Trump wants to freeze fuel economy standards and it’s the right thing to do
The Environmental Protection Agency has proposed to freeze the ever-rising Corporate Average Fuel Economy (CAFE) standards at the current benchmark of 37 miles per gallon — suspending the increase to 51 miles that had been scheduled for 2025.
And that’s a good thing. Indeed, it’s usually a good thing when administrative agencies flip through the federal register and find ways to root out inefficient redundancies and relieve regulatory burdens.
The Trump administration has not been shy about rolling back expensive federal regulations and mandates that have outlived their usefulness, so this proposal to freeze the market-distorting CAFE standards should not come as a surprise. But it should come as welcome relief to every American family shopping for a new car.
Federal CAFE standards are relics of President Gerald Ford’s response to oil and gas shortages, a leftover piece of President Jimmy Carter’s “malaise” that permeated the 1970s. They were part of Washington’s misguided attempt to ease the pain of high gasoline prices by requiring automobile manufacturers to meet designated fuel efficiencies averaged across their entire fleet of vehicles.
Meeting those artificial averages, of course, raises manufacturing costs, which, as even the Obama Administration acknowledged, raises the retail price of the average car. Indeed, the Heritage Foundation estimates that CAFE standards raise car prices by $3,800 on average.
Leave it to Washington to fight high gas prices by raising car prices. Whatever utility the efficiency mandates may have once provided has long been replaced by market preferences and consumer demands. Auto makers today tout fuel efficiency as a competitive feature. Consumers expect decent gas mileage and willingly pay more for more fuel-efficient vehicles. Neither the seller nor the buyer in today’s car market require federal bureaucrats to encourage fuel efficiency with artificial standards and higher-priced cars.
Proponents of rising CAFE standards argue that they reduce vehicle emissions. But CAFE standards were never designed or intended to reduce emissions, and they are ill-suited to accomplishing the task. In fact, the CAFE standards regime may even be working against lower air pollution levels by making smaller, lower-emitting cars artificially more expensive.
And because the CAFE standards are less stringent for trucks and SUVs, some manufacturers may choose to make and sell more higher-emitting vehicles to avoid the harsher standards for smaller cars. Volkswagen, for example, has decried the federal standards precisely because they unfairly favor large vehicles with poor fuel economy by making them cheaper relative to sedans. Consumers respond to such price incentives by buying higher-emission trucks and SUVs instead of low-emission sedans.
The federal CAFE standards were poorly forged weapons for an oil and gas war that Americans are no longer fighting. There are no long lines at gas stations. Hybrid cars and electric vehicles are rapidly gaining market share in a competitive, free-market race to lower emissions and raise fuel efficiency.
The American automotive consumer doesn’t need antiquated policies from the Ford and Carter administrations spiking car prices just to encourage better gas mileage. So, freezing the CAFE standards and staving off their scheduled escalation is the right thing to do and now is the right time to do it.
Rea S. Hederman Jr. is executive director of the economic research center and vice president of policy at The Buckeye Institute in Columbus, Ohio.