01 Jul 2007 CAFE Tab Too Expensive for America, by Deneen Borelli

Proposed legislation to increase Corporate Average Fuel Economy (CAFE) standards – the federally-mandated fuel efficiency rules for cars, light trucks and SUVs – will likely cause more harm to the American people than good.

Our nation’s dependency on foreign oil and reducing so-called “greenhouse gases” are the stated motivation for empowering 535 people on Capitol Hill and the President with the ability to set arbitrary demands on the automotive industry.  It comes, however, at the expense of consumer choice, safety and economic stability – especially for poor households and the already ailing domestic auto industry.

Legislation that was recently passed in the Senate and is now under consideration in the House of Representatives would increase CAFE standards from the current standard of 27 miles per gallon for cars and 22 mpg for light trucks to 35 miles per gallon for both by 2020.  Automakers face the challenge of meeting these steep demands without pricing themselves out of the market competitively or going bankrupt due to the estimated $114 billion necessary to retool assembly lines.  The tradeoff – higher gas mileage for increased costs – is not a fair trade because consumers as well as workers and retirees in the auto industry and related businesses will absorb the brunt of increased costs.

First of all, increased CAFE standards adversely affect what vehicles people can buy.  Automakers will most likely reduce vehicle weights to meet the new mandates, making them lighter and smaller.  Families with small children who have a preference or need for larger vehicles will be among the first victims.

Additionally, increased CAFE standards will make driving more dangerous.  Lighter and smaller vehicles increase the severity of injuries and decrease survival rates in crashes.  According to a 2002 study by the National Academy of Sciences, current CAFE standards cause an estimated 1,300 to 2,600 additional accident-related deaths per year. 

Low-income families stand to suffer the greatest harm from increased CAFE mandates.  These families may be unable to afford a new vehicle because of CAFE’s added production costs.  For that reason, low-income families may forego a new vehicle in favor of older, unreliable vehicles that may already require constant repairs.  If they get something new, it would inevitably be among the cheapest and therefore probably the smallest and most dangerous to drive.

Unfortunately, it seems our elected officials are not concerned about the consequences of their actions.  Not surprisingly, details of the potential harm revised CAFE standards could impose have, thus far, not slowed Big Government’s aggressive political pursuit of inflexible fuel economy standards. 

This insensitivity to the plight of low-income families in particular is found in another scheme designed to address the theory of man-made global warming.  The idea, which was endorsed by the corporate criminals at Enron, would limit carbon dioxide through an international “cap and trade” emissions program.  According to a April 25, 2007 critique of the policy by the nonpartisan Congressional Budget Office: “[M]ost of the cost of meeting a cap on [carbon dioxide] emissions would be borne by consumers, who would face persistently higher prices for products such as electricity and gasoline.  Those price increases would be regressive in that poorer households would bear a larger burden relative to their income than wealthier households would.” 

In a free market, any manufacturer or service provider should have the flexibility to give customers what they want – choice, quality, affordability and convenience.  And the market works, as manufacturers have already produced a number of smaller, more fuel-efficient vehicles for those consumers who prefer them.  Big Government intervention, especially in the instance of fuel economy standards, is harmful to both the consumer and the auto industry.  It puts safety and preferences in the backseat.

Drivers should beware and proceed with caution – an increased CAFE standard would move the government into the driver’s seat, leaving the American people with no control and few alternatives.

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Deneen Borelli is a fellow with the Project 21 black leadership network.  Comments may be sent to [email protected].

Published by The National Center for Public Policy Research. Reprints permitted provided source is credited. New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21 or the National Center for Public Policy Research.