Political constraints prevented President Obama from taking the best route to quickly and vastly improving the fuel efficiency of automobiles on America’s roads – higher gasoline taxes. So he chose the only route left to him, raising the Corporate Average Fuel Economy standards, the problematic, easily gamed mandate originally imposed more than three decades ago when the nation was briefly spurred to change its wastrel ways by the Arab oil embargo. That route is far better than standing still.
Of course, even getting those standards raised was a struggle, succeeding only because CAFE’s leading foes, the U.S. auto companies, have been splattered by the economy, by globalization and by the skeptical view many Americans have of their products into bankruptcy or near-bankruptcy or, in the case of Ford, severe stress on the bottom line. Along with the economic weakening that saw two of these regulation-fighting giants begging for government handouts, and a CEO pushed out by the President, there was also the reduced clout of long-time allies like Rep. John Dingell. The companies were ripe for collecting the praise (and perhaps improved market share) they would get for joining with Obama at the White House Tuesday as he made his announcement that the fuel-efficiency standards would be boosted by 30% in less than seven years.
Perhaps because the auto companies previously found ways to game CAFE standards and may expect to again, there has, as yet, been no public retreat the way the health insurance companies did after their own meeting and announcement at the White House.
Even gamed, the raise will certainly make a positive difference. Under the circumstances the President was right to press the auto companies into agreeing to the change. Frances Beinecke, president of the Natural Resources Defense Council, called the measures "a global warming solution that will strengthen our economy and put the auto industry on the path to a clean energy future. ... "The new standards will deliver cleaner, higher-mileage cars nationwide, cut global warming pollution and save drivers money every time they fill up."
The Loons Weigh In
As expected, the most benighted elements of the right wing went immediately on the attack after the announcement. The message of Michelle Malkin, Cadillac Escalade-driving Glenn Beck and like-minded pundits amounted to "do nothing, there is no problem, and even if there were a problem, the government shouldn’t be trying to do anything to solve it because the government only does good things when the Dick Cheneys are in charge."
Two key conservative complaints: higher efficiency would mean cars that cost, on average, $1300 more; lighter vehicles required by the new standards would mean more Americans killed every year in car crashes.
The first is fundamentally bogus, a product of people who "did the math" but conveniently forgot to complete the equation. The second criticism is more problematic and is a view with broader support. But the claim also leaves out some factors and is based on old technology.
Price Rise?
Without going into whether the claim of a $1300 price hike per vehicle is truly accurate, it quickly becomes irrelevant when life-cycle costs are taken into account. Let’s say gasoline stays at its current level in California, hovering in the $2.50 range. Picture a passenger car now running at 27.5 mpg, the current CAFE standard. Assume the car travels 15,000 miles a year: $1363 worth of gasoline. Now assume 35.5 mpg and the same mileage: $1056 worth of gasoline. In five years, that $1300 in additional car-purchase cost is whittled down to a savings of $2537 $235. If the price of gasoline goes up, which will happen when the economy improves, the savings will, obviously, be higher.
So what’s the problem? There isn’t one. It’s a propaganda point, as Brandon Friedman brilliantly pointed out here.
More Dead on the Road?
Safety is something else. It’s true, as ROBERT E. GRADY, wrote in his Light Cars Are Dangerous Cars in The Wall Street Journal Friday, the National Research Council did a 2002 study estimating that 1300 to 2600 extra auto deaths occurred in 1993 because cars weren’t as heavy on average as they were in 1976.
But critics of the report say times have changed and are continuing to do so, making the weight issue irrelevant to the safety claim.
One of those is Robert Hall, professor emeritus of operations management at Indiana University. In 2005, he told Rob Chapman at the Center for Auto Safety:
"In the last 40 years ... auto racing speeds have increased, yet deaths have decreased significantly while the weights of the vehicles have gone down progressively. Why? Crushable fronts that absorb impact, 'tubs' that shelter drivers after the entire car has disintegrated, a relocation of the front axle and, yes, crash bags. In this case, lighter is markedly safer."
Daniel L. Green wrote a "Dissent on Safety Issues" to the National Research Council's 2002 report, in which he states: "There is no fundamental scientific reason why decreasing the mass of all vehicles must result in more injuries and fatalities." With Sanjana Ahmad, Greene also wrote The Effect of Fuel Economy on Automobile Safety: A Reexamination.
