Budget debate pits ANWR versus CAFE

With the budget bill stuck, House GOP leaders last week offered a potential trade-off between drilling in Alaska’s northern coastal plain, a long-sought goal of conservatives, and increasing fuel standards for cars and trucks, a goal of Republican moderates and Democrats.

While it is unclear how serious that offer was, the head of the auto industry’s main trade group told a Senate panel yesterday that raising the standard for corporate average fuel economy (CAFE) would provide only a temporary restraint on the country’s demand for gasoline — the latest round in a perennial fight on Capitol Hill.

Fred Webber, the president and CEO of the Alliance of Automobile Manufacturers, told the Senate Commerce, Science and Transportation Committee that if the fuel economy for the world’s fleet of vehicles were raised by 25 percent overnight, an expected increase in vehicles on the road and the farther distances drivers are expected to travel will negate any fuel-consumption gains in just seven years.

“The CAFE program is not the answer to U.S. gasoline-consumption concerns,” Webber said. “Many factors contribute significantly to U.S. oil demand, and attempting to reduce demand by pulling only one lever will not work.”

But by increasing fuel economy, the demand for gasoline, and therefore the price, could recede, supporters of raised limits argue. Environmental groups favor a higher CAFE standard because they believe that would reduce the amount of pollutants released into the atmosphere.

The auto industry, with bipartisan support on Capitol Hill, has dominated the legislative fight, sending amendments to increase CAFE to convincing defeats.

But Energy and Commerce Committee Chairman Joe Barton (R-Texas), who has argued against CAFE, last week openly considered accepting some modest increase to win support for drilling in the Arctic National Wildlife Refuge, which House leaders were forced to remove from the budget-reconciliation package after a threatened revolt from party moderates.

The Senate panel’s hearing yesterday focused on the progress of new technologies that could reduce the country’s use of gasoline. The price of gas shot up to near record highs after the damage inflicted on the nation’s energy infrastructure by Hurricanes Katrina and Rita.

Other energy experts agreed with Webber’s assessment that there is no silver bullet to reduce demand. But several added that increasing the fuel efficiency of vehicles is a critical first step toward doing so.

Even as the federal government pumps billions of dollars into hydrogen power and other alternative-fuel programs, the new fuels will likely take decades to be viable commercially, they said.

“The most straightforward way to reduce dependence on gasoline is to increase vehicle efficiency,” Steven Plotkin, a transportation energy analyst for the Center for Transportation Research of the Argonne National Laboratory, told the panel.

David Friedman, a research director at the Union of Concerned Scientists, said because of the rise in popularity of SUVs and other large trucks, the average fuel-economy standards has actually decreased over the last twenty years.

The auto industry has been too focused on improving the performance standards of its fleet — increasing power and building bigger vehicles — and not enough on improving its miles-per-gallon standards, Friedman said.

Webber countered that more than 100 cars on the market exceed 30 miles per gallon. One problem with raising CAFE, industry lobbyists point out, is that the standard measures what people drive, which the industry can’t control.

Consumers now favor SUVs and light trucks over passenger cars by 58 to 42 percent, according to the Alliance.

There are two CAFE standards. Cars must get 27 miles per gallon. SUVs and light trucks must get just under 21 miles per gallon now. The light-truck CAFE is set to increase to 22.2 mpg by 2007.

Charles Territo, a spokesman for the Alliance,  said increasing CAFE has the effect of favoring car companies with more fuel-efficient fleets. That means Honda could have an advantage over General Motors or Ford Motor Co., two U.S. companies already struggling.

An amendment to increase CAFE to 33 mpg, which was offered on the House floor last April, was soundly defeated, 254-177. And after the hearing, Webber expressed confidence that there is enough bipartisan opposition in Congress against raising CAFE standards to improve the chances of the budget package.

One auto lobbyist said a CAFE increase is not likely to be packaged with ANWR drilling in the budget reconciliation package.

But industry lobbyists have stepped up their efforts to educate members and staffers about what they see as the problem with increasing CAFE.

“Anytime you have a chairman discuss an issue like that, it’s a concern for the industry,” Territo said.