Average Fuel Economy (CAFÉ) standard


It is no longer a mystery that humans are to responsible for rising global temperatures, melting polar ice, and rising sea levels, all of which have come to be known as global warming. It is concerning that no effective remedy is in place, and that the problem impacts not only current generations but also future generations.

Travelling and Global Warming

Although travelling from one place to another is necessary and inescapable for humans, it is one of the major drivers of global warming, necessitating a reconsideration of how we might regulate gasoline usage in such a manner that it does not contribute to global warming. Since addressing the issue of global is unavoidable, it is high time that the government steps in and provides a solution aimed at putting an end to this as well as sustaining the economy.

The Corporate Average Fuel Economy (CAFÉ) Standard

A corporate Average Fuel Economy (CAFÉ) standard is a legislation passed by the Congress in 1975 in a bid to contain emission of carbon in the US. In particular, the legislation stipulated that 27.5 miles per gallon should be the standard for all passenger cars in the US, a rule that the Obama administration tightened, especially, during the financial crisis. However, economists have weighed in their opinion regarding this issue, precisely, arguing that a more direct approach is what the country needs. In so doing, they believe that introducing a gasoline tax would be more effective in solving this problem. Thus, it raises the question of what are the advantages and disadvantages of the two solutions.

The CAFÉ Standard Approach

To start with, CAFÉ standards, the solution stems from the assumption that people tend to purchase new vehicles within a specified period. As such, the government can use this idea to push manufacturers to conform to the standard of 27.5 MPG, something that will likely put an end, though gradually, of fuel-intensive vehicles. Proponents of this idea argue that implementation of the idea will make it very hard for people to get cars that are below 27.5, a move that will likely see phasing out of old cars and manufacturers moving towards the recommended fuel. Although the policy is touted as effective, in reality, it largely relies on an assumption which can be deceptive.

Fuel Efficiency and Consumer Behavior

For instance, it is not always true that people will respond the same way with a higher MPG car than they are likely to for vehicle having a lower MPG. Even though fuel efficient cars tend to be a bit expensive in regard to upfront cost, it can prove to be cheaper when costs are put together in the long run. It suggests that people are traveling long distances by using gasoline. Although the intention of the policy was to have people make the same distance and use less gasoline, this is not what happens in reality. Additionally, the standard fails to address the exact price of gasoline, making the concept of consuming less gasoline irrelevant. In fact, people can still consume more gasoline with these new cars. An article by Ed Dolan has tried to address this issue. For instance, a person with a fuel-efficient car may tend to avoid public transportation as a result of having low cost a per mile traveled in their car. In addition to that, instead of flying, having a fuel-efficient car may encourage a person taking a road trip for vacation. In so doing, the income effect is the best indicator to speculate behavior. The fact that distance traveled becomes cheaper, the effect of this is that the amount that the consumer saves will influence him or her to start yearning for consuming more fuel. However, there are those consumers who will behave differently, that is, use less gas and as such, put the remaining resources into other uses. Thus, how consumers behave about responding to CAFÉ standards is conflicting, making it difficult to confidently suggest that the policy is the best to tackle the problem of reducing fuel emission.

The Carbon Tax Approach

On the other hand, economists have embraced the idea of the carbon tax, or rather, gasoline tax, as an effective method to combat the rise of emissions. Although it appears to be a more direct concept, the problem lies in comprehending how it works and what makes it a better method to use than the CAFÉ standards.

Implementation and Market Forces

In particular, a carbon tax denotes a flat tax that is to be paid at the gas pump, and economist speculates that it may be regarding per gallon rate. Whether the produce or consumer pays the tax is irrelevant in this case since in the end, the tax will have to be paid. The intention of this policy is to increase the amount of distance traveled irrespective of the negative consequences that this may have on the consumers. Since there would be direct tax levied on consumers, this will trigger market forces to find ways to deal with the unwelcoming practice, in so doing, fuel-efficient options would be more appealing to them in terms of lifestyle preference and car. In addition to that, the producers will step in a bid to cater for what the market needs and in so doing, embrace production of fuel-efficient products. In addition to that, the more expensive the prices of gasoline gets, the better the chances of doing away with gas guzzling sales and in effect, the better the chances of finding a fuel-efficient model of a car.

Benefits and Technological Innovation

The idea stems from the fact that consumer will not like the extra expenses that they have to incur for every gallon of gasoline consumed or the high upfront price. The two factors are the one that makes carbon tax better than CAFÉ standards as far as practicability is concerned. Thus, instead of the two market forces working against one another, they would work in harmony in pushing for less carbon use and in effect, causing less emission of carbon into the atmosphere. In addition to solving market needs, the idea has the potential to spark technological innovation in the manufacturing sector in an attempt to come up with new methods of reducing carbon consumption and in effect, reducing costs. On the other hand, the gasoline tax put into consideration the usage of carbon to its very core and as such, it is very likely to have market forces determine the producer and consumer behavior.

Political and Societal Challenges

Although the economic concepts on combating emission of carbon by introducing gasoline tax seem appealing and more effective than CAFÉ standards, the political and societal problem needs to be looked at as this poses the greatest challenge to this idea.

Political Implementation

Firstly, it is highly unlikely that politicians will come up with legislation that aims at raising taxes. It is unlikely to happen for the basic reason of the notion that the law will make them unpopular among voters. Thus, although the idea is good and likely to act for the benefits of humanity, politicians may not be willing to sacrifice their political aspirations for the sake of making the world a better place as far as the emission of carbon into the environment is concerned. Politics determines a lot as far as implementing key issues in society are concerned, and in this case, climate change.

Irreversible Damage

It is worth noting that neglecting climate change is a very big problem as the repercussions are severe. For instance, it is very likely that should the world continue emitting carbon at the current rate, the world risk being a desert, an element that would suggest the end of humanity. The thing that makes it even more worrying is the fact that the current generation is politicizing the issue; however critical the issue appears, thus, pushing damage of climate change to be irreversible, which may as well be the greatest failure of the present generation when analyzed by future generations.


Although CAFÉ standard has tried to address the issue, it is not sufficient to solve the problem when analyzed as a whole. The problem lies in making it a national topic of discussion, something that politicians will always try to pull it down. When looking at the concept at its very core, CAFÉ standard appears to be a tool for achieving an end and in this case, reducing gasoline consumption. It is time to look for other ways that could solve the problem since CAFÉ standard is becoming increasingly ineffective. The gasoline tax comes with practicality and the advantage of little responsibility that the government has to play in implementation. All the government has to do is set the tax rate and collect revenue and leave for market forces to carry out the changing of consumer and producer behaviors. In addition to that, others who support this concept argue that the collection of revenue can serve as the best way to cut taxes in other areas society feels the taxes are not favorable while the goods are so essential. In the same vein, by increasing taxation on the negative behaviors, we make it possible to reduce taxation on the positive behaviors. Therefore, this encourages consumers to do more on the positive behaviors but on the other hand, do less on the negative behaviors which are quite encouraging, especially, as far as the idea of reducing carbon emission is concerned. Although CAFÉ standard is a descent policy, the problem needs a more aggressive and radical ideas that are both practical and effective. The thing is, consumer behaviors are what need to be changed, although this has come at a very late stage, it ought to have started forty years ago. Even though the conversation has been going on, nothing has come out of it, and I fear the trend continuing until my generation comes to power. It is quite worrying that the issue is so pertinent but then, successive administrations have failed to initiate a national dialogue on the same.

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