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90 IRET Congressional Advisory 1 (1999)

handle is hein.taxfoundation/iretcgadv0087 and id is 1 raw text is: September 27, 1999 No. 90 CORPORATE AVERAGE FUEL ECONOMY: WHERE PRO-LIFE AND PRO-CHOICE MEET In 1978, during the height of the energy crisis, Congress passed the Corporate Average Fuel Economy program, commonly known as CAFE, as part of The Energy Policy and Conservation Act. The Act mandated certain levels of fuel efficiency for cars and light The existingJ1 trucks sold in the United States standards sho and empowered the the currentbi Department of Transportation aS soon aS p (DOT) to raise the standards in elimination of the future. Currently CAFE standards are 27.5 miles per gallon for cars and 20.7 MPG for so-called light trucks (including SUVs and many mini-vans). These averages apply to the entire fleet of automobiles in each category sold by a company in the U.S. market. CAFE standards are an assault on individual liberty and have been shown to decrease auto safety, costing thousands of lives each year. Congress froze the standards in 1997 by withholding funding for any tightening. The existing freeze on the CAFE standards should be continued in the current budget work, followed as soon as possible by the total elimination of the CAFE program. Some History During the 1970s, the Nixon, Ford, and Carter price controls on oil and gasoline were causing a severe decline in domestic oil exploration and refinement while encouraging consumers to demand quantities of gasoline that could not be sustained at the controlled prices. By the mid- 1970s all exploration for new domestic sources of crude oil had come to halt. Literally no new wells were being drilled and consequently oil imports were on the rise. The results were policy induced gasoline shortages and chaos in energy markets. Instead of adopting the common sense approach, later taken by Ronald Reagan, i.e., abolish the price controls, Congress and the Carter Administration pursued a policy of demand management, attempting to constrain the choices of American automobile consumers. The purpose of CAFE regulations was, and still is, to force American consumers out of the cars and trucks ree7e on the CAFE ild be continued in 'dget work, followed ossible by the total the CA FE programn. CAFE disappear they would naturally prefer and force them into the types of - vehicles favored by legislators in Congress and bureaucrats at the DOT. With the abolition of energy price controls in 1981 came a flood of new investment in oil and a decline m in prices. The original misguided justification for ed. Even from the perspective of those who favored the regulations, abolition was in order and free consumer choice should have been restored. But during the 1980s, those favoring CAFE regulations shifted their argument from managing an energy crisis to saving the environment. By the 1990s, the primary justification for not only continuing but raising the CAFE standards became to fight off the evils of global warming. According to the Sierra Club, Increasing the fuel efficiency of automobiles is the biggest single step the United States can take to reduce the consumption of fossil fuels and the threat Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 * Fax 202-463-6199 0 Internet www. ret.org

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