks separately continued to rise.

Combined fuel economy for cars and trucks has been falling since 1986, not because “CAFE failed” but because of a loophole in the law that allowed trucks to meet a lower fuel economy standard. Automakers used that loophole, designed to protect farmers and small business, to build family vehicles on truck chassis – familiarly known as SUVs and Minivans.

CAFE worked to increase average fuel economy for cars and trucks separately, but the steady growth in trucks from less than 20% of the market before CAFE to over 50% today, eventually offset CAFE. As a result, total fuel economy has been falling

since 1986.

Without CAFE standards, we would be using an additional 80 billion gallons of gasoline on top of the 140 billion gallons we will use this year. That would represent an increase in oil demand by 5.2 million barrels of oil per day, or a 25 percent

increase in our oil addiction. At today’s average price for regular gasoline, about $2.50 per gallon, that represents $200 billion dollars saved.

Even today, these standards continue to save nearly 3 million barrels of oil per day, according to the National Academies of Sciences. Since 1985, however, fuel economy has been stagnant and our imports have grown.

According to data in the 2002 report by the National Academies of Sciences on CAFE, the technology exists to reach 37 mpg in a fleet of the same make-up as the NAS analyzed, even ignoring hybrids and cleaner diesels.

Paul Portney, chair of the NAS committee, recently noted that, “It might be possible to meet more stringent fuel economy standards at lower costs than the committee foresaw.”

The United States is falling behind other nations pushing for better fuel economy as concerns mount over global warming. Even China, oft touted as the reason why the U.S. shouldn’t act, has tougher fuel economy standards.

Because the automakers did not meet voluntary agreements to reduce greenhouse gas emissions, the European Commission in Brussels is moving mandate automakers to limit carbon-dioxide emission to an average of 130 grams per kilometer for all new cars by 2012.

CAFE Going Forward

CAFE is usually seen as mandating the average fuel economy that each automaker must attain for its vehicles. However, fines for not meeting the required average fuel economy support enforcement of CAFE. The current fine that an automaker not meeting the required average fuel economy pays is $55 for each mile per gallon the automaker’s average fuel economy falls short of the requirement, multiplied by total unit sales.

The CAFE fine is too small to have induced compliance by itself. The Gas Guzzler Tax applies only to cars and amounts to an average of $585 per mile per gallon below 21.5 mpg. Recent estimates both by UMTRIvi and by Espey and Nairvii put the value that consumers put on fuel economy at about $600 per mile per gallon. Compliance also depends on interpreting the CAFE fines as penalties for illegal behavior, which would have consequences far more serious for publicly traded corporations than the magnitude of the fines.

The Detroit automakers, as U.S. corporations, have been unwilling to risk being penalized under CAFE and have always met the CAFE requirements, Most of the Japanbased automakers have always exceeded the CAFE requirements, so the fines have not been an issue. The European automakers are the only ones who have consistently paid CAFE fines. The European automakers have a relatively small share in the U.S. and total fines collected annually have always been less than $100 million.

In order to induce automakers to significantly increase fuel economy, the fees for falling below the goal would need to be much higher than the current $55 per mpg in CAFE—on the order of $600 per mpg or more—or the illegal nature of noncompliance would need to be maintained or strengthened.