Case Overview, CAFE Standards (106th Congress)

This document provides background information and summarizes the debate over CAFE standards in the 106th Congress. The links to the left will lead you to public documents that we have found.


           Since the oil embargo imposed by Arab countries in the 1970s, political leaders have emphasized the importance of energy independence. If we as a nation are not going to be beholden to the countries that produce the oil we need to fuel our cars-and more broadly fuel our economy-then we must reduce the proportion of energy usage derived from foreign oil. Some policymakers have strongly advocated increased domestic energy production as a way of freeing Americans from foreign oil. Others have encouraged less consumption, advocating smaller cars, more fuel efficient engines, development of renewable energy sources such as solar and wind, and more mass transit.

           When gas prices spike upwards the debate over energy independence moves back to center stage. Generally, though, energy independence has diminished in importance as the world supply of oil has increased and the prices for gasoline and home heating oil have remained steady and sometimes even dropped. Environmental groups like the Sierra Club have continued to work on the issue, especially on Corporate Average Fuel Economy (CAFE) standards for cars and trucks. The CAFE standards, first enacted in the 1970s, prescribe the average fuel economy that all cars sold by each manufacturer must achieve each year. Thus, a car manufacturer like Ford must sell enough small, fuel efficient cars to balance the more gas hungry large cars it sells. There are separate CAFE standards for cars and for light trucks. Due to the popularity of SUV's and minivans (classified as light trucks), the overall average fuel economy in this nation has been dropping in recent years.

           During the 106th Congress environmentalists were again pushing for an increase in the fuel economy standards. They argued that America had become complacent about the environment and the nation's automobile manufacturers could easily improve the fuel consumption levels of their cars through improvements in technology and the use of lighter materials. Those on the other side of the issue, chiefly the car manufacturers and steel producers, argued against any change. They had been successful in preceding sessions of Congress in persuading lawmakers to enact short-term moratoriums forbidding the Department of Transportation from raising the CAFE standards. The car and steel manufacturers made a number of arguments to legislators. As one lobbyist put it, "If fuel efficiency standards are raised, then manufacturers will go with something lighter [to construct the vehicles]. If lighter materials are used safety and cost become an issue. Lighter cars tend to be less safe and steel is less expensive than alternative materials."

           Although Americans show great support for environmental causes and the large environmental lobbies have memberships in the hundreds of thousands, there is quite a divide in the public over what kinds of cars they prefer. In the absence of higher gas prices, there's been little pressure on Congress to raise the CAFE standards except from the environmental lobbies. The effort to raise the CAFE standards for light trucks and vans failed in the 106th Congress. In the 107th Congress President Bush supported a tiny increase in the CAFE standards but it is so modest that environmentalists did not consider its enactment even a small victory.