The Environmental Protection Agency in June will begin its multistep midterm review of the fuel economy standards it wants cars and light trucks to meet by the 2025 model year.
Put in place in August 2012, the EPA standards would require new American-made cars and light trucks to average 54.5 miles per gallon less than 10 years from now. The standard today (for model year 2016) is 34.5 mpg.
Enacted in 1975 after the Arab oil embargo, the corporate average fuel economy, or CAFE, standards were first sold to voters as a way of reducing American dependence on imported oil.
Today the standards are sold as an uncontroversial means of reducing fossil fuel consumption to save the planet from climate change Armageddon.
But it’s important to recognize that fuel economy standards are mostly the stuff of fiction.
Because the standards are based on averages, few motorists will be driving 54.5 mpg vehicles anytime soon. Automakers can still produce gas-guzzling SUVs as long as they also produce gas-sippers.
Further, the fuel efficiency ratings posted on the side windows of new vehicles are determined by running the engines of various vehicles with ethanol-free gasoline in an indoor factory laboratory.
Consequently, mileage ratings gathered on the highway by vehicles burning blended fuels predictably fall short of EPA marks — much as then-Sen. Hillary Clinton missed the mark when she claimed in a speech at the North Carolina Democratic Party’s 2008 Jefferson-Jackson Dinner in Raleigh, N.C., that automobiles getting between 100 and 150 mpg would be in our garages “in a couple of years.”
What EPA bureaucrats appear not to understand — or refuse to acknowledge — is that improved fuel efficiency also can generate rebound effects.
Because the cost per mile of driving a 54.5 mpg car is lower than that of a 34.5-mpg car, consumers rationally may respond to tougher standards by driving more miles, offsetting the standard’s intended effect.
The main problem with the mandated fuel economy standards is that the least expensive way for automakers to comply is by making vehicles lighter.
Replacing steel with aluminum and fiberglass is cheaper than re-engineering already highly fuel-efficient engines. In fact, that may be the only way to meet the latest rules, according to the National Highway Traffic Safety Administration.
Lighter cars and trucks are less crash-worthy than heavier ones. Stricter mileage standards therefore will lead to more injuries and deaths on the nation’s highways.
So while Washington politicians and EPA bureaucrats focus on being green, they ignore the death and destruction their mandates trigger.
Another way to meet tougher mileage rules, of course, is to produce more hybrid or plug-in cars and trucks. That strategy may have made sense to automakers when the retail price of gasoline was $4 per gallon, but not when a gallon of gas costs less than $2 in many places.
It is no surprise that President Barack Obama wants to curry more favor with environmentalists before leaving the White House, but the administration’s micromanagement of the auto industry will, as usual, fall on the backs of American consumers.
Designed in D.C. for a world fearing that crude oil would soon run out, the CAFE standards mean that cars and light trucks will carry much bigger price tags and offer their occupants less protection in crashes than the gas guzzlers of a bygone era.
William F. Shughart II is the research director of the Independent Institute in Oakland, Calif., and the J. Fish Smith professor in public choice at Utah State University’s Huntsman School of Business. Readers may write him at: The Independent Institute, 100 Swan Way, Oakland, CA 94621.