CAFE

For many Americans car ownership isn’t a luxury, it’s a lifeline.

Corporate Average Fuel Economy standards (CAFE), the official title of the U.S. fuel efficiency mandate, is one of the more outdated laws still on the books. CAFE was created back in the 1970s in response to the oil price shocks of that decade and a Malthusian fear about the world running out of oil. Whatever the initial logic of the program, recent years have shown it to be an anachronism. The U.S. is awash in oil, producing more than ever before in our history, and notwithstanding political turmoil in certain countries, there is no prospect of the world market running out of oil.

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 and the additional technology required for greater fuel economy makes automobiles more expensive. This dangerous precedent is a direct result of the Obama Administration’s willingness to double down on bad policy.

American consumers have also shown their disdain for the CAFE program, overwhelmingly favoring trucks and SUVs as their vehicles of choice.

Thankfully, the Trump Administration has – through their proposed rule – taken meaningful steps to reduce the burden and irrationality of this outdated and unnecessarily complicated mandate. The proposed rule addresses a number of problems:

• The proposed rule elevates and ensures the primacy of consumer choice over bureaucratic dictates. Automakers now design vehicles to meet the preferences of bureaucrats rather than the preferences of consumers, the proposed rule takes steps toward changing that.
• The proposed rule establishes and confirms true federalism by removing California’s ability to dictate to consumers in other States what kinds of cars they should buy. No State should have the ability to dictate what kinds of cars citizens of other States can or should own.
• The proposed rule is a welcome acknowledgment that the world has changed since 1975.  We now live in an era of energy abundance. The mandate is a relic of a bygone era based on the notion that oil is becoming scarce and needs to be rationed by government action.
• The proposed rule minimizes the costs to consumers imposed by the current mandate. The technical assessments (initially created by the Obama Administration) indicate the mandate, left undisturbed, will raise the average price of a vehicle by at least $3,000 and consequently price some consumers entirely out of the new car market.

The fundamental question associated with this mandate is clear: who should decide what types of cars consumers should buy, consumers themselves or bureaucrats in Sacramento or Washington? We think that answer is clear, and, consequently, welcome the Administration’s action.

President of AEA Thomas Pyle on CAFE: