September 06, 2012
For D.C.-imposed ineffectiveness and unintended consequences, it’s
tough to beat the Corporate Average Fuel Economy (CAFE) program.
Enacted amidst the energy-policy nitwittery of the 1970s, CAFE is
still around, and thanks to the Bush and Obama administrations, it promises to
misallocate resources and increase fatalities for decades to come.
1978, the first federal mileage mandate forced manufacturers to build cars that
achieved an average of 18 miles per gallon. A second, less-stringent
dictate for “light trucks” -- i.e., minivans, SUVs, and pickups -- went into
effect the following year.
For a brief period, it appeared that CAFE worked. In 1978, the U.S.
thirst for gasoline was 7.4 million barrels per day (bpd). Demand dropped
for several years afterward. But even as CAFE standards intensified, the downward
consumption trend didn’t last:
1985: 6.8 million bpd
1995: 7.8 million bpd
2005: 9.2 million bpd
How was it possible -- didn’t farsighted fedpols, working with
brilliant bureaucrats, command
Two factors contributed to CAFE’s dismal performance: the
light-truck “loophole” and a gasoline-price collapse.
Washington Post’s Warren Brown observed,
“CAFE did not … require consumers to buy what the car companies want to sell,”
and thus, the market shifted toward roomy SUVs and minivans. The federal government’s
mileage micromanagers, Brown lamented, “all but killed family station wagons.”
Millions of tire-kickers began to consider bigger vehicles, and
as ‘70s stagflation gave way to the booming Reagan and Clinton years, many households could afford to
supersize. In addition, the penalty at the pump vanished. Adjusted to today’s
purchasing power, a gallon of gasoline dropped from $3.53 in 1981 to $1.59 in 1999.
Whether a driver owned a Chevy Tahoe or a Toyota Corolla, motoring was much cheaper,
and chances are, he did a lot more of it.
Thoughtful analysts began to realize that Americans’ overall gasoline
demand -- something Washington
has no business wagging its finger about, but that’s for another column -- will
decline only due to dramatically higher prices and/or economic strife
comparable to the Nixon-Ford-Carter epoch.
Conservation scolds, meet $4-a-gallon gasoline and the Great Recession.
Here are the figures:
2007: 9.3 million bpd
2008: 9.0 million bpd
2009: 9.0 million bpd
2010: 9.0 million bpd
2011: 8.8 million bpd
At the start of 2012, Tom
Kloza of the Oil Price Information
Service speculated that gasoline use was headed toward its lowest level
“since Elian Gonzalez was at the top of the news, Time Warner was heralding the
synergies of its AOL purchase, and American
Beauty was the Golden Globe winner.” By the end of June, consumption
was on track to fall for the fifth year in a row.
Great news? Not for the president and the environmental paranoiacs
who oversee his energy policies. In 2009, using authority granted to it in an
atrocious energy bill signed by George W. Bush, the administration boosted
the fleetwide fuel-economy decree to 35.5 miles per gallon in 2016. Undesirable
and unnecessary, but the ratcheting-up was puny, compared to what was to arrive
this year. On August 28, as the GOP nominated its presidential candidate,
Hurricane Isaac headed for land, and most citizens focused on the imminent
Labor Day break, Obama
compounded the CAFE catastrophe. He “finalized groundbreaking standards
that will increase fuel economy to the equivalent of 54.5 mpg” in 2025.
Wildly ambitious, but we’re told that scary-smart engineers with
gee-whiz doohickeys can deliver. Writing in POLITICO, the “deputy assistant to the
president for energy and climate change” gushed that the stricter mandate will “drive
innovation in the manufacturing sector and help create new jobs throughout the
supply chain, from companies that make everything from advanced engines and
transmission systems to cutting-edge batteries and more efficient tires.”
Here in reality, federal technocrats’ past predictions -- about
everything from spacecraft
trains to embryonic
stem-cell research -- offer scant assurance that the invention of a few just-around-the-corner
thingamajigs will make passenger vehicles sip gasoline by 2025. The Big Three
and their “foreign”
competitors will likely respond by doing what they’ve done in the past: reducing
weight. And lighter cars mean more carnage. Entities as varied as Harvard, the
Brookings Institution, the National Academy of Sciences, and USA Today (using data from the Insurance
Institute for Highway Safety and National Highway Traffic Safety
Administration) have concluded that CAFE’s body count numbers in the thousands.
The automobiles of the future will be costlier and more
dangerous than they should be, to fix an imaginary problem. It’s something to
remember the next time you hear a pundit extol the blessings of bipartisanship.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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