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October 8 2012

New CAFE standards a burden for car industry, consumers

The Hill
Emily Wismer

The Obama campaign has worked over-time trying to convince voters that the president understands the challenges confronting the middle class, while Romney is out of touch. Yet deeds speak louder than words, and American families — already struggling with rising gasoline and grocery prices, under-water mortgages, and high unemployment — should note how this Administration has taken actions to increase the costs of cars, while simultaneously making them more dangerous. How is exactly does that help the middle class?

Since the Arab Oil Embargo of the mid 70’s, the government has set rules dictating a base level of fuel efficiency, which is known as the Corporate Average Fuel Economy regulations, or CAFE standard. This month, the Administration doubled the requirements on the fuel efficiency of cars, vans, sports utility vehicles, and pickup trucks.

President Obama recently boasted about this policy change: “After thirty years of inaction, we raised fuel standards so that by the middle of the next decade, cars and trucks will go twice as far on a gallon of gas.”

While it sounds fantastic to drive twice as far on each tank of gas, this extra efficiency comes at a large, up-front cost to consumers: New cars are expected to cost about $2000 more because of this mandate. As a result, many potential new car buyers will be priced out of the market. The effects of higher new car costs will ripple into the used car market, as fewer families will be able to trade in old vehicles for a new car. That means less supply and more demand for used cars, and higher prices for used cars as well.  

Yet the worst costs borne by consumers because of this new mandated won’t be monetary. In order to meet these new requirements, manufacturers are making their vehicles lighter. A lighter car tends to be a less safe car, which means we will be paying for this mandate in human lives. In fact, the Nation Highway Traffic Safety Administration estimates that for every 100 pounds a car’s weight is reduced, fatality will go up .9-2.21 percent. While the administration has failed to provide fatality estimates for this rule, the National Academy of Sciences concluded that the fuel efficiency changes of the 80’s and 90’s “probably resulted in an additional 1,300 to 2,600 traffic fatalities in 1993.” That suggests that thousands of lives will be lost as a result of driving lighter, less safe cars. 

While it pales in comparison to the rule’s body count, the new CAFE standard will also saddle the car industry with an additional $156 billion in compliance costs and paperwork. The administration has touted its efforts to prop up ailing auto manufacturers. It’s unclear how much of a help — or a hindrance — government bailouts were to the long-term prospects of American car companies. But what is certain is that costly new regulations will be a burden that these already struggling employers don’t need.  

Undoubtedly, the president and his administration would counter that the CAFE standards are advanced for a good cause. They are supposed to reduce carbon emissions and greater fuel-efficiency has the potential to save Americans money in the long term. But are the costs really worth those benefits? The cost of human lives? The costs that will hit families who need to get to work, bring their children to school, and keep to their budgets today? 

Furthermore, Americans already have the opportunity to purchase fuel-efficient cars if they desire. Fuel efficiency is on the rise, and Americans who can afford the initial cost have numerous options to purchase cars that have great gas mileage.

Decreasing emissions is a laudable goal, but increasing burdens on consumers and job providers while increasing crash fatalities is a cost that’s just too high. Instead of kissing babies and hitting voters with another slick campaign commercial, candidates can demonstrate that they really connect with middle-class Americans by opposing these kind of burdensome regulations that backfire on families. 

Wismer is a policy analyst at the Independent Women’s Forum. 

 

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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