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Congress Set to Raise Fuel Efficiency Standards

December 2, 2007 - by Donny Shaw

With oil prices flirting with the $100 per barrel mark, the House of Representatives this week will take up a bill that could give consumers some relief at the pump, albeit gradually over the next 13 years. A compromise agreement on how to move forward with Congress’s stalled energy bill was announced on Friday and, for the first time since 1975, it will raise the Corporate Average Fuel Economy (CAFE) standard for automobile manufacturers.

The energy bill will hit the House floor on Wednesday, the same day that OPEC is expected to decide not to raise crude oil output at its meeting in Abu Dhabi, possibly sending oil prices over the $100 mark. On her blog, The Gavel, House Speaker Nancy Pelosi (D-CA) wrote that the fuel efficiency standards will be the cornerstone of the compromise bill. “We will achieve the major goal of increasing vehicle efficiency standards to 35 miles per gallon in 2020, marking an historic advancement in our efforts in the Congress to address our energy security and laying strong groundwork for climate legislation next year.”

The CAFE provision comes from the Senate’s work on the energy bill this summer (the House energy bill did not have a CAFE provision at all) and it will remain in basically the same form, with only a few changes. Consumer advocacy group Public Citizen, who has reviewed “talking points circulating on the Hill,” calls it an improvement upon the Senate’s bill from the summer. Their main finding is that the new bill drops a provision that would have amounted to “a Hummer-sized loophole:”

>Although the Senate touted the bill it passed this summer as demanding an increase to 35 mpg by 2020, the Senate’s bill actually set only a toothless target, with a Hummer-sized loophole: the administration would be given the power to set lower targets, or no targets at all, provided only that it justify doing so by producing a cost-benefit analysis. Cost-benefit analysis is a rigged game that pits wildly inflated cost estimates against significantly understated benefits numbers, with the result that the administration would have faced no real mandate of any sort under this summer’s Senate bill. The new deal eliminates this cost-benefit “off-ramp,” so that the 35 mpg goal will now be a true mandate and not an empty promise.

But there are new provisions in the compromise bill that, in some respects, make it weaker than the original. For example, the auto industry, with the help of Detroit Democrat John Dingell won a provision that will extend a program that allows them to exchange CAFE credits for manufacturing flex-fuel cars that can operate on ethanol blends of 15 percent gasoline and 85 percent ethanol, also known as E85. The problem with exchanging mileage credits for flex-fuel credits is that even though flex-fuel-compatible cars are able to operate on E85, they usually don’t. An Associated Press article from 2006 explains how the program amounts more to a way for manufacturers to skirt mileage standards than encourage the use of renewable fuels:

>A 2002 Department of Transportation study estimated that E85 accounted for only about 1 percent of the fuel consumed by flex-fuel vehicles between 1996 and 2000 — the equivalent of 26 million gallons.
>Relaxed fuel economy standards resulting from flex-fuel credits, meanwhile, were responsible for increased petroleum consumption totaling 772 million gallons — enough gas for a Jeep Grand Cherokee to drive from San Diego to Boston and back more than 8,000 times.

Currently, the flex-fuel credits are scheduled to run out by 2010. The new bill will extend them to around 2020.

Gas pumping photo from used under a Creative Commons license.

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