The Obama administration has rolled out its new Corporate Average Fuel Economy (CAFE) standards — requirements that will eventually cost Americans as much as $11,000 more per car.
“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” President Barack Obama said.
“It’ll strengthen our nation’s energy security, it’s good for middle-class families, and it will help create an economy built to last.”
CAFE requires automakers to calculate average fuel economy for all the cars in their fleets. That means large vans and SUVs that get poor mileage must be offset by high-mpg sedans, electric cars and hybrids.
But a new report by the Republican House Committee on Government Oversight and Reform cited emails showing that the CAFE agreements were negotiated behind closed doors with a small group of automakers, in violation of the Administrative Procedures Act.
Referring to the tens of billions of dollars in automaker bailout money spent by the Obama administration, the report stated that “the administration’s investment in GM and Chrysler gave it great leverage to force the companies to improve fuel economy without regard to cost.”
Consumers, however, are likely to regard cost. According to the Center for Automotive Research, the price of a car will increase by $4,000 to $11,000 by 2025 compared to 2008 prices.
As a result, fewer people will buy new cars and the automobile industry will suffer, while prices for used cars are likely to rise.
“Fuel-saving technologies are anything but a bargain unless the price of gasoline is far higher than it is now,” says economist Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and author of “Regulating to Disaster: How Green Jobs Policies Are Damaging America’s Economy.” She also served in the administrations of Presidents Ronald Reagan, George H.W. Bush, and George W. Bush
“In Europe, where gasoline prices range from $7.25 to $8 per gallon, people buy small, fuel-efficient cars. But this is because of fuel prices, not CAFE standards.”
The standards will affect safety as well, because lighter cars are more dangerous in collisions. A survey of more than 1,000 engineers by Ward’s Automotive concluded that “stringent fuel economy requirements like those set for 2025 will be impossible to meet without sacrificing the safety of the vehicles.”
Furchtgott-Roth points out that with the higher car prices, Americans will keep their old cars longer, and old cars generally produce more tailpipe emissions.
“If energy security is the rationale for CAFE standards, America needs to increase production of domestic oil, gas, and coal, invest in more refinery capacity, and build nuclear power plants,” she adds.
“These are major components of Romney’s energy plan, yet the Obama administration has been noticeably slow on all these.”