Apples for Health- Analysis: Will new energy law deliver?

The most prominent and publicized aspect of the Energy Independence and Security Act of 2007, signed on Dec. 19, hinges on the increased fuel-efficiency requirements for cars and light trucks, or the Corporate Average Fuel Economy standards. Government CAFE standards require that car manufacturers meet a certain miles-per-gallon average for every fleet they produce.

The Energy Independence Act raises the required fuel efficiency level to 35 mpg by 2020, up from 27.5 mpg. The bill's passage marks a major victory for congressional democrats, many of who believe the change should have taken place years ago, including Rep. Edward Markey, D-Mass.

"It's a very important step forward," said Jessica Schafer, Markey's communications director, pointing out that CAFE standards have stayed stagnant since Congress first passed them in 1975.

One of the key areas to benefit from the increased standards is national security, proponents say, because the higher energy efficiency of new cars will cause consumers to use less gas, decreasing the nation's overall consumption of oil, including that imported from politically unstable regions.

"There's clearly a direct correlation with our consumption of foreign oil and national security," Schafer told United Press International. "By decreasing our consumption of foreign oil, we increase our energy security by disengaging ourselves from these unstable regions. I think, overall, this bill has massive implications for national security."
In fact, the House Select Committee on Energy Independence and Global Warming projects the law will decrease American consumption of oil by 4 million barrels per day in 2030.

But some economists don't believe it.

Bob Crandall, a senior fellow of economic studies at the Brookings Institution, a nonprofit public policy organization based in Washington, says the new regulation will lead to few changes in oil consumption.

"The idea that somