Improved fuel economy standards are critical to America’s security and prosperity

Congress is now considering major changes to the nation’s energy policy, and the importance of the decisions before them cannot be overstated. America must embark on a course to conserve fossil fuels and to ensure reliable access to the resources essential to continued prosperity. The long-term economic and national security interests of the country depend on improved energy security.

Increasing transportation efficiency is the single most effective step the U.S. can take toward energy security. Our nation consumes more than 20 million barrels of oil per day, and nearly 70 percent of this staggering quantity fuels the transportation sector. Transportation relies on oil for 97 percent of delivered energy, with almost no substitutes available.
To reduce this oil dependence, America requires a new legislative approach to vehicle fuel-economy. Corporate Average Fuel Economy (CAFE) standards enacted in the aftermath of the 1973-’74 Arab oil embargo were instrumental in helping Americans dramatically raise fuel economy during the decade or so that followed. Since then, however, fuel economy for America’s light-duty vehicles has remained essentially unchanged, while average horsepower, weight and acceleration have all significantly increased. This stagnation in fuel economy has persisted even as technological advances have made improvements increasingly possible.

Considering the potentially devastating impact of an oil crisis, the time has come for new voices to break the CAFE deadlock. Business leaders and retired national security officials can help provide the necessary momentum. As the leader of a global transportation and logistics company with 677 airplanes and 70,000 vehicles, and a former member of the Joint Chiefs of Staff who spearheaded the establishment of an independent U.S. Central Command for the Middle East, we are convinced that America’s extreme dependence on oil constitutes an unacceptable threat to national security and prosperity.

Sens. Bryon Dorgan (R-N.D.) and Larry Craig (R-Idaho) have introduced a bold proposal, the Security and Fuel Efficiency Energy Act of 2007 (SAFE Energy Act). It requires annual improvements of four percent in the fuel economy of all on-road vehicles while also establishing “off-ramps” to relax the standard in a given year if it is proved to be technically infeasible, unsafe or not cost-effective. A recent study by economists at the University of Maryland suggests that this step alone could reduce U.S. oil demand by nearly 4.8 million barrels per day by 2030 and provide a net growth benefit to the overall economy.

By requiring a yearly four percent increase in fuel economy across the entire fleet, rather than arbitrarily prescribing a CAFE number for miles per gallon, the SAFE Energy Act gives discretion to the National Highway and Transportation Safety Administration (NHTSA) to set individual standards for different classes of vehicles that, in aggregate, reach the four-percent increase. This flexibility will allow manufacturers to make decisions on the vehicle mix of their fleets while still safely and significantly increasing the overall fuel economy of the U.S. fleet. In other words, large pickups won’t be forced to compete with sedans that are roughly as long or as wide but instead will be in their own category and subject to whatever percentage increase in mileage that NHTSA finds safe and achievable with current technology at a reasonable cost.

In a 2002 study, the National Academy of Sciences (NAS) argued that the fuel economy of certain U.S. passenger cars could be cost-effectively raised by as much 27 percent within a decade. For the largest light trucks, the potential improvement was 42 percent. The implied potential fuel economy for the entire fleet given the existing mix of vehicles was 30.3 miles per gallon, well above today’s actual fleet fuel economy of 24 mpg. Significantly, these improvements were premised on the use of existing and emerging technologies without altering the average weight, size-mix or performance of the fleet. If one incorporates the higher fuel prices seen since 2002 into the NAS model while holding technology assumptions constant, the expected cost-effective fuel economy of the entire fleet rises to around 37 mpg.

The SAFE Energy Act seeks to reform and modernize the CAFE standards for light-duty vehicles, ending two decades of stagnation. But it goes further — and, indeed, stands alone — by calling for the fuel economy of medium and heavy trucks to be regulated for the first time in American history. Recently, the U.S. Department of Energy identified feasible average fuel-economy improvements of as much as 90 percent for Class 3-4 delivery trucks operated in urban conditions. Perhaps most important, these fuel-economy gains were projected to have no adverse impact on performance.

Reformed and strengthened fuel-economy standards —combined with appropriate government incentives and strict adherence to technology neutrality — must be critical components of any comprehensive plan to significantly reduce U.S. oil dependence. Thanks to an array of near-term technologies, Americans should be able to purchase extremely safe and fuel-economizing vehicles that also maintain the performance and comfort features that consumers favor. Hybrids that combine electric motors and gasoline engines to boost mileage are perhaps the best known of these cutting-edge technological solutions, but numerous other technologies, from advanced diesel engines to improved transmissions, can yield dramatic mileage gains.

At the end of the day, the SAFE Energy Act will make America more secure. Our military and foreign policy will be less constrained, and our continued prosperity will be even more certain. Sens. Dorgan and Craig have offered a bold and meaningful set of legislative solutions to the urgent problem of U.S. oil dependence, and their work deserves the strong bipartisan support of all those committed to addressing one of the great security challenges of the modern era.

Smith is chairman, president and CEO of FedEx Corp. Kelley is a retired general who served as commandant of the Marine Corps and was a member of the Joint Chiefs of Staff under President Reagan. They are co-chairmen of the Energy Security Leadership Council, a project of Securing America’s Future Energy (SAFE).