Cafe Standards - Is a Change in Form Needed?

Automobile fuel economy standards have been controversial since they were first considered over a decade ago. The controversy has increased recently as some auto manufacturers have struggled to meet the standards. This paper addresses the question of whether a change in the form of the standard is needed to reduce the perceived problems and make the program more effective. The paper argues that the main purpose of the standards is to increase the technical level of fuel economy in all vehicles while leaving the mix of vehicle sizes largely to be determined by the market.

Alternative groupings of vehicles and fuel economy measures are considered. Three alternative measures are presented in detail. Their impacts on different types of manufacturers are presented through sample calculations. The paper concludes that alternatives are needed and possible.