A friend with a high-priced one-year-old Hyundai recently had a flat tire. When he looked in the trunk, he was surprised to see that he had no spare tire. In an article I wrote thirty-seven years ago, I explained why station wagons were disappearing and would likely never return. In the 1990s, auto companies began to produce millions of SUVs annually.
These three phenomena may seem unrelated. They’re not. They are all consequences of regulations that the federal government imposed in a 1975 law in the midst of the energy crisis. The regulations mandate something called Corporate Average Fuel Economy, CAFE for short. At first those regulations made cars lighter and more fatal to their occupants in the event of a crash. Now they are lighter and, though safer than their lighter counterparts of decades ago, are still more dangerous than heavier vehicles. The rules also make cars look more and more alike. Have you ever looked for your Toyota Camry in a large parking lot and instead found yourself heading toward a Honda Accord or even a Chrysler? I have. The regulations also cause engineers in the United States and other countries, many of whose employers want to produce for the US market, to put a large percent of their effort into compliance. And, most important, beyond the other negative consequences, the CAFE regulations have substantially reduced the freedom of producers and car buyers.
These are the opening 2 paragraphs of my latest article for Hoover, “Wake Up and Smell the CAFE,” Defining Ideas, February 3, 2022.
Another excerpt:
But whether the goal is to rein in global warming or to reduce dependence on foreign supplies, there’s a big problem with the regulations even beyond the ones I’ve discussed above: they don’t reduce fuel usage as much as advertised because of two factors: the “rebound effect” and what might be called the “older car effect.”
Read the whole thing.
READER COMMENTS
Jerry Brown
Feb 4 2022 at 6:01pm
Well, lighter cars are not more dangerous to the vast majority of the population that is not in that car. And the air is somewhat cleaner. And it is nice to get better gas milage. Sometimes I wish you were not such a ‘principled’ libertarian.
Matthias
Feb 5 2022 at 12:58am
If we grant the goal that cars should use less fuel, and we grant that we want to use a law or regulation to get there, taxing fuel would be the way to go.
Then people could decide what cars they want and how much they want to drive them.
Your remark about safety would suggest that mass in a car is a negative externality.
Courts could take mass into account when they assign liability for accidents. The insurance companies would probably soon follow in raising rates on heavier cars.
Alternatively, you could tax car mass (or kinetic energy?).
No need for a government directive that limits mass directly.
Dylan
Feb 5 2022 at 7:42am
CAFE doesn’t limit mass directly. Indeed, CAFE is responsible in many ways for increasing the mass of vehicles, first by pushing manufacturers into producing more “light trucks” as a way of getting around CAFE laws and, more recently, by incentivizing production of EVs.
Taxing mass times the number of miles driven would be better from a road maintenance perspective as well. Historically, the gas tax was an OK substitute for this, given the high correlation between fuel economy and weight, but that breaks down with EVs too.
Mark Brophy
Feb 5 2022 at 11:27pm
I live in Colorado and most people drive trucks here. Government regulation has failed to force people to drive light cars that are less dangerous to other drivers. The air quality has worsened the last few years because we’ve suffered many forest fires and the smoke often travels a long way. For instance, I took a vacation in Utah, Snowbird Mountain, last summer and air was unbreathable one day because smoke had drifted in due to a fire in California.
MarkW
Feb 4 2022 at 7:06pm
I generally agree — I’m not a CAFE fan either, but I do have a few quibbles. First of all, the station wagon did not die, it took over the market while sedans have become the endangered species. Most of the vehicles we call SUVs are ‘crossovers’ built on unibody car platforms, not body-on-frame truck platforms. They’re a little taller than the cars built on the same platforms, but that’s really the only difference. So, the world is now full of tall wagons. And, BTW, back in the 60s-70s, most cars were also body-on-frame which made them much less safe, despite their heft. Body on frame vehicles don’t handle as well, are more likely to roll over, and don’t crumple to absorb impact like unibody vehicles do. Yes, all other things being equal, heavier vehicles are safer. But today’s smaller vehicles are much safer than yesterday’s heavyweights. Oh, and ‘all the cars look alike’ really isn’t a new phenomenon.
David Henderson
Feb 5 2022 at 7:29am
My point in my 1985 article was that station wagons as we knew them then would disappear. Of course, as you say, they ev9lved into SUVs, but that’s what I said too. That was part of the point. How do you produce something that functions as a station wagon without being a station wagon? Build an SUV and, for CAFE purposes, call it a truck.
MarkW
Feb 5 2022 at 1:11pm
As far as I can tell, the station wagons of my childhood would qualify as light trucks for CAFE purposes too, just based on the catch and cargo carrying abilities with seats folded. Here’s a 2004 article about Subaru even qualifying its Legacy sedan as a light truck with only minimal tweaks. The point being that CAFE regulations didn’t force automakers to turn the low height wagons of the 70s into the taller crossover wagons of today. Consumer sentiment did that. People prefer the higher seating height and more rugged image (even when if there’s really no off-road capability). In the past few years, manufacturers have been dropping their remaining few wagon models from their U.S. lineups, not because they couldn’t classify them as trucks, but because not enough buyers wanted them.
Dylan
Feb 4 2022 at 8:33pm
Like the other posters, I want to take issue with the idea that heavier cars are inherently safer. As Jerry mentioned, they’re not safer for pedestrians, cyclists, or people in smaller cars. And, in vehicle to vehicle collisions, it isn’t the absolute weight that matters, it’s the relative weight. You want to be in a heavier car than the one you’re crashing in to, which leads to a bit of a weight arms race. As a proponent of the “add lightness” method of car design, this makes me sad.
