Examining New U.S. Fuel Economy Standards

Abstract

After decades of futile attempts to increase U.S. fuel economy standards for passenger cars, which have remained unchanged since enactment of the Corporate Average Fuel Economy (CAFE) Standards in Title V of the 1975 Energy Policy Conservation Act, it seems increasingly likely that new and tougher standards will be enacted in the near future - especially after the Senate's 21 June passage of energy efficiency bill H.R. 6. As this magazine went to press, the bill, which calls for a 40 percent increase in vehicle fuel economy by 2020 among other efficiency and alternative energy goals, was headed to the House of Representatives for more debate. Congress has seen proposals like this since the 1980s, but this is the first time that one of them has passed in the Senate. The Bush administration has also weighed in with a proposal to increase new vehicle fuel economy by 4 percent per year from 2011 to 2017, and the administrator of the National Highway Traffic Safety Administration (NHTSA) has asked Congress to grant the Secretary of Transportation the authority to restructure and increase CAFE standards for cars, a power denied by the original CAFE legislation. A confluence of events has led tomore » this change of political climate, including: the failure of world oil production and refining capacity to keep pace with rapidly growing demand, especially from China and other emerging economies, which has led to the highest oil prices since the 1980s and growing fears that world production of conventional oil may be close to its peak and rapid decline; the escalating influence of oil resources on geopolitics as China seeks to guarantee its future access to supplies, enhanced revenues from the higher prices, which prop up authoritarian regimes in Iran, Venezuela, Russia, and elsewhere and allow them increasing freedom of action; the enhancement of the role of climate change in political decision making by new reports from the Intergovernmental Panel on Climate Change (IPCC), with much strengthened language about the probability and severity of climate change and man's influence on it, and a recent Supreme Court decision rejecting the Environmental Protection Agency's assertion that it has no authority to regulate greenhouse gas emissions. New fuel economy standards will represent an ambitious and expensive undertaking on the part of the automobile industry and the nation, and proposals for new standards deserve careful congressional and public scrutiny.« less