commentary

(Detroit Free Press)

March 16, 2007

Steer a Smarter Course Than Specific Mileage Goals

by John D. Graham

Growing concerns about energy security and climate change are causing Congress to consider forcing the auto industry to produce more fuel-efficient cars and light trucks. It makes sense for Congress to set a strong oil-savings goal, but technical determination of mileage rules to achieve that goal are best left to the executive branch.

The history of fuel economy teaches us that miles-per-gallon rules need to be crafted carefully. And with California and other states passing uncoordinated "carbon-control" rules, there is an urgent need for a uniform national policy.

Congress forced a doubling of passenger car fuel economy from 1974-85, but, according to the National Academy of Sciences, the fuel savings came at a big price: about 2,000 additional traffic deaths per year as cars were downsized, making them less able to protect occupants in collisions. And the rules did little to stimulate the creation of new engines and fuels.

The Bush administration has already raised standards for "light trucks" (SUVs, vans and pickups) by 16% from model years 2004 to 2011. But Congress is right to require even tougher mileage rules for cars, as well as for all light trucks produced in 2012 and beyond.

If no further regulations are enacted and fuel prices stabilize, the average mileage for U.S. passenger vehicles is projected to rise slowly from 25 to 28 m.p.g. by 2015. Congress may be tempted to compel a much larger increase.

However, while Congress should set a strong oil-savings goal, inserting a specific mileage figure in legislation could cause problems. A combination of congestion pricing in cities, alternate fuels, and tougher mileage rules may do more to save oil than relying only on mileage rules. Congress should give the executive the discretion to find the right mix.

The executive branch also is in a better position than Congress to weigh the benefits and costs of tighter mileage standards. The rule-making process is the proper place for regulators to review the proprietary product plans of manufacturers, determine fuel-saving opportunities, compute the costs of tighter rules, determine safety and environmental impacts, and consider technical comments.

But Congress can make a constructive contribution by:

  • Requiring that by the end of 2008, regulators set mileage standards for all passenger vehicles through 2015.
  • Authorizing regulators to use size-based standards for cars, as they did for light trucks. This encourages new technology rather than downsizing.
  • Requiring that mileage rules be set based on benefit-cost calculations, with no special treatment for manufacturers facing financial problems.
  • Extending tax credits for fuel-efficient vehicles (such as clean diesels and hybrids), thereby ensuring that consumers remain interested in fuel economy even if fuel prices decline or remain flat.
  • Reaffirming that national mileage rules override conflicting state "carbon" rules, since consumers and workers will be hurt by conflicting regulations.

There is no question that ill-considered legislation could harm workers in the auto industry, especially those at manufacturers and suppliers that lack resources to efficiently shift production plans. Congress may need to hedge against unacceptable hardships; workers and financially strapped companies also may need temporary financial assistance from the government in order to participate in a strong national policy to cut oil consumption.


JOHN GRAHAM is dean of the Frederick S. Pardee RAND Graduate School and holds a chair in policy analysis at the RAND Corp., a nonprofit research organization. He previously served as administrator of the Office of Information and Regulatory Affairs in the White House Office of Management and Budget. Write to him in care of the Free Press Editorial Page, 600 W. Fort St., Detroit 48226.

This commentary originally appeared in Detroit Free Press on March 16, 2007. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.