CAFE Contradiction—Fuel Efficiency And Cheap Gas


The recent boost in gas prices has provoked a truly odd argument from some Congressional leaders about American fuel use. They want to raise the federal CAFE, or Corporate Average Fuel Economy standard, 4 percent a year for the next 20 years.

One of the supporters of the Fuel Economy Reform Act of 2006, Sen. Norm Coleman (R-Minn.) paradoxically decries high gas prices: "I now look at the impact on the economy, impact on jobs, on the high price of oil, the devastating impact it's having in so many corners of our economy on so many people," says Coleman. "So I'm one of the converted on this, and I think a number of my colleagues are as well." Apparently, the idea of increasing CAFE standards is to encourage Americans to buy more fuel efficient cars so that the price of gasoline will fall. Huh?

In fact, what CAFE standards did do was persuade Americans to buy gas guzzling SUVs and light trucks that were not subject to mileage restrictions. In the current issue of Regulation, Paul Godek, vice president at Competition Associates, outlines the contradiction at the heart of CAFE:

Does CAFE have anything to do with gasoline consumption? Of course not. To paraphrase Rockefeller, the price of gas will fluctuate; and people will react accordingly. U.S. energy policy is schizophrenic anyway. If gas should be less available and more expensive, then tax it. Well, they already do. Federal and state taxes amount to about 40 cents per gallon. But the authorities do not want gas to be less available (more expensive), they want it to be more available (less expensive). So why do they want to compel "conservation" when they also want gas to be more available? Go figure.

Go figure indeed. If our Congressional overlords and environmental activists really think we should drive less and buy more efficient automobiles, then they should ditch the CAFE shell game and have the courage to recommend taxing gasoline at $5 per gallon.