Corporate average fuel economy standards

Definition: Federal standards designed to improve automobile fuel efficiency in the United States

Vehicle fuel economy standards were imposed in the United States during the 1970s in an effort to reduce fuel consumption, but increased driving and use of larger vehicles led to higher per-capita consumption over the next three decades. During the early twenty-first century, however, rising gasoline prices revived interest in improving the standards.

In response to the energy crisis of the 1970s, the U.S. Congress enacted legislation intended to reduce American dependence on oil imports. The 1975 corporate average fuel economy (CAFE) standards mandated fuel-efficiency levels for automobile manufacturers. Each manufacturer’s annual automobile output had to meet the assigned average for that model year. If a fleet exceeded the CAFE standards, the manufacturer faced a substantial fine. To ensure that manufacturers did not import fuel-efficient foreign cars to offset low averages in their domestic output, the legislation required that import and domestic fleets be evaluated separately.

The 1978 standard for passenger cars was 18 miles per gallon (mpg). Averages gradually increased over the years (with the exception of a rollback during the late 1980s, prompted by a petition from automakers). By the 1990s the passenger car standard had reached 27.5 mpg, while the standard for light trucks (which included vans and sport utility vehicles, or SUVs) was 20.7 mpg. Between 1996 and 2001, provisions in the Department of Transportation’s appropriations bills prohibited changes in the standards.

During the late 1990s many environmentalists pressed for more stringent CAFE standards. They argued that improved fuel economy would reduce the introduction of greenhouse gases and other harmful automobile by-products into the atmosphere. In addition, it would serve to protect U.S. wilderness areas where the threat of oil drilling remained a possibility. Proponents of more stringent standards also pointed to the increased use of minivans and SUVs. When CAFE standards first were imposed, light-truck-class vehicles were used predominantly for business and agricultural purposes, and lower standards were set for light trucks in order to protect small businesses and farmers. SUVs, vans, and trucks weighing between 8,500 and 10,000 pounds were not subject to any fuel economy standards at all. During the 1990s, minivans and SUVs proliferated as means of personal transportation, meaning more fuel-hungry vehicles on the road and a rise in per-capita fuel consumption.

Critics argued that CAFE standards had no impact on foreign oil imports, which continued to rise after the regulations were enacted. After a period of concern during the Persian Gulf War in 1991, most consumers regarded the continuing decline in gasoline prices that marked the mid-1990s as evidence that the issue was not critical. CAFE opponents also contended that the standards hurt the U.S. automobile industry and the country’s economy in general. They claimed that the costs of manufacturing vehicles with increased fuel efficiency were passed on to consumers in the form of higher vehicle prices that unfairly affected not only individuals but also small businesses. More important, critics asserted, manufacturers achieved better performance by building smaller cars from lighter materials—vehicles that provided less protection to passengers in the event of accidents. This argument gained ground in 1991 when the U.S. Department of Transportation released a study indicating that higher CAFE standards were directly related to increases in traffic injuries and fatalities. (Later studies, however, suggested that the quality of a vehicle’s engineering plays a greater role than its mass in determining how it fares in an accident.)

Environmentalists countered that higher vehicle costs were offset by savings in fuel expenses. As for the increase in traffic deaths, they maintained, automobile exhaust causes environmental damage that also results in deaths. They pointed to global warming and its consequences as proof that CAFE standards were necessary. However, as long as gasoline prices remained low, these arguments made little headway with most politicians and automobile manufacturers.

In 2003, with gas prices on the rise, new light-truck standards were issued: 21.0 mpg for model year (MY) 2005, 21.6 mpg for MY 2006, and 22.2 mpg for MY 2007. By 2007, per-capita fuel consumption in the United States had exceeded pre-1975 levels. That year, lawmakers increased CAFE standards to a combined level of efficiency for new cars and light trucks of 35 mpg by 2020. The legislation also subjected vehicles weighing between 8,500 and 10,000 pounds to CAFE standards for the first time, effective in 2011. In 2009, following a spike in gas prices the previous year, President Barack Obama’s administration accelerated the timetable, calling for a fleetwide average of 35.5 mpg (39 mpg for cars, 30 mpg for trucks) by 2016 in conjunction with a 30-percent reduction in tailpipe greenhouse gas emissions. An even more ambitious goal was announced in 2011: the Obama administration reached an agreement with thirteen automobile manufacturers to achieve an average fuel efficiency of 54.5 mpg by 2025.

Bibliography

An, Feng, et al. Passenger Vehicle Greenhouse Gas and Fuel Economy Standards: A Global Update. Washington, D.C.: International Council on Clean Transportation, 2007.

Csere, Csaba. "Can We Hit the Target?" Car & Driver Nov. 2014: 54. Print.

Marks, Paul. "Fuel for the Road Ahead." New Scientist 8 Sept. 2012: 20. Print.

National Research Council. Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards. Washington, D.C.: National Academies Press, 2002.

Nivola, Pietro S. The Long and Winding Road: Automotive Fuel Economy and American Politics. Washington, D.C.: Brookings Institution Press, 2009.