CAFÉ: Not So Brilliant

Remember when you were little, and your parents would warn you against blindly following others? “If Bobby jumped off the Brooklyn Bridge, would you, too??”

Earlier this month, President Obama announced his intentions to use CAFÉ (Corporate Average Fuel Economy) standards in federal regulations, effectively adding an estimated $1,300 onto the typical consumer’s next car purchase (if the regulations are really adapted). Democrat and California representative Henry Waxman was a leading voice behind the House of Representative’s recent passage of the Waxman-Markey American Clean Energy and Security Act. California Governor Schwarzenegger applauded the passage of the bill on May 21 with a California-centric statement: “…this Act represents the kind of comprehensive federal strategy to use energy more efficiently, produce more clean energy here at home, and courageously address the urgent threat of global warming that leading states such as California have urged for years.”

The problem with this statement is that it addresses a rather inglorious period for California leaders. It was also in the 1970s that Californians revolted against an irresponsible band of leaders, at the same time that fuel prices were rising and mandatory regulations were being put in place on exactly what people could drive. Anyone who truly understands the California spirit understands that you don’t mess with a California’s vehicle choice.

This follows what is believed to be the influence of some California politicians, as California is well known for tougher (not necessarily more helpful) fuel emission standards, and Governor Arnold Schwarzenegger teamed up with the president to announce “success” in pushing for more rigid federal emissions regulations as well.

Let’s go back just a little. The origin of the whole let’s-realllllly-regulate-cars, started in the 1970s, with California and the federal government outlining conservation guidelines, mainly in response to the hurtful Arab oil embargo. According to the National Highway Traffic Safety Administration, 1975’s Energy Policy Conservation Act got the proverbial federal ball rolling. CAFÉ standards are defined as “the sales weighted average fuel economy, expressed in miles per gallon (mpg), of a manufacturer’s fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 lbs. or less, manufactured for sale in the United States, for any given model year.” What’s also strange is that the NHTSA notes that all manufacturers are penalized (for now) $5.50 “per tenth of a mile per gallon for each tenth under the target value times the total volume of those vehicles manufactured for a given model year.” Doesn’t that mean the NHTSA stands to benefit considerably from even stricter emissions standards, which it even notes some huge manufacturers, American and foreign, have failed to meet, and over the last 26 years, have paid “more than $500 million in civil penalties” for failing to do so?

The CAFÉ standards refer to fuel usage and miles per gallon which a car can average. It has been argued that adopting such standards will have deleterious effects on the average consumer. Obama’s regulations would effectively go into action by 2012, at which point cars would need to be able to travel at least 35.5 miles on every gallon of fuel used. By 2016, it would be expected that every new car would have a fuel efficiency of 35.5 miles per gallon or better.

Another interesting argument about such strict new emissions standards includes that of the light car and the dirtier, older car: in an op-ed in the Wall Street Journal last week by Robert Grady of the Carlyle Group, Grady argued two fascinating and surprising points. The first is that it is cars made in the last four decades which contribute to the bulk of smog, but those made in the preceding decades, before more recent regulations. Grady also noted that, ironically, with rising prices on more quote-on-quote environmentally-friendly cars, people will end up using their older cars longer (“…fewer new cars means more pollution, which can cause significant health problems… yet the environmentalists and the press have ignored this issues”), and more likely contribute to the problem, rather than solve it (“…the rules could impose substantial costs in terms of urban air pollution and human life.”). Grady also noted that a consequence of more expensive cars is that smaller, less safe cars will be made, effectively providing a trade-off between driver safety and alleged environmental protection. This is all assuming that the crux of this legislation, that climate change is clear and man-made, can actually be reversed by having drivers under even stricter regulations.

California is absolutely not a place to mimic right now. As the people suffer, the political class in Sacramento has been twiddling its thumbs and pushing for nonsensical (and potentially harmful, fiscally) legislation and ignoring real issues. The recent failure of Propositions 1A through 1E provided an extreme wake-up call to legislators, that California, is in fact, not the beacon of governmental light that it once was, at least not right now. The 800 lb. gorilla in the room that no one is even mentioning is that CAFÉ standards really don’t make a lot of sense. They are not accurate representations of actual fuel efficiency, as the numbers crunched by said standards, consist of averaging the number of various car models divided by their individual mpg, rather than accurate, actual reflections of a manufacturer’s production. So even if a manufacturer has a fabulously fuel-efficient car, if it has more cars that are not as efficient, it’s CAFÉ rating will be significantly different from that standout model’s. If you’re going to use an awful system to regular car manufacturers, at least find one that makes a little more sense.