NCPA - National Center for Policy Analysis

Fuel Efficiency Standards

December 5, 2012

The Obama administration has affirmed its commitment to promoting cleaner, more efficient cars in its recent announcement that it would double fuel efficiency standards. Called the Corporate Average Fuel Economy (CAFE) standards, the purpose is to impose a minimum threshold for how many miles a car must be able to travel per gallon of gas. If a company does not meet the minimum threshold, they pay a fine, says Emily Wismer of the Independent Women's Forum.

While the goal of reducing gasoline consumption and helping the environment is admirable, the new CAFE standards will have several unintended consequences. The first is its impact on car safety.

  • To reach fuel efficiency, cars are often made lighter with aluminum rather than steel.
  • However, the National Highway Traffic Safety Administration estimates that for every 100 pounds a car's weight is reduced, fatalities will go up 0.9 percent to 2.21 percent.
  • The downsizing of cars in the 1970s and 1980s resulted in an additional 1,300 to 2,600 traffic fatalities in 1993 alone.

Furthermore, cars become more expensive.

  • The average price increase of each new vehicle will be around $1,800 in 2025.
  • As a result, many consumers will be priced out of the market and forced to buy used cars.
  • Because of this, consumers will drive older vehicles that are not fuel efficient or environmentally friendly.
  • More importantly, the new fuel standards will hurt low-income Americans the most because they can't afford newer cars and will be forced to pay higher maintenance costs for their older vehicles.

Finally, the auto industry, claimed to be rescued by the Obama administration, will be negatively impacted as well.

  • Companies like General Motors and Ford will accrue nearly $6 billion and $4.5 billion in compliance costs, respectively.
  • Additionally, it becomes more difficult for smaller competitors to enter the market because it becomes costlier to operate a car company.
  • The National Automotive Dealers Association expects 7 million potential new car customers to be priced out of the market.

Source: Emily Wismer, "Fuel Efficiency Standards," Independent Women's Forum, November 19, 2012.


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