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May 7, 2007

Increasing CAFE standards is not the answer

Analysis of: CAFE Break | online.wsj.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Christopher Dane, President-HRG Afilliates, LLCChristopher Dane
President-HRG Afilliates, LLC, HOGG ROBINSON GROUP P L C
Implications: * CAFE  standards never had the intended outcome.
* relies on something to happen in the future when what is needed something for today.
*  Making car makers accountable for conservation rather than the end user is illogical.
*  Drivers are ultimately responsible for conservation.
*  The solution is to follow the Europeans...charge what the charge for fuel and invest that money into the highway and road infrastructure.

Analysis:  CAFE standards never had the intended outcome...and that is to reduce the use of gasoline thru conservation as a result of better gas mileage. In fact the reverse has happened...miles driven continue to increase as a result of better gas mileage. Secondly changing the average mileage at some point int he future...in this case 2016-2020 depending on whose program you are looking at, does nothing to help today situation of global warming and increased foreign dependency.

Automobiles account for only 18 percent of America;s total energy consumption...who can tell me what we are doing on the other 82%. Moreover, CAFE is making the automobile companies responsible for conservation rather than the end user...and isn't that who is ultimately responsible for the use of energy...It is the drivers that must be motivated to conserve fuel. The way the European Union (EU) does that is thru the cost of fuel...which forces smaller calls with better gas mileage.

Thus if the cost of fuel was equal to or greater than the cost of fuel in Europe and the added cost of that fuel reinvested in the infrastructure of the highway system in the country...this would force us to conserve fuel while the government spent the money easy traffic congestion which would further conserve fuel, force the manufacturers to invest in new technologies and lighter materials...which would again force more conservation.

Therefore the we are attacking the problem from the wrong side...rather forcing the end user to behave responsibly.   Isn't that more logical?


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