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Executive Summary

Legislation to increase Corporate Average Fuel Economy (CAFE) standards for cars and trucks was included in the Senate energy bill (H.R. 6) that was passed in June of this year, marking the first time in over thirty years that either House of Congress has passed an increase in CAFE standards. The Senate CAFE would raise gas mileage standards for cars and trucks from 27.5 miles per gallon (mpg) and 22.2 mpg respectively to 35 mpg by 2020.

Nationwide the savings would be significant. In 2020, the Senate fuel economy legislation would reduce our national oil consumption by 1.2 million barrels per day, save consumers $26.5 billion dollars and have the global warming emissions reductions equivalent to taking 14 million cars off the road. Increasing CAFE standards is one of the biggest steps we can take to reduce our dependence on foreign oil, improve our national security and move us on the path towards a new, clean, energy future.

Driving Towards a New Energy Future 5 America is Too Dependent on Oil The United States is too dependent on oil. This dependence threatens our national security, environment and pocketbooks. Holding only two percent of the world’s oil reserves, the U.S. consumes a quarter of the world’s petroleum.

Our heavy reliance on oil to fuel transportation vehicles takes a heavy toll on the environment. Emissions from cars are a major source of air pollution like smog and ozone and are a leading source of global warming pollution. Consumers pay for our inefficient vehicles with increased prices at the pump. Gasoline prices have been steadily on the rise for the last five years. In 2003, a gallon of regular gasoline averaged $1.56; today the average is almost twice as high, rising to $3.11. In the last twenty years there has been a dramatic shift in the American vehicle fleet towards larger less efficient vehicles. Today, sports utility vehicles (SUVs) and light trucks account for almost half of all light duty vehicle sales.

Despite the development of new technologies like hybrids, the average fuel economy of both cars and SUVs has stagnated. Congress and the Bush administration, however, have failed to increase federal fuel economy standards (except for a minor increase in light truck fuel economy). For model year 2007 new cars and light trucks average just 20.2 miles per gallon (mpg), the same as model year 2006, and five percent below the model year 1987 peak of 22.1 mpg (Figure A).

A Proven Success

In response to the Arab oil embargo of the early 1970s, Congress implemented the first miles per gallon standards in 1975 to protect consumers from high gasoline prices and supply vulnerability resulting from U.S. dependence on foreign oil. The drafters of the successful oil savings law recognized that the only way to reduce dependence on foreign oil was to reduce oil demand, requiring cars and light trucks to nearly double miles per gallon averages to 27.5 and 22.2 mpg, respectively by 1990. As a result, cars today use 2.8 million barrels of oil per day less than they would have under the old fuel economy standards and have significantly reduced global warming emissions.5 Unfortunately Congress has not updated the standards since 1975. Increased fuel efficiency is achievable now, with existing technology. A 2002 National Academy of Sciences (NAS) report concluded that automakers could use existing technology to increase the fuel economy of their fleets to 37 mpg over the next decade while improving safety and maintaining performance.6 The NAS study was conducted when gasoline prices were significantly lower and without considering hybrid technology, so it is likely that they would find that even further gains are possible. The Union of Concerned Scientists has shown that we can achieve 40 mpg within ten years.

If every vehicle simply achieved the same fuel economy as the most efficient vehicle in its size class they would go 48 percent farther on a gallon of gasoline.8 This would be equivalent to an average of 44 mpg today.

Once a leader in new technology, the United States now sees itself being outpaced by others. The fuel economy standard for the European Union and Japan is 40 mpg today, while China’s mandate will be above 35 mpg by 2009.9

The Senate Solution

For two decades CAFE standards have remained unchanged as Congress and Presidential administrations were blocked from raising standards by the auto industry and their allies. At the same time American auto manufacturing jobs continue to decline and American auto share is reduced because foreign manufacturers make the fuel efficient vehicles that American consumers want. With gas prices skyrocketing, our national security compromised by our dependence on foreign oil and increased concern about global warming, it has become apparent that an updated fuel emission standard is needed more now than ever. For example, former CAFE opponent, Senator Barbara Mikulski (DMd) said on the Senate floor: "And now, after 20 years, I firmly do believe it is time for a change."10 The Senate agreed, passing an energy bill that included CAFE provisions that mandate that we achieve 35 mpg fleetwide by 2020.

Increasing CAFE standards is one of the biggest steps we can take to reducing our dependence on foreign oil, improving our national security and moving us on the path towards a new, clean, energy future.

The ten states that will have the largest consumer savings if the Senate CAFE legislation are adopted are: California, Texas, Florida, New York, Illinois, Ohio, Michigan, Pennsylvania, Georgia and North Carolina. California alone would save over $3 billion in 2020 under the Senate plan.

Congress should act now to pass an energy bill that includes the Senate CAFE legislation along with a strong renewable electricity standard, and efficiency provisions to save consumers money, reduce our dependence on foreign oil and make a down payment on the fight against globally warming.