House Fuel Bill, "35 mpg by 2020," is Full of Loopholes

At the time of the 1974 Arab oil embargo, the average US non-commercial vehicle got a mere 12.9 miles on a gallon of gas. This despite winners of the Shell and Mobil economy run competitions exceeding 100 mpg in full sized cars.

Corporate Average Fuel Economy (CAFE) legislation, enacted in 1975, required each automaker's fleet of cars to average 27.5 mpg and "light trucks," liberally construed, to average 22.2 mpg.

This dual standard is known as the "SUV loophole." It allowed America to cruise on in blissful ignorance, driving big wasteful vehicles on borrowed time and money.

The 27.5 mpg standard was to be reached by 1985. It was, but fuel efficiency has remained flat ever since. Pretty obviously, automakers are not going to invest in new technology without being forced.

Since US oil production peaked in the early 1970's, oil imports have grown from 36% to 60% of consumption. The subtle system devised to get the rest of the world to pay for this, petrodollar hegemony, is currently facing its most severe challenge to date.

So news of an energy bill compromise in Congress between parties and interest groups raises a glimmer of hope.

For 23 years, a coalition of Republicans and Democrats representing vehicle-producing states has resisted tougher standards. They say tightened fuel rules would compromise safety, due to lighter cars, accelerate auto industry job loss, and cost $6K per car to implement.

A measure mandating a 40% increase in fuel efficiency for new cars and light trucks by the year 2020, and imposing a corporate average of 35 mpg, looks sure to pass the House and Senate.

The 35 mpg standard is embedded in a larger energy bill with many add-ons which effectively reduce the effect to a tolerable level for Detroit. Auto industry representatives are already calling the longstanding debate concluded.

So why is Detroit suddenly smiling?

Long-time Rep. John D. Dingell (D-Mich.), Detroit's point man on Capitol Hill, has grudgingly come around to supporting the bill. This supposedly attests to the new influence wielded by House Speaker Nancy Pelosi.

But the agreement creates more exceptions than it eliminates.

The SUV loophole, a separate class for broadly defined "light trucks," is retained.

Protection for jobs is guaranteed by a distinction between domestic and foreign-made fleets.

A system of credits, allowing builders to exchange gains in one class of vehicle for deficiencies in another, insures continued barge-building as usual.

CAFE as we have known it, a system of fleet mileage standards, will be eliminated. Substituted is a flexible rule-making process where NTSHA, the National Highway Traffic Safety Administration, will set goals for each class.

Then there is the ethanol loophole. The farm-lobby corn-as-fuel folks added several biofuel provisions. Automakers can earn credits against federal mileage targets by building flexible-fuel capable vehicles able to burn up to 85 percent ethanol. No regulation requires actual use of ethanol, just the ability to burn it.

Also included is a requirement that greater amounts of biofuels be added to America's gasoline supply starting in 2013.

Another provision forces major electric utilities to generate at least 15% of the nation's electricity from renewable resources like wind and solar.

Analysts expect the bill to pass with majorities next week.

Will President Bush will sign the bill? There wasn't much in the above that favored the oil industry.

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