FUEL ECONOMY WONKISHNESS….The CAFE fuel economy standards passed in 1975 have worked great: average fuel efficiency increased dramatically between 1974 and 1985, cutting U.S. oil consumption by about a billion barrels per year. Unfortunately, CAFE standards haven’t been tightened since then, which means fuel efficiency has stagnated since the mid-80s.
Last year President Bush proposed that CAFE standards be increased, but his proposal does away with the “A” in CAFE. Dean Baker doesn’t like it:
Carmakers will be required to make each type of car they produce more fuel efficient over time, but they will not be obligated to improve the average fuel efficiency of the cars they produce.
Thus, each car maker would have to gradually and steadily improve the mileage of each type of car, instead of improving the fuel efficiency of their entire fleet. According to EPA estimates, the 2006 Toyota Prius gets 55 miles per gallon (mpg), and the 2007 Ford Explorer gets 16 mpg. Under the new standards, both cars must improve their mileage. Which means that if, a few years from now, the Prius is still at 55 mpg and the Ford Explorer is at 20 mpg, Toyota will be penalized, while Ford will be a model corporate citizen.
Point taken, though I think Bush’s proposals would raise fleet averages: if you raise the standards for every category of vehicle, the average for all of them put together almost has to go up unless buying habits change pretty dramatically. Still, why not add a bit of free market orthodoxy to the mix, as recommended by the National Academy of Sciences:
Changing the current CAFE system to one featuring tradable fuel economy credits and a cap on the price of these credits appears to be particularly attractive. It would provide incentives for all manufacturers, including those that exceed the fuel economy targets, to continually increase fuel economy, while allowing manufacturers flexibility to meet consumer preferences. Such a system would also limit costs imposed on manufacturers and consumers if standards turn out to be more difficult to meet than expected. It would also reveal information about the costs of fuel economy improvements and thus promote better-informed policy decisions.
Too wonky, I guess. But it sure seems like just the kind of thing both liberals and conservatives could get behind. Maybe that’s the problem.
