Center for American Progress

A New Day for CAFE in Congress: New Standards Mean Consumer Savings

A New Day for CAFE in Congress: New Standards Mean Consumer Savings

The new 35 mpg fuel economy standard under consideration in Congress would save consumers $22 billion annually, writes Dan Weiss.

1975: The year the Cincinnati Reds beat the Boston Red Sox in a seven game classic Series, the year America evacuated Vietnam, and the first—and last—time Congress set fuel economy standards, also known as Corporate Average Fuel Economy or CAFE standards.

The 1975 law dramatically increased fuel use by cars and light trucks (SUVs, minivans, et al) from an average of 13 miles per gallon in 1975 to 22 miles per gallon in 1987, and U.S. oil consumption dropped by 17 percent.

But what if the 1975 law was updated so that cars and light trucks were averaging 35 miles per gallon today? According to the Union of Concerned Scientists, families on average would have used 160 gallons less gas this year per car for a total savings of $420 per car based on last year’s average gasoline price of $2.55 per gallon. This equals a total of $90 billion that would have been saved last year alone in total lower gasoline costs, or 2.5 million barrels of oil a day—a 12 percent decrease. And what’s more, there would have been 425 million metric tons less carbon dioxide pollution responsible for global warming released into the atmosphere this year. This would be the equivalent of removing 60 million cars from the road.

Back in 1975, Congress acted on the heels of the first oil shock—the Arab oil embargo. The United States imported 35 percent of its oil that year, and it cost only $24.27 per barrel in 2007 dollars. Today we import 66 percent of our oil at a cost of $90.54 per barrel.

So why have oil use and cost risen so exponentially? Average gasoline efficiency for cars and light trucks peaked at 22 miles per gallon in 1987, and has slowly declined to 20 miles per gallon since then. Gasoline use rose significantly; even with much higher prices it’s up 13 percent since January 2001 alone. While average fuel economy stagnated, auto companies opposed efforts to strengthen CAFE standards. Instead of employing existing technology to make cars go further on a gallon of gas, they turned their ingenuity toward adding luxury features such as the infrared sensors on a Lexus that assess the body temperatures of the back-seat passengers to adjust the air flow accordingly.

Now Congress is poised to increase fuel economy standards to an average of 35 miles per gallon in 2020. After years of higher oil consumption, imports, and prices, why the sudden change? There are many essential ingredients. Nothing focuses politicians’ attention like near record oil and gasoline prices, and their effect on American families. Our dependence on oil from unstable or unfriendly regimes such as Nigeria, Saudi Arabia, and Venezuela—the three nations combine for 29 percent of U.S. oil imports—threatens our national security.

Mounting evidence that global warming is here, helped along by the nearly one-quarter of U.S. emissions spewed by cars and trucks, is increasing the urgency to act. In the wake of federal recalcitrance to cut pollution responsible for warming, California adopted limits on global warming pollution from cars and light trucks, and 15 states have adopted this standard too. Now all they need is EPA approval, which has been pending for two years. Along with states, many other nations established much stricter fuel economy standards, including the European Union and Japan (41 mpg in 2006), Canada (34 mpg in 2010), and even China (36 mpg in 2010).

All of these factors have increased pressure for federal action. Yet it took Congress’s new leaders to finally act on fuel economy. Speaker of the House Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) made it a top priority in 2007. Success also required the support of some former opponents such as Sen. Ted Stevens (R-AK) and Rep. John Dingell (D-MI).

The first legislative hike in fuel economy in 32 years couldn’t be more timely. By 2020, the new 35 miles per gallon standard will reduce oil consumption by 1.1 million barrels of oil per day according to the Union of Concerned Scientists—about equal to current Nigerian imports. It would save consumers $22 billion annually in lower fuel costs. And it would reduce global warming pollution by 192 million metric tons annually—the equivalent of removing 27 million cars from the road. Now it’s up to Congress and President Bush to leave the past behind once and for all by promptly passing and signing these 21st century fuel economy standards.

More on the energy bill from CAP:

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Daniel J. Weiss

Senior Fellow