NCPA - National Center for Policy Analysis


August 18, 2006

CAFE (or Corporate Average Fuel Economy) standards -- which mandate an average fuel-economy number across the car and truck fleets of automakers -- has had the exact opposite effect of its charter, says Henry Payne, a freelance writer in Detroit.

CAFE was designed in response to the oil shocks of the 1970s:

  • It was supposed to reduce oil consumption by raising mileage standards, first to 18 mpg in 1978 (17 for trucks), and then to 27.5 mpg (20.5 for trucks) in 1987. 
  • Already on the rise before CAFE due to relentless advances in engine technology, average fuel economy peaked at 22.1 mpg in 1987 -- then fell somewhat to 21 mpg as of last year.


  • Because CAFE didn't anticipate the massive consumer switch to light trucks (in part due to CAFE's forced downsizing of cars, while the market still demanded larger vehicles).
  • Contrary to federal estimates that CAFE would force a 30-percent decline in oil consumption, energy consumption increased by about 30 percent between 1978 and 2000, according to economist Paul Joskow.
  • Rather than reduce America's dependence on foreign oil, CAFE has presided over a period when imported oil has risen from 35 percent of the U.S. market in 1974 to more than 52 percent today.

How did the feds get this so wrong?

  • They estimated that vehicle miles traveled would increase by 38 percent by 2000; in fact, miles traveled increased by 150 percent, writes Joskow.
  • He attributes this to more efficient vehicles overall, as well as more trucks, cheap gas, and an increase in vehicles per capita as Americans have become ever richer.
  • As transportation became more affordable, drivers did more of it -- driving twice as many miles as they did before CAFE was enacted, says H. Sterling Burnett of the National Center for Policy Analysis.

Source: Henry Payne, "Friedman's Follies The columnist's math falls flat in Detroit," National Review Online, August 18, 2006.


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