The U.S. Environmental Protection Agency (EPA) will soon begin its mid-term review of the new fuel-economy standards it wants U.S. cars and light trucks to meet by the 2025 model year.
Announced in August 2012, the EPA standards would require new American-made cars and light trucks to average 54.5 miles per gallon by 2025. The standard today (for model year 2016) is 34.5 mpg.
Enacted in 1975 following the Arab oil embargo, the so-called Corporate Average Fuel Economy (CAFE) standards were first sold to voters as a way of reducing American dependence on imported oil.
Today the CAFE standards are sold as an uncontroversial means of reducing fossil fuel consumption to save the planet from climate change Armageddon.
It’s important to recognize that fuel economy standards are mostly fictional. Because they are based on averages, no single driver can expect to purchase a 54.5 mpg vehicle anytime soon. Automakers still can produce gas-guzzling SUVs as long as they also produce gas-sippers.
As a matter of fact, the fuel efficiency rating posted on the side window of new vehicles is determined by running the engines of various models fueled by ethanol-free gasoline in an indoor factory laboratory.
Mileage ratings on the highway burning blended fuels predictably fall short of the EPA’s mark — much as then-Sen. Hillary Clinton missed the mark when she claimed, in a May 2, 2008, speech at the Democratic Party’s 2008 Jefferson-Jackson Dinner in Raleigh, N.C., that automobiles getting between 100 and 150 miles per gallon would be in our garages “in a couple of years.”
What EPA bureaucrats appear not to understand — or refuse to acknowledge — is that improved fuel efficiency also can generate “rebound effects.”
Because the cost of driving per mile is lower in a 54.5 mpg car than in a car that gets 34.5 mpg, consumers rationally may respond to tougher standards by driving more miles, offsetting CAFE’s “intended” effect.
The main problem with the mandated fuel economy standards is that the least expensive way for automakers to comply is by making vehicles lighter.
Replacing steel with aluminum and fiberglass is cheaper than re-engineering already highly fuel-efficient engines. In fact, that may be the only way to meet the latest rules, according to the National Highway Traffic Safety Administration.
Lighter cars and trucks are less crashworthy than heavier ones. Stricter mileage standards therefore will injure and kill more people on the nation’s highways.
That’s why Washington politicians and EPA bureaucrats focus on being “green” — while ignoring the death and destruction their mandates trigger.
Another way to meet tougher mileage rules, of course, is to produce more hybrid or plug-in cars and trucks. That strategy may have made sense to automakers when the retail price of gasoline was $4 per gallon, but not when a gallon of gas costs less than $2 in many places.
On top of his proposal to levy a $10 per barrel federal tax on crude oil, it is no surprise that President Obama wants to curry more favor with environmentalists before leaving the White House.
The administration’s micromanagement of the auto industry will, as usual, fall on the backs of American consumers.
Designed in D.C. for a world fearing that crude oil would soon run out, the 2025 CAFE standards mean that cars and light trucks will carry much bigger price tags and offer their occupants less protection in crashes than the gas guzzlers of a bygone era
William F. Shughart II is J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business and research director of the Independent Institute. Readers may write him at Business 510, 3500 Old Main Hill, Logan, UT 8432