Columns & Advice
A hockey-playing friend came up with a fabulous U.S. election gimmick — a pair of mittens, connected by a short string.
Hold them in front of you with fists closed and each shows the word, “Idiot.”
Opening them reveals on both palms: “Mitt.”
Genius: If only my friend had $500,000 for a Chinese manufacturer, these things would be all over the campaign trail.
They seemed particularly appropriate when I read U.S. presidential candidate Mitt Romney’s comments about the increasingly stringent standards known as the Corporate Average Fuel Efficiency regulations, or CAFE, being imposed in the United States, regulations that Canada mimics.
The current round of gasoline-consumption cuts began in 2011 and they deepen annually until 2016. The U.S. government, carmakers and unions have negotiated further reductions to 2025.
As I wrote last week, the new standards would ensure consumption drops substantially, even if buyers continue to choose larger cars over fuel-sipping econoboxes — a positive development, unless you own an oil company.
But there is a big qualification in this.
In part, it’s because of Romney.
He’s against the CAFE regulations.
He can’t do much about the 2016 standards; they’re already enshrined. But he’d review the later one, which proposes a fleetwide average of 4.3 litres per 100 km by 2025, compared with the current 9.9.
In 2007, then-president George W. Bush approved a 40-per-cent efficiency improvement by 2020. Still, Romney complains such standards are an intrusion into the free market by U.S. President Barack Obama’s administration.
“The best approach is to try and build vehicles that people want, rather than having the government telling the companies what they must make,” Romney told The Detroit News in June. “I would work with the manufacturers to find ways to encourage fuel economy on the part of the consumer. But trying to have the manufacturer push the product on the consumer — that the consumer doesn’t want — is not the right approach.”
Experience has shown that doesn’t work. CAFE standards were first imposed during the 1970s oil embargo, but that effort withered after the crisis ended. For two decades, engineers modestly improved the efficiency of internal combustion but their efforts were neutralized as cars gained weight, power and accessories. Average fuel consumption for vehicles built by the Detroit Three didn’t budge.
Concerns about climate change, energy security and fuel prices combined to revive interest in fuel efficiency. Surveys suggest many buyers still approve of it and expect continuing improvements.
So, does it matter that Romney promises to review CAFE if he’s elected?
Yes, because the concerns fuelling the efficiency drive are weakening: Despite this summer’s heat and storms, few people show interest in tackling climate change. And discoveries of oil embedded in shale under much of the United States and deep offshore near Brazil, combined with Alberta’s bitumen developments, are easing fears of peak oil, skyrocketing prices and dependence on unsavory foreign suppliers.
Carmakers’ engineers love the challenge posed by the standards and they’re doing amazing things to meet them.
But corporate bean counters are less enthusiastic and while a recent report from the Washington D.C.-based Environmental Defense Fund argues that at current gasoline prices fuel savings can repay the cost of efficiency technologies in months, buyers still complain about the price premium.
The oil industry also continues to battle CAFE, forecast to reduce U.S. consumption by 3.3 million barrels a day by 2030.
Even when Obama was in the driver’s seat — having bailed out Chrysler and General Motors and with rising fuel costs and threatened shortages creating a sense of urgency — strong resistance forced him to twice lower the proposed 2025 standard to get a deal.
Increased fuel efficiency makes sense environmentally and economically and it’s spawning better vehicles. But with fuel costs and supply fears reduced and an opponent within sight of the White House, it’s far from a certainty.
I’ll take a pair of those mitts.
Columns & Advice
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