CAFE quicksand

Every so often in our nation’s capital, a “don’t just stand there, do something” mentality takes over and consumers inevitably suffer the consequences. Well, it’s about to happen again as some in Congress rush to try to stop global climate change by setting drastically higher fuel economy standards for motor vehicles. And once again, consumers should beware.

There’s an old saying that those who ignore history are doomed to repeat it. Legislating to raise Corporate Average Fuel Economy (CAFE) standards to between 35 and 40 miles per gallon to respond to growing concern about dependence on foreign oil and global climate change is a good case in point.

Reacting to the gas crisis in the 1970s, Congress established the CAFE program to improve vehicle gas mileage and reduce dependence on foreign oil. It arbitrarily decreed the auto industry should double gas mileage over a decade. Ultimately, the automakers did so, but only because gas prices rose substantially in the late 1970s and early ’80s, forcing consumers to buy smaller cars. And it didn’t happen without significant adverse consequences for consumers, the industry and its employees.

For example, as a direct result of higher CAFE standards, big family station wagons were regulated out of existence. But large families, farmers, small businesses and those who tow or haul heavy loads still needed vehicles. Thus, minivans, SUVs and extended cab pickups were developed to fill that need, since by law, as light-duty trucks, they are subject to somewhat lower mileage requirements. Consumers no longer had the option of buying a full size station wagon, even though the substitute vehicles yielded little or no fuel savings.

Now some in Congress want to subject those vehicles to a 10-15 mpg raise — with no thought as to what millions of Americans with a need to tow and haul will do about getting a vehicle that can meet those needs. So the more than 20 million towables — campers, trailers, RVs, snowmobiles, motorcycles, boats and so forth — may be consigned to the garage or the backyard.

Regulatory schemes like CAFE can come with a number of unintended consequences — things like putting smaller, sometimes less-safe vehicles on the road; pricing some vehicles beyond the reach of many Americans; and artificially creating winners and losers in a highly competitive environment like the auto industry. Remember in the 1970s when Congress and the regulators required higher CAFE standards and new tailpipe emissions requirements? As a result, the American auto industry nearly buckled under regulations that clearly favored Asian manufacturers who produced only small cars and very few light-duty trucks and therefore were not as adversely affected as Chrysler, Ford and General Motors. Many thousands of U.S. jobs were wiped out.

Now, at a time when the auto industry is more intensely competitive than ever, Congress may impose a regulatory scheme that will further distort the marketplace, though the old CAFE scheme has an abysmal track record in reducing America’s reliance on foreign oil. In 1975, the U.S. imported about 35 percent of its oil. Today, even after nearly 30 years of living under CAFE requirements, more than 70 percent of our oil comes from foreign sources.

Recently, the Senate Commerce Committee voted to raise CAFE standards dramatically to 35 mpg by 2020 with 4 percent annual increases over the next decade — and to apply the CAFE standards to medium- and heavy-duty trucks with the same 4 percent annual increases in the future. That may look like a good idea on paper, it’s a bad idea in practice. If the intent is to cut foreign oil imports and overall oil use, we need to rely on things like biofuels, clean diesels and other alternative fuel technologies. The Senate bill does none of these.

As House Commerce Committee Chairman John Dingell said, “What we need now is some new thinking.” He’s right. Congress should not pick an arbitrary CAFE level and tell the automakers to figure out how to get there — we have already seen the unintended consequences that approach can have. That’s not a wise approach to energy policy.

Washington policymakers should slow their rush to just “do something.” We must reduce our dependency on foreign oil, but not by building on CAFE regulations that wipe out U.S. jobs and undermine the quality of life for millions of Americans.

James H. Burnley was the transportation secretary 1987-1989. He now is a partner in the law firm Venable, LLP.