All Commentary
Thursday, November 1, 2001

Uncle Sam’s False Fuel Economy

CAFE Standards Kill Dozens of People a Day

Doug Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books.

A quarter century after the misguided policies of President Jimmy Carter and a Democratic Congress created an “energy crisis,” President George W. Bush and a Republican Congress risk wandering down the same foolish path. Worst may be the campaign to lift corporate average fuel economy (CAFE) standards in order to make automobiles more fuel-efficient. Paradoxically, CAFE increases the amount of driving as well as the number of people killed in car accidents.

CAFE was one of a number of arbitrary measures to cut energy use imposed after the OPEC oil embargo. Congress enacted the program in 1975, mandating that the average mileage for automaker fleets rise from 18 to 27.5 mpg in 1985.

The industry complied by building cars that consumers didn’t want and selling them below cost in order to continue producing the larger autos that Americans did want. Smaller, luxury automakers simply paid off Uncle Sam: Companies like BMW, Jaguar, Mercedes-Benz, Porsche, and even Volvo have paid about half a billion dollars in fines.

Carmakers successfully lobbied to prevent any CAFE increase and to keep the level for “light trucks,” which include SUVs, substantially lower. Now, however, the legislative natives are getting restless, and Congress is moving to raise CAFE.

A Republican backbencher, Representative Lee Terry of Nebraska, has led the counterproductive charge. And the Bush administration, battered by environmentalists and anxious to sell its flawed, subsidy-ridden energy package, seems disinclined to defend the industry.

The most immediate beneficiaries of any CAFE increase would be Japanese and European manufacturers, which offer a smaller, more fuel-efficient product line. Business Week said, “Only Toyota Motor Corp. sells full-size SUVs and pick-ups, but sales of smaller SUVs, pickups, and minivans keep it safely below overall CAFE ceilings.” Moreover, the Japanese automakers possess future credits for being under CAFE targets in the past, improving their ability to compete in the larger car market.

The theory of course is that it reduces gasoline use. But people’s transportation demands reflect a number of factors, including the quality of autos and the price of driving. To the extent that CAFE makes new cars less desirable—reducing their size and engine power—it encourages people to hold on to their older cars longer and shift to SUVs, which are less fuel-efficient.

Moreover, when CAFE “works,” it reduces the cost of driving. Which means that it encourages people to drive more.

Environmentalists have long recognized that price matters, which is why many of them support hefty energy taxes. They argue that hiking the levy on gasoline would cause people to choose mass transit, consolidate errands, and carpool. But the more mileage your car gives you per gallon, the less incentive you have to choose mass transit, consolidate errands, and carpool.

Americans now average twice as many miles driven as before CAFE was imposed. That’s not all due to CAFE, of course, but no one knows how much, if any, gasoline has actually been saved.

Robert Crandall of the Brookings Institution says: “CAFE has had much less effect on total fuel consumption than a simple examination of new-car, fuel-economy trends might suggest.

Unfortunately, no one has conducted a definitive empirical study of CAFE’s effects that would give us a respectable estimate of the fuel saved. As in most environmental issues, this absence of evidence on the effects of policy simply allows proponents to press for even more stringent regulation.”

Lethal Standards

CAFE is a particularly bad deal for another reason. It kills people.

There is one clear rule of the road: big cars beat little cars. Any given auto can have fewer or more safety devices. But more metal around a driver or passenger almost always means a better chance of surviving an accident.

That smaller cars do worse in accidents is beyond dispute. In 1989 Crandall and John Graham of Harvard University reported a 23 percent average weight reduction in automobiles due to CAFE, warning that “the negative relationship between weight and occupant fatality risk is one of the most secure findings in the safety literature.”

People intuitively understand this rule. Clotaire Rapaille, who has studied the characteristics of SUV owners for the auto industry, says: “People tell me, ‘If someone bumps into me, I kill them, they don’t kill me.’”

Unfortunately, CAFE runs against this rule. Although there are a number of ways to increase gas mileage, the easiest and cheapest, and thus most common, method is to make cars smaller with less protective metal shells. Half of the dramatic downsizing over the last quarter century is due to CAFE.

Graham and Crandall estimated the annual death toll to run between 2,200 and 3,900. In the mid-1990s the Competitive Enterprise Institute figured that between 2,700 and 4,700 people died each year because of CAFE, upwards of one-fifth of America’s auto total casualties.

In 1999 USA Today analyzed federal crash data and concluded that 46,000 people had died because of the shift to smaller, lighter autos. This research is backed by a recent study in the American Journal of Public Health by Leonard Evans, on staff at the Vehicle Analysis and Dynamics Laboratory at the General Motors Research and Development Center in Warren, Michigan.

Evans says, “Replacing any individual car with a heavier one will in the vast majority of cases reduce total population risk.” The reverse is also true: “replacing all the cars in a population with cars lighter by a fixed amount or percentage will necessarily increase population risk.”

Thus drivers would be in greater danger even if all cars got smaller. Especially since there will always be SUVs and trucks of all sorts, which do significantly greater damage to smaller autos.

Federal regulators have attempted to avoid the truth, but in 1992 a federal appeals court dismissed arguments by the National Highway Traffic Safety Administration defending CAFE’s safety record. The agency’s contentions were based on “bureaucratic mumbo-jumbo,” “fudged analysis,” and “statistical legerdemain,” said the judges.

Evans offered his findings without any policy recommendation. But he noted that “When policies are expected to influence the mix of cars, however, effects on safety should not be ignored.”

Which means that CAFE should be repealed, not strengthened. As Sam Kazman of the Competitive Enterprise Institute said: “The notion that we can mandate more stringent CAFE standards without increasing traffic deaths is simply preposterous.”

America does not need a new government energy policy, especially one that needlessly kills a dozen people a day.

  • Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.