Energy & Environment

Romney vs. Obama: Showdown at the auto CAFE

Dan Farber

Perhaps lost in the media focus on the Republican convention, the Obama Administration created CAFE standards two months ago.  (CAFE stands for Corporate Average Fuel Economy, a fancy name for gas-mileage rules.)  Romney immediately attacked the rules.  It’s a very revealing – not to mention acrimonious — dispute.

graph: new goals in fuel economy

New goals in fuel economy

According to the Administration, the new standards will save the average consumer about $8000 in fuel prices at an up-front cost of $2-3,000.  As the NY Times reported, “[t]hirteen major automakers, including General Motors, Ford and Chrysler, endorsed the new standards during lengthy negotiations last year.”

Nevertheless, Mitt Romney has sharply criticized the new standards.  Indeed, he seems to be opposed all fuel efficiency standards, which he has blamed for the woes of the U.S. auto industry.  This is one area of policy where the dispute between the candidates is sharply drawn.

In response to the new standards, the Romney campaign said:

“Governor Romney opposes the extreme standards that President Obama has imposed, which will limit the choices available to American families. . . The president tells voters that his regulations will save them thousands of dollars at the pump, but always forgets to mention that the savings will be wiped out by having to pay thousands of dollars more upfront for unproven technology that they may not even want.”

There’s actually an interesting feature in the regulation calling for mid-course corrections if the technology does not prove out or if consumers resist the more efficient models. This safeguard apparently has not mollified Romney. Not only does he disapprove of the issuance of the rule, but he has threatened to rollback the fuel-efficiency standards.

Obama replied caustically to Romney’s criticisms:

“Just yesterday, my opponent called my position on fuel efficiency standards extreme. . . .It doesn’t seem extreme to me to want to build more fuel efficient cars. Maybe the steam engine is more his speed.”

Romney’s policy advisor has explained the candidate’s opposition to fuel-efficiency rules as being based on faith in the market: “But if we actually have technologies that are going to increase efficiency, the market will actually bring them forward without the government telling you you have to buy them.” Many (but not all) economists question, however, whether consumers really make rational decisions about tradeoffs involving up-front costs and long payback periods.

It’s possible that Romney’s view rests on a faith in the perfection of markets, which would raise questions about his support for energy-efficiency standards of any kind and about many consumer-protection laws.  Or perhaps he is responding to complaints from oil companies about the impact on their business, which would raise other kinds of questions about his future policies. If Romney really cares about energy independence, as opposed to oil profits, you’d think he would find the CAFE standards attractive. Either way, this dispute is quite revealing about the differences between the candidates.

Cross-posted from the environmental law and policy blog Legal Planet.

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Comments to "Romney vs. Obama: Showdown at the auto CAFE":
    • Randy

      I priced out solar for my home, and the “break even” was 31 years, by which time the panels were expected to deplete. This did not include battery refresh and maintenance costs. Economics and reality, unfortunately, also plan a role in fuel efficiency standards. Obama has no real experience in any industry to speak of and does not understand that. Go Bears!

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    • Dan

      Not sure who you priced it out with, but there are many solar options in today’s market. Most solar companies will not event sell you a system if it will not pay for itself within the life of the system. But the newer proposal is where you don’t pay anything for the system, you just lease it and your monthly lease payments replace your monthly electricity payments at a lower cost. If they can’t provide their system for you at a lower cost than you are currently paying for electricity then they won’t perform the install. A no brainer. Of course, for some homes where they don’t have enough direct sun exposure, or their electricity usage is too low, it is still not a money saving proposition, but for most sunbelt state homes, there is no question that solar is a sound choice not just for the environment but for your pocketbook too.

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    • Laura Jimena Quiroga

      Comprendo muy bien a esta edad 38 anos, que sin education, no hay cultura, ni futuro, you deseguir estudiando y trabajar, confio en que Obama con buenas ideas pueda revolucionar la education para todos, esta es el ingrediente principal para que un pais salga adelante.

      desde Argentina

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    • Brandt Hardin

      If Obama loses the election, you can blame/thank the Right for bamboozling him. How is it ethical that an entire news network questions the President’s citizenship for four years to create doubt in voters while a fringe element of the far right demonizes and degrades him? Most of this is financed by the rich who want to keep their stranglehold on the flow of wealth in our country. Watch the white hands apply the Blackface to our first African-American President here.

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