Bill proposed in Congress would require NHTSA to use realistic gas prices to set CAFE

The energy bill that was passed by Congress last December requiring corporate average fuel economy to be raised to 35 mpg by 2020 had some interesting little known elements in it. Among other things, the bill required NHTSA to set the standards at the maximum feasible level for any given years meaning that the 35 mpg threshold could be reached well before 2020. The problem lies in that word feasible. In setting standards NHTSA was required to factor in projections for what fuel prices would be in future years. That's why when NHTSA released its draft proposal for the first round of fuel economy standards, the average was set at 31.6 mpg by 2015 which caught some people by surprise. However with gas at $4 /gallon this spring, it looked like the reality would overtake the law. It turned out that NHTSA used a projection of $2.42 /gallon in 2016 to set the 31.6 mpg standard. Representatives Ed Markey (D-MA) and Todd Russell Platts (R-PA) this week introduced a bill that would require NHTSA to use more realistic projections in setting the standards. Under this proposal the standard could be moved up to 35 mpg by 2015. Again all of this demonstrates that mandating a fuel economy standard is probably a wrong headed approach. If higher fuel prices suddenly make higher fuel economy feasible, why not just set a minimum floor price for fuel and if prices drop below this level, tax it up to the minimum. We've seen this work in Europe where average fuel economy is much higher than in the US based largely on higher fuel prices. Then there is the issue of the bogus fuel economy calculations.

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