Automobile Mandate

Fuel Economy Mandates

The federal government is mandating dramatically higher fuel economy standards for cars and light-duty trucks (pickup trucks, SUVs and vans) in an effort to reduce oil use. These regulations, called Corporate Average Fuel Economy standards (CAFE) have some serious negative side effects. History shows that to meet fuel economy mandates, automakers make cars lighter and less safe[1]and the additional technology required for greater fuel economy makes automobiles more expensive. [2]  Generally, the auto companies have resisted these mandates, but after bailing out General Motors and Chrysler, the Obama administration twisted the automakers’ arms into supporting ever higher mandates, regardless of cost or safety. In fact, the latest round of fuel economy mandates will force 7 million car buyers out of the market because the regulations add thousands of dollars to the price of a new car.

The Fuel Economy Mandate was Negotiated in Secret Between the White House and the Auto-makers

Starting during the Bush administration, the federal government has looked to ratchet up the federal fuel economy mandate. Traditionally, car makers have pushed back against federal efforts to increase the fuel economy mandate. One reason is that car makers, especially the American car makers, have made a large portion of their profits on SUVs. But after the federal government bailed out General Motors and Chrysler, the automakers changed their tune and started supporting a higher fuel economy mandate.

Negotiations between the White House’s Energy and Climate Change Czar, Carol Browner, and the car makers were held in secret. Browner instructed the car makers to “put nothing in writing, ever.”[3] This disregard for transparency and good government is especially troubling given that higher fuel economy mandates have been shown to lead to more deaths.

Fuel Economy Mandates Increase the Price of a New Car by Thousands of Dollars and Will Force 7 Million of Drivers Out of the Market

According to the federal government, the latest fuel economy mandate will increase the price of a car by almost $3,000. The National Automobile Dealers Association (NADA) warns that this amount (which is almost certainly an underestimate) will price nearly 7 million drivers out of the market for a car.[4] According to EPA’s calculations, their fuel economy mandate will increase the upfront price of car and the higher fuel economy will save money over time. The problem with EPA’s logic is that people have to come up with the money upfront to buy a car. By increasing the upfront costs, fewer people will have the money to buy a car or to afford a loan to buy a car. In the end, that means fewer people will be able to enjoy the benefits of automobility. Instead, these people will be forced to spend more of their precious time on public transit instead of having the great personal mobility that personal transportation provides.

While $3,000 a car sound like a steep increase in the price of a car that is EPA’s estimate and is therefore likely an underestimate. Other estimates place the price of EPA’s regulation at $4,800 per car. According to NADA’s  calculations, this would force 10–11 million drivers out of the market.[5]

Fuel Economy Mandates Threaten Safety

One way to make cars and truck more fuel efficient is to make them smaller and lighter. The problem with downsizing cars, according to the International Institute for Highway Safety is that “smaller, lighter vehicles generally are less protective of their occupants in crashes.”[6]

Study after study has found that downsizing cars leaders to more deaths and more injuries. In 2001, the National Academy of Sciences reported that “the downweighting and downsizing that occurred in the late 1970s and early 1980s, some of which was due to [fuel economy] standards, probably resulted in an additional 1,300 to 2,600 traffic fatalities in 1993.”[7] A study by scholars at Harvard and the Brookings Intuition found that downsizing vehicles was “associated with a 14 to 27 percent increase in occupant fatality risk.”[8] This means that between 41,000 and 125,000 people have died because of these fuel economy mandates.[9]

A Flawed Premise #1—We Aren’t Running Out of Oil

Part of the justification for fuel economy mandates is that the United States has limited oil resources and must therefore drastically reduce our oil consumption. There are a number of flaws with their belief.

The United States is not an oil-poor country. In fact, we are oil rich. The United States has 1.44 trillion recoverable barrels of oil.[10] This is enough oil for the next 200 year without a single drop of imported oil. It’s not the case that we are running out of oil, but the federal government is keeping over one trillion barrels of oil off limits from exploration and production. The follow chart shows how vast U.S. recoverable oil shale resources are compared to other large oil-producing countries.

Flawed Premise #2—Drivers are Smart Enough to Choose Which Cars and Trucks Work Best for Their Lives Without the Federal Government Limiting their Choices

For decades, Americans have had the option to purchase fuel efficient vehicles. Twenty-five years ago, Honda produced the Civic Coupe HF, which got 40 mpg in the city and 48 on the highway. But when it comes to making choices about vehicles, it turns out that fuel economy is just one of many factors Americans use to make their car purchase choices. Americans also want cars that are comfortable, safe, practical, and fun to drive.

Over time, cars have become bigger, quicker, and more comfortable, while at the same time retaining decent fuel economy. Consider the following table[1] that compares today’s cars to the same version from 25 years ago. In every case, the fuel economy is similar even though the 2010 version of each car is larger, the engines are larger, the cars have more passenger volume, and provide more luggage volume. Interestingly, the 2010 versions generally get slightly worse city fuel economy and slightly better highway fuel economy.

Moreover, when the government mandates fuel economy improvements, car makers are forced to make sacrifices in other areas, such as comfort, size, or power. What’s wrong with automakers building cars that the American people want? Should auto manufacturers really be forced to produce the cars the Obama Administration thinks we should have?