The CAFE Klatsch Must Die

Americans never demanded whale blubber. They simply wanted to light their homes. When a better means to the same end came along– a cheaper, safer and more effective energy delivery system (that didn’t require long, dangerous voyages and a Hellish rendering process)- they said ‘pardon me, be right back,’ and never returned. By the same token, Americans don’t demand imported oil or inefficient cars. They want a certain standard of performance. The two concepts just happened to be joined at the hip– at the moment. But that needn’t be so.

Many critics of America’s vehicular efficiency call for a gas tax to “force” the free market to create more efficient cars and trucks. The truth is a hefty gas tax will never pass. Besides, our federal Corporate Average Fuel Economy (CAFE) standards are a perfectly adequate instrument to stimulate a relatively painless increase in our automotive efficiency. If this system was properly implemented, every car, van and truck in America would get better gas mileage. We know this because we can already see its effects: hybrids, eight speed transmissions, composite materials, Canada goose-like drag coefficients. This process could easily be accelerated simply by raising the CAFE standards.

Could automotive engineers meet the challenge of more demanding regulations? Consider Formula One. Year after year, the sport’s regulating body attempts to slow things down using restrictive legislation. Year after year, F1 teams create cars that perform at the brink of human endurance. To say ingenuity can’t lead to more fuel-efficient cars, trucks, vans and sports cars is to say science is played out and we know all there is to know. The principle that CAFE necessity is the mother of invention remains fundamentally sound. Ah, but there is a caveat; raising CAFE standards is not enough. The rules are fundamentally flawed.

First, the legislation should be amended to stop assigning higher fuel economy ratings to flexible-fuel vehicles. For example, CAFE regs rate an E85-compatible 5.3-liter V8 Chevy Tahoe at 33mpg. The vehicle’s “gas only” EPA rating is 15/19mpg. The SUV struggles to achieve 10mpg on E85– which is more or less completely unavailable to 90% of the US population. Oh, and that’s one of the reasons why GM can advertise the fact that so many of their vehicles get “over 30mpg.” The CAFE regulation’s E85 calculations are ridiculous on so many levels it hurts.

Second, the EPA mpg figures should reflect actual real world driving. A Toyota Prius does not get 60mpg in city driving or 51mpg on the highway, and should not receive CAFE credits for doing so in the theoretical realm. While new EPA regulations will supposedly lower mileage estimates on hybrids by roughly 30%, and reduce a lot of other overly-optimistic estimates, it’s been clear for quite some time that the EPA should be using real world data. What’s more, the agency should create one simple statistical average for both city and highway driving.

Third, the loophole whereby passenger vehicles get called trucks or light trucks– removing some of the worst CAFE offenders from manufacturers’ car fleets and subjecting them to lower truck-related mpg standards– must be cinched. Classifying the PT Cruiser as a truck because it has a removable rear seat is just wrong. Classifying a crossover a truck because it has greater cargo-carrying capacity than passenger-carrying volume is also unacceptable. Common sense– rather than weights and measures– should be applied. If we’re really serious about improving overall fuel efficiency, it’s time for pickup trucks to be classified as passenger vehicles, regardless of their weight or commercial use.

Fourthly, the whole system of CAFE “credits” should be eliminated. Specifically, when a manufacturers’ car or light truck fleet’s average fuel economy exceeds the required standard, they earn credits that can be applied to any three consecutive model years prior to (“carry back”) or subsequent to (“carry forward”) the model year in which the credits are earned. Why do we need to dangle a carrot in front of automobile manufacturers? On the stick side, the penalties for non-compliance must be raised to the point where companies like BMW can’t simply shrug them off as a cost of doing business.

Lastly, again, CAFE standards should be raised. A manufacturer’s passenger car fleet is currently required to average 27.5mpg; light trucks must average 21.6 (rising to 22.2 mpg for 2007). I suggest a relatively modest increase of 2% a year for the next ten years.

Repealing the laws of supply and demand is challenging. If cars use less gas, supply rises, prices drop and the airline and trucking industries gobble up what good CAFE achieved. Everyone needs to be in the same boat, because consumption is – forgive me – a whale of a problem. Transportation is responsible for nearly 70% of the world’s oil use. The captains of that industry should be charged with changing course.