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Repeal CAFE, Save the Auto Industry
Posted by dzhuang on September 22, 2008
I stumbled upon an interesting Wall Street Journal article, “How to Save Detroit and Save $50 Billion,” and not to indulge in nostalgia over the auto industry’s golden days as I would never do that without feeling repusive, but this article (along with others I found in my research), convinced me that CAFE or Corporate Average Fuel Economy is bunk for the most part and that scrapping it could salvage whatever dignity automakers still have left.
CAFE was a policy first established in 1975 to force auto makers to meet fuel-efficiency standards (e.g. so many miles per gallon) in light of the 1973 Arab oil embargo. It’s purpose was to ween ourselves off from foreign oil dependency, to create more fuel-efficient cars, and to satisfy the American consumers. Fast forward 33 years and auto makers are begging for $50 billion from Congress to help them cover the $100 billion in costs they need to pay to meet CAFE standards.
I never considered mileage standards to be at the root of the problem, but it is awfully close. In other nations, auto makers are not forced to meet mileage standards. Instead, they make fuel-efficient cars because it is profitable. In the market, consumers have a high demand for light, compact, fuel-efficient cars. However, making fuel-efficient cars in the United States have only recently become profitable with the high gas prices. Previously, the hottest cars on the market were the SUVS, pickup trucks and minivans. I’m not saying that their gas guzzling qualities are good, but if that’s what Americans want, then let them have it. By forcing auto makers to meet mileage standards, they had to divert billions of dollars worth of capital from designing, manufacturing, services, and the likes towards researching and developing fuel efficiency, an ultimately unprofitable area for the long term.
CAFE was instituted with auto safety and reducing consumption in mind. However, it has failed on both fronts. Mileage standards have forced auto makers to develop smaller, more lightweight cars that are more suspectible to crashes. The Heritage Foundation delivers some reliable and powerful data on this issue:
More than 25 years ago, research established that drivers of larger, heavier cars have lower risks in crashes than do drivers of smaller, lighter cars. 7 A 2000 study by Leonard Evans, now the president of the Science Serving Society in Michigan, found that adding a passenger to one of two identical cars involved in a two-car frontal crash reduces the driver fatality risk by 7.5 percent. 8 If the cars differ in mass by more than a passenger’s weight, adding a passenger to the lighter car will reduce total risk. 9
The Evans findings reinforce a 1989 study by economists Robert Crandall of the Brookings Institution and John Graham of the Harvard School of Public Health, who found that the weight of the average American automobile has been reduced 23 percent since 1974, much of this reduction a result of CAFE regulations. 10 Crandall and Graham stated that “the negative relationship between weight and occupant fatality risk is one of the most secure findings in the safety literature.” 11
On the issue of consumption, consumers have obviously not reduced their gas consumption in the last 33 years since CAFE was passed in Congress. By purchasing fuel-efficient cars, the consumer mindset is thinking that it is perfectly justifiable to drive those cars more than normal. Thus, extended driving leads to a ton more gas being burned. This is the case in most instances because of something called the “rebound effect,” something that makes sense with all technology. As things get easier to do, people want to do it more. The same Heritage article highlights this as well:
Advocates of higher CAFE standards argue that increasing miles per gallon will reduce gas consumption. What they fail to mention is the well-known “rebound effect”–greater energy efficiency leads to greater energy consumption. A recent article in The Wall Street Journal noted that in the 19th century, British economist Stanley Jevons found that coal consumption initially decreased by one-third after James Watt’s new, efficient steam engine began replacing older, more energy-hungry engines. 13 But in the ensuing years (1830 to 1863), consumption increased tenfold–the engines were cheaper to run and thus were used more often than the older, less efficient models. In short, greater efficiency produced more energy use, not less.
The same principle applies to CAFE standards. A more fuel-efficient vehicle costs less to drive per mile, so vehicle mileage increases. As the author of The Wall Street Journal article notes, “[s]ince 1970, the United States has made cars almost 50% more efficient; in that period of time, the average number of miles a person drives has doubled.” 14 This increase certainly offsets a portion of the gains made in fuel efficiency from government mandated standards.
In result, our dependency on foreign oil has grown, our own auto industry has declined to the point of near failure and our consumers are, well, not doing too badly. Well, except for the fact that their tax payers are going to be paying for the auto makers struggle to meet mileage mandates. We should seriously rethink how we can pull auto makers out of their pit of despair, and abolishing CAFE standards can be a start.
