CAFE Is Still Open for Business …But Not Without Some Changes

“This is going to be a new era for American jobs and job creation,” President Trump said at a recent Detroit meeting. “The assault on the American auto industry is over. My administration will work tirelessly to eliminate the industry-killing regulations, to lower the job-crushing taxes and to ensure a level playing field for all American companies and workers.”

In President Trump’s whirlwind first few months, you might have missed his plans for one of the most impactful regulations of the last 40 years, the Corporate Average Fuel Economy (CAFE).

CAFE standards are regulations in the United States, first enacted by the United States Congress in 1975, after the 1973-74 Arab Oil Embargo, to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) produced for sale in the United States.

The miles per gallon rose steadily over the years, but from the early 1990s onward, the standards were essentially unchanged.
In the May 6, 2007, edition of Autoline Detroit, Bob Lutz, an automobile designer/executive of BMW and Big Three fame, asserted the CAFE standard was a failure and said it was like trying to fight obesity by requiring tailors to make only small-sized clothes.

According to US Energy Information Administration, our share of imports from Organization of the Petroleum Exporting Countries (OPEC) and Persian Gulf countries has declined, while the share of imports from Canada has increased.

US petroleum imports rose sharply in the 1970s, especially from nations that comprise the OPEC. In 1977, when the United States exported relatively small amounts of petroleum, OPEC nations were the source of 70 percent of total US petroleum imports. Since 1977, the share of OPEC imports to the United States has generally declined. In 2015, OPEC’s share of total US petroleum imports was about 31 percent. Saudi Arabia was the source of about 37 percent of OPEC imports, and Venezuela was the source of about 29 percent of OPEC imports.

In 2015, about 16 percent of US petroleum imports came from the Persian Gulf countries, with Saudi Arabia being the source of 70 percent of Persian Gulf imports.

The share of US petroleum imports from Canada has increased significantly. Canada supplied 15 percent of US petroleum imports in 1994. This share increased to 40 percent in 2015, and it represents the largest share of US petroleum imports from any country.

The five largest sources of US petroleum imports by share of total imports in 2015:
• Canada: 40 percent
• Saudi Arabia:11 percent
• Venezuela: 9 percent
• Mexico: 8 percent
• Colombia: 4 percent

This has caused subsequent administrations to shift the need for the standards to global warming and emissions control.

Manufacturers have introduced all-electric cars like the Chevrolet Bolt and increased the use of lightweight materials like aluminum. Engine technologies, such as direct fuel injection, and more efficient transmissions are also contributing. The standards give manufacturers extra credit for new technologies, such as hybrid engines for pickup trucks and stop-start systems, which automatically shut off the engine when the vehicle stops in traffic.

Selfishly, it has led to different technologies with unintended consequences. For example, one of these innovations is gasoline direct injection (GDI). GDI systems led to many issues that require more services for the consumer that you can provide: enhanced carbon removing chemicals and low oil protection.

I would happily offer these services in exchange for a more vibrant auto industry. Workers driving around with cash in their pockets are better for all of us.