One thing you should cheer on this front, if vehicle weight is a concern, is that CAFE* standards are now making vehicles heavier, with manufacturers adding EVs to their fleets to get their average fuel economy down, and EVs are far heavier than a comparable car of the same size.
*I say this as someone that is not a fan of CAFE and would much prefer a carbon tax.
Alan Goldhammer
Feb 5 2022 at 9:18am
Cars are only as safe as the person who drives them irrespective of body weight. A properly designed small car is much more responsive and the energy that goes into braking is less than that required for a heavier car.
CAFE may have been a good idea when it was first proposed and implemented but has now outlived its usefulness. As with most Federal regulations, someone will figure a way to get around it and this is what the auto manufacturers did with the SUV. That being said, I’ve been driving an SUV since 2001 and find them much better than the station wagon (I had one of these also many years ago). Getting cargo in and out is much easier and there is more storage space.
Just FYI, I Googled ‘Hyundai no spare tire’ and found this THREAD. I know that road side emergency folks know about this. My wife had a flat tire just over a year ago and we called GEICO and the first question was ‘…. does your car have a spare tire?’
Andrew_FL
Feb 5 2022 at 9:35am
The sedan seems headed the way of the station wagon now, too.
Geoffrey Ryan
Feb 5 2022 at 9:53am
Not only is there no spare tire, but the spot where a spare would go is designed out of the car. I would be perfectly content to have the car manufacturers exclude the spare to help with meeting cafe requirements if I could turn around and purchase a spare and rim that would fit nicely into the trunk, but that possibility doesn’t exist. Alternatively I’d be happy to pay a small CAFE fee for the privilege of owning a spare that fits into the trunk but again that choice doesn’t exist.
My only surprise is that Uncle Joe hasn’t yet mandated that tow services be staffed exclusively with union members.
Thomas Lee Hutcheson
Feb 5 2022 at 11:33am
CAFE standards presumably somewhat reduce CO2 emissions, an external harm that vehicle purchasers do not take into consideration. By enough to warrant the cost? Based on this article, who knows as it provided information on neither the benefits or the costs.
Jon Murphy
Feb 6 2022 at 7:34am
That’s a string claim given the myriad of taxes and costs to auto ownership/operation. What evidence do you have?
Dylan
Feb 6 2022 at 9:56am
Outside of the gas tax, I don’t know of any taxes that are closely correlated with the amount on carbon a vehicle emits. Some taxes are inversely correlated, in that it is typically cheaper to register an older vehicle than a newer one, and newer vehicles on average have better fuel economy.
Jon Murphy
Feb 6 2022 at 12:19pm
The gas tax is just one of many taxes automobile owners face, not to mention many other costs of vehicle ownership and driving. All of those taxes change the cost structure of the vehicle market, and thus cause market participants to internalize the externality. Whether or not the tax is imposed on the carbon emissions itself is irrelevant.
Dylan
Feb 6 2022 at 1:26pm
We’ve been down this road before (pun not intended), but I fail to see how the raft of other taxes a car owner faces internalize the externality of carbon emissions. Yes, on the margin, they slightly reduce the demand for car ownership, but they do nothing to demand for fuel (outside of the gas tax, as I already mentioned). In fact, given the way that our other taxes work, they can work at cross-purposes to a carbon tax and incentivize the use of older and less fuel efficient vehicles. I didn’t have to pay an annual registration fee on my 1950 Plymouth, because it was a vintage car so, in that way, I was encouraged to keep a car that got around 9mpg (IIRC) on the road. How does that internalize the externality?
Jon Murphy
Feb 6 2022 at 2:22pm
Have we? I don’t recall
The same way a carbon tax does.
AMT
Feb 8 2022 at 3:57pm
I have to agree with Dylan here that they are pretty different. A tax on the purchase of a vehicle (for example) will very slightly reduce quantity of vehicles demanded due to substitution, and in theory could have a tiny income effect on fuel consumption, but it’s not fair to say they internalize the ghg emissions “the same way” as a carbon tax. If a carbon tax points due north, a lump sum vehicle tax points almost straight west and a degree or two north. It really doesn’t make sense to say that people’s incentives for consuming fuel change as much from a tax not directly related to fuel consumption, as one that is directly tied to it.
Thomas Lee Hutcheson
Feb 6 2022 at 2:32pm
Well, I’m a car owner and I don’t take account the CO2 I’m emitting when I drive. It is an unfortunate fact that we tax road use with a gasoline tax instead of a vehicle-specific mileage tax, and we we get around to taxing net CO2 emissions, that would be an additional reason to switch.
But surely you agree with the idea that CAFE is a poor way to discourage CO2 emissions just as it is a poor way to promote safety. It’s not even a very good way to discourage fuel use, if there were any reason to do that; that would be a fuel tax.
Chris
Feb 6 2022 at 1:20pm
I much prefer a gas tax as well, but in order to be efficient at affecting the purchase decision the tax should be applied at the time of purchase. We know the fuel economy and we know how long a typical car lasts (roughly 200k miles) so we can tax the buyer of the car for the full lifetime estimated fuel consumption. This also avoids the equity implications of gas taxes. New cars are disproportionately purchased by upper income buyers. They are less sensitive to fuel costs. Lower income used car buyers actually have no influence on what new cars are bought, but are more sensitive to fuel prices. Because of this the market generally left on its own delivers lower fuel economy than might be globally optimal. Taxing on the hood sends the price signal the the appropriate place to affect the decision that is most important. It also places the tax on the decision maker and the party with the greatest ability to pay.
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