That’s something O’Grady doesn’t mention. Perhaps it was too hard to dig out. But you would think, if he really wanted to tell the whole story rather than make a propaganda point, he could find an article in the Wall Street Journal headlined "Crash course: How U.S. shifted gears to find small cars can be safe, too" and published in 2005:
"There's now a credible opposing view to what used to be the only view," says David L. Greene, a research fellow at Oak Ridge National Laboratory, a Department of Energy research lab. A paper he co-authored in March, looking at car-crash fatality rates from 1966 to 2002, found no statistically significant relationship between fuel economy and increased traffic fatalities. Mr. Greene says that previous research that did find a correlation studied only the immediate years after fuel-economy reform when weight drops were most significant. But studied over a longer period, that correlation disappears, he says.
For years, the accepted wisdom in the car industry held that, all things being equal, heavier vehicles are always safer when two vehicles crash. New studies highlight how other factors -- including a car's size, body design and advanced technology -- can do much to counteract the weight issue.
The newer studies also have homed in on the downside of weight: While a heavy vehicle protects its occupants in an accident, it inflicts more damage to those it hits. That means reducing the weight of the biggest vehicles could yield dividends in both fuel consumption and safety.
As Chapman writes:
There has been a recurring contention that heavier vehicles are safer. But even the experts disagree on that point. The more important question is whether lighter-weight vehicles can be made to be as safe as heavier ones. The evidence suggests they can be.
So say goodbye to two of the chief complaints about increasing the standards. The third complaint – gaming the system – is harder to gainsay because that’s been one of the biggest problems of the current standards. there will be less of the light truck vs. passenger car gaming because that loophole has been partly closed by giving each class a separate mile-per-gallon and emissions standards, they must also both meet a joint average.
But there are rumblings about how just fiddling with the air conditioning in new cars – rather than creating more efficient body shapes or engines – can go part of the way toward meeting the new standard. Moreover, raising the standard doesn’t deal with another problem, the number of miles people drive instead of using mass transit and other techniques to reduce their time behind the wheel. In fact, more efficient automobiles and light trucks may increase driving in miles per capita.
Additionally, raising the standards might make it tougher for GM, Chrsyler and Ford to compete in the export market where their big cars now dominate. Building more efficient vehicles for the domestic market is a good thing, but overseas those cars will be competing with carmakers who have snagged big chunks of the foreign market with cars that Detroit once laughed at.
Be that as it may, raising the CAFE standards will clearly have a positive impact, even if it’s not quite as strong as some would like. And, unfortunately, political reality, gave Obama no politically feasible alternative. But he may have another seven and a half years as President. There’s time for add-ons if Congress and the American people can be persuaded. And the proper add-on is incrementally raising the gasoline tax.
One cannot envy Obama if he chooses sometime in his term(s) to push that approach. Even progressives are deeply divided on the subject. The effect on low-income people is a key concern. However, using some method to reduce the harm to them from high gasoline taxes – rebates or income tax credits or gas stamps – this is the way to quickly change behavior, as $4-a-gallon gasoline proved.
Michael Levine and Mark Roe make the case quite well.
The overall politics required could be delicate. Taxing petrol is unpopular and that unpopularity has kept the tax off the table for years, even in the face of pleas by economists and environmental organisations. The implementation of a petrol tax and its politics will require savvy. Done right, however, it will both do its job and make broad income tax cuts (or fewer increases) easier.
Special interests hit by a broadly applied fuel tax could stymie a petrol tax in Congress. Fuel is a core expense for airlines, railways, taxi drivers, farmers and truckers. Together they may be too powerful to overcome. The politically astute would have to engineer the right deal.
Taxing road fuel only at the retail pump would take airlines, rail and farmers out of the picture. The emissions, the impact of other large users such as package express companies and truckers, could be addressed through financial credits in a cap-and-trade system. Independent truckers, small businesses and taxis might end up getting special tax concessions. The dealmaking needed would not be pretty and would almost certainly result in a less-than-optimal plan, but the practical question is whether what could be done would improve the current situation.
Overcoming these implementation and political hurdles will not be easy. But they are surmountable. A road fuels tax should not be off the table, as it is. On the contrary, it should be high on the national policy agenda now.
In the past, whenever a gasoline tax increase has been proposed, even some supporters argue that now is not the right time. And at the moment I have to take that same stance. Today, with a still rising number of Americans out of work and the economy on the fritz, even if there are several signs a turnaround may soon be evident, introducing even the idea of increasing the gasoline tax might be political suicide. But try adding more tax when prices again rise to $4.
Sometime before prices rise too high again, Obama or some brave Representatives in Congress should get the ball rolling.
The right tax is not one that slaps on a $1 or $2 now, but something more incremental – say, and extra 25 cents to 50 cents a gallon each year for the next five years. It won’t be an easy sell, as I and everyone who has ever made this suggestion at Daily Kos and other venues are all too aware. But that resistance doesn’t make it the wrong choice.