If you aren’t part of the auto industry, as most of us here at Lot Pro are, and if you haven’t been paying attention to what has been going on in Congress for the better part of a year, you might think that the title to this article means that the government has finally decided to regulate Starbucks. Fortunately (or unfortunately, depending upon which side of the argument you are on), this is not the case – despite the fact that my father would probably roll over in his grave if he knew that I pay almost $4 for a cup of coffee from one of those establishments.
What was lost in all the Christmas holiday hustle and bustle was H.R. 6, more commonly known as the “Energy Independence and Security Act of 2007” – the long overdue sequel to the original Energy Act of 1975.
If you were around back then, you probably remember what it was like. The world had just emerged from the Arab Oil Embargo. Gasoline rationing, long lines at the gas pump and high gas and heating oil prices were a way of life for Americans who, only a few years earlier, had enjoyed 35 cent per gallon gasoline – some of the lowest prices in the world. Along with this largesse, American cars averaged only 17 miles per gallon. As the oil shock subsided, Congress took action, passing a bill that would ensure that all cars sold in the United States would, within 10 years, achieve a corporate average fuel economy of no less than 27.5 mpg.
Fast forward 30+ years. The U.S. is coming off a summer with gas prices, adjusted for inflation, near historic highs. Sport Utility Vehicle sales along with light trucks, the lynchpin of domestic automaker profits are off 4.5% from 2006 and a whopping 16% from 2005. Home heating oil wholesale prices have risen from $ .80 per gallon in 2002 to $2.80 in 2007. To quote Casey Stengel “It’s deja vu all over again!”
And once again, Congress gets back into the act, this time revising CAFÉ standards as well as addressing a number of issues arising from the original Energy Act of 1975 – most notably the classification of certain SUVs as light trucks and putting both in a separate category. The new objective is “to achieve a combined fuel economy average for model year 2020 of at least 35 miles per gallon for the total fleet of passenger and non-passenger automobiles manufactured for sale in the United States for that model year.”
The biggest change that the new act accomplishes is to raise the Corporate Average Fuel Economy from 27.5mpg to 35mpg. It also eliminates the separate category for SUVs and light trucks, putting both into the combined corporate average.
The truth is that for far too long, the auto companies have focused their resources on increasing horsepower and not engine efficiency. Congress has, just as it did in 1975, forced a change in direction. Anyone connected with the auto industry will tell you that this is both a tremendous opportunity as well as a challenge. Once again, “the times, they are a-changin’.”
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