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Repeal CAFE, Save the Auto Industry : Think Youth | Progressive News and Opinion from America’s Youth said
[...] [cross-posted at Michigan Youth Political Alliance] [...]
Aurora said
Sho-to-ka-ka-a-like:)
Stephanie Shinn said
CAFE Standards Useful and Effective—Critical for the Rough Transition
Stephanie Shinn [01.09.2009]
CAFE has been heavily doubted in recent years causing much uproar when deciding whether or not these standards are effective and essential. Many opponents to the policy argue CAFE standards are dangerous, sending auto makers over the edge and shifting the focus away from Alternative Fuels to an offset in fuel efficiency; whereas consumers have increased their driving and consumption rises.
However, consider this instead; CAFÉ Standards are needed in order for the United States to remain competitive with the rest of the world. Even more so, CAFE Standards further promote innovations, technologically more efficient vehicles, and a pathway leading to more achievable development and research of Flex-Fueled vehicles.
The Associated Press in Washington delivers some interesting facts about smaller vehicles on the market, asking the question, are smaller cars safer?
[The Insurance Institute for Highway Safety gave top scores on front-end crash tests for several 2009 small cars being released today. Three vehicles - the Pontiac Vibe and Toyota Matrix, which share the same underpinnings and are considered corporate twins, and the Suzuki SX4 - also received top scores in side protection.
Only one of the vehicles tested, the 2009 Chrysler PT Cruiser, received the lowest mark of poor in side protection and rear protection. Two other 2009 small cars, the Ford Focus and the Chevrolet HHR, got top marks in front-end tests and received the second-highest score of acceptable in side protection. "Automakers have made big improvements to small cars to better protect people in frontal crashes," said Joe Nolan, an institute senior vice president. "They've also added stronger structures and standard head-protecting side air bags to help in side crashes, which are tougher on smaller, lighter cars."]
The issue is not that CAFE Standards force auto makers to create smaller, less protective vehicles, it is an issue of when will people realize American automakers are improving the qualities of vehicles to meet CAFE standards and keep drivers safe, not to reduce weight. Laura Schewel, an environmental engineer with the Rocky Mountain Institute provides insight on the issue.
["Cars are not simple objects colliding like billiard balls on a table. They are highly complex products engineered to protect you." Design and safety features make a huge difference when two cars collide. Schewel points out how a driver of a 1999-2002 Chevrolet Blazer is 26 times more likely to die in that vehicle than the driver of a similar model year Toyota 4Runner even though both are midsize SUVs (the 4Runner is actually 200 lbs. less).]
On the issue of consumption, the average number of miles a person drives can correlate with as many factors such as gas prices, holidays, and the total overall number of drivers on the road; effecting commuting time and destination points. The consumption rate in relationship to the number of miles a person drives does not solely rely upon there being 50% more efficient cars since 1970. Simply because a fuel-efficient vehicle costs less to drive per mile, does not mean there is a direct relationship to greater energy consumption. Just because “things get easier to do,” does not mean people “want to do them more.” That is as much of an assumption as saying just because you can download or order movies more with Net Flix verses going to the Block Buster, does not necessarily mean you will want to watch more movies. The outcome of this “Rebound Effect” is undoubtedly minimal.
The National Highway and Traffic Safety Administration (NHTSA) document the current standard is set at 27.5 mpg for cars and 22.2 mpg for light trucks. “American fuel economy hit its peak in 1987 at 26.2 mpg, and the U.S. now has the lowest fuel economy standards of any industrialized nation, including China” (“MSN”). By establishing “harsh” standards, as labeled by CAFÉ opponents, American automakers can remain competitive with other regions of the world. The world’s demand for oil is increasing, but its supply is remorselessly decreasing. As they say, American automakers need to get on the fuel-efficient bandwagon if they are to remain competitive with their Japanese counterparts (“Will New Fuel Economy Standards Make Cars Less Safe?”).
If we are a nation so dependent on foreign oil, is it better to increase production in drilling and reliance, or is it better to encourage efficiency standards as an alternative? CAFÉ makes it so automobile manufactures build the best, most proficient vehicles. Without CAFÉ Standards, there is no infrastructure given and no objective set for auto makers to meet. The demand for newer and more sustainable vehicles keeps growing, but before we push even more so into a Flex-Fueled market, we need to make sure auto makers are meeting the set requirements now. The CAFÉ Policy has also encouraged this with Flex-fuel Credits that allow automakers to meet lower CAFE standards by producing more alternative-fuel vehicles. By testing limits and trying new initiatives, CAFÉ has only offered to make the transition into alternative-fuel vehicles a smoother one.