Saturday, June 16, 2007

Open Letter: CAFE Regulations

Dear Congressmen and Senators,

I am writing today to urge you to support the strongest possible CAFE requirement, one that makes no exceptions for so-called 'light-trucks' or for the use of alternative fuels. Various amendments have been offered in the Senate which would alter the deadline for meeting the rather modest standards that have been proposed in S.357. I urge you to reject those amendments and keep the bill clean from unrelated amendments.

Truth be told, CAFE is rather poor policy. It is complicated for manufacturers to calculate and meet. It allows for several exceptions, and it fails to regulate the fuel efficiency of larger vehicles. And it does nothing to alter the fundamental pattern of urban development in America that drives the nation's incredible appetite for oil.

A far better approach would be to replace CAFE with a constantly increasing federal motor fuels tax (aka a gas tax). A gas tax that increased by $0.03 per month (and more after several years) would give consumers a clear reason to reduce their fuel consumption. They would be able to do so in the way that suited them most, be it buying a fuel efficient car, moving closer to work, telecommuting, car-pooling, or many other means. Such a tax would be easy to collect – a federal gas tax already exists - and would eliminate the paperwork created by CAFE. A new gas tax would not cause significant financial hardship because it would give people plenty of time to adapt, as well as clear incentives to do so.

Many people claim to object to a gas tax because it would fall hardest on poorer Americans. However, a gas tax is hardly the only tax that poor people face. A gas tax could easily be offset by using the revenues from it to replace the FICA tax on the first few thousands of dollars of wage earnings. A gas tax plus such an exemption would give poor people a reason to reduce their use of fuel, along with more reasons to work, while still preserving their FICA contributions. A gas tax could also be used to fund improvements in mass transit.

But I am a realist, and recognize that increasing the federal gas tax would be very unpopular. Most Americans are totally uninformed and unrealistic about the viability of our current level of oil usage. Most Americans expect that their grandchildren will drive huge cars everywhere anytime, just like everyone does today. This expectation will certainly be proved terribly wrong. Until the time that Americans support an increasing gas tax, CAFE will be the best policy that can be implemented at the federal level. I look forward to seeing the small improvement that CAFE represents passed soon.

Thank you for your time.