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Americans now spend more than $500 million per day to fuel their cars, SUVs and light trucks. On a national scale, these vehicles account for 40 percent of U.S. oil consumption – 8 million barrels a day (mbd).1 More than half of America’s total oil consumption is now imported from abroad, often from politically volatile regions of the world. In addition to the economic and political implications of our dependence on foreign sources of oil, gasoline consumed in motor vehicles is a major contributor to greenhouse gas emissions and urban smog.

Sliding Fuel Economy

Fuel economy standards have improved the fuel efficiency of America’s cars and trucks and made dramatic oil savings. Corporate Average Fuel Economy (CAFE) standards passed by Congress in 1975 led to a doubling of America’s gas mileage over the subsequent decade. In fact, a July 2001 report by the National Academy of Science noted that "if fuel economy had not improved, gasoline consumption (and crude oil imports) would be about 2.8 million barrels per day higher than it is, or about 14% of today's consumption."

The absence of action by Congress or the White House to continue increasing the mileage of vehicles throughout the 80s and 90s has led to a steep drop in fuel economy and a missed opportunity to move onto a more sustainable energy path. America’s fuel economy is at a 22-year low, and still declining.2

Furthermore, the CAFE law contains a loophole that allows fleets of new sport utility vehicles (SUVs) and other light trucks to meet only 20.7 miles per gallon, compared to new cars, which must average 27.5 miles per gallon. This loophole was intended to exempt pickup trucks and vans used primarily for commercial and farming functions, which at the time were a minority of the vehicles sold.

Auto manufacturers have driven millions of trucks a year through this ‘light truck loophole,’ by developing passenger cars on truck chasses. Today, half of all cars sold in America are counted as “light trucks.” Many of them are used primarily as passenger or family cars, while burning a third more fuel for each mile they drive than the standard car.3

In addition, the Alternative Motor Fuels Act of 1988 created the ‘dual fuel loophole’ which allows automakers extra credit for producing vehicles that could run on alternative fuels. Unfortunately, few do. It has become another loophole for manufacturers to produce inefficient vehicles. According to a joint report to Congress filed in 2002 by the Department of Transportation, the Department of Energy, and the Environmental Protection Agency, although there are currently some 1.2 million dual fuel vehicles on the road, there are only 5,236 alternative refueling sites of the 176,000 gasoline stations nationwide.4

Furthermore, the joint report notes that extending the Alternative Motor Fuels Act through 2008 will increase petroleum use by an additional 1.2 billion gallons a year. In fact, the National Academy of Sciences 2001 report on fuel economy standards addresses this issue and recommends the eliminations of the dual-fuel program because the program failed to produce the intended benefits.5

The Environment

Emissions from cars and light trucks threaten our local environment and exacerbate global warming. Each year, the production and distribution of gasoline to fuel America’s automobiles causes the emission of 392,000 tons of benzene-equivalent and 848,000 tons of smog-forming hydrocarbons and nitrogen oxides.6 Moreover, a recent UCLA study linked air pollution and birth defects in Southern California for the first time, finding that pollutants are transferred to the fetus through the umbilical cord.7

There is a consensus among the scientific community that the average global temperature is rising, and that humans are largely responsible for this change.8 Consuming one gallon of gasoline releases 24-28 pounds of carbon dioxide (CO2) into the atmosphere.9 Increasing fuel economy would not only help curb global warming, but also reduce other air pollutants and smog.

Scare Tactics – Jobs and Safety

As Congress began consideration of CAFE standards in 2001, American auto manufacturers waged a multi-million dollar ad campaign that provided misleading information claiming that increasing CAFE standards would be detrimental to safety and jobs. Their intent was to pressure senators and representatives to vote against increased CAFE standards.

However, several recent studies have shown that the key to a vehicle's safety is in its design, not weight. An Oak Ridge National Laboratory study found that “[b]ased on a comparison of fatality data for SUVs to other vehicles, the registered-vehicle-fatality rate (defined as number of fatalities per number of registered vehicles) for SUVs is higher than the registered-vehicle-fatality rate for other vehicles.”11 The disparity in weight between vehicles on the road only increases the risk for all drivers. High-strength, lightweight materials can reduce weight while retaining size and advancing the safety and fuel economy for the driver as well as increasing the overall safety of our highways.

In addition, raising fuel economy would create new jobs in the automotive sector as a result of large-scale production and use of new technologies and materials. Consumer’s gas savings would be spent on products and services, creating new jobs throughout the economy. Cars and trucks would not be eliminated, rather improved, and American manufacturers could become more competitive with foreign manufacturers who currently lead the industry in fuel efficiency.

Congressional Status

Congress rejected efforts to increase CAFE standards during the 2002 energy bill debate. The House and Senate both missed the opportunity to increase fuel economy by putting the interests of the auto industry before national interests, passing legislation that would have further harmed America’s fuel economy.

The Senate not only removed a provision that would have set 35 miles per gallon by 2013 (as the standard) from the Senate bill, but also refused an amendment to save America one million barrels of oil a day by 2015. The House also refused to eliminate the ‘light truck loophole’ and called for gasoline savings that provided window dressing rather than consequential oil savings.

When the House and Senate energy bills met in Conference, some of the most egregious provisions were fortunately eliminated, such as the elimination of pick-up trucks from a future CAFE increase and criteria that would have hobbled future efforts to raise CAFE.
In sum, there were no victories for fuel economy in 2002. Recently, conferees accepted the negligible fuel savings in the House bill but delayed these savings by two years and extended the ‘dual fuel loophole,’ thus further increasing America’s dependence on foreign oil.

Tax Incentives

Tax incentives are important market drivers for energy efficiency. While both the House and Senate energy bills contain vehicle tax incentives for hybrids, fuel cells, and alternative fuel vehicles, the Senate version places an emphasis on high efficiency and maintains strong performance criteria to ensure that consumer tax credits are consistent with public policy goals of energy security and emissions performance.

The Alliance Position

Congress must go back and increase the fuel economy of the cars and light trucks on America’s roads. A meaningful increase in the CAFE standard – 40 mpg for new cars, SUVs, and other light trucks – over the next 10 years would save nearly 2 mbd in 2012 and nearly 4 mbd by the end of the next decade. This is more oil than the U.S. currently imports from the Persian Gulf and the projected yield from the Arctic National Wildlife Refuge, combined12.

In addition, the Alliance supports:

• The elimination of the ‘light truck loophole’ and the ‘dual fuel loophole.’
• Tax credits for high efficiency vehicles.
• Gasoline taxes and other consumption taxes to offer an additional incentive to consumers to purchase high-efficiency vehicles.

For more information, contact Kara Saul Rinaldi, Policy Director, at (202) 857-0666 or mailto:kara@ase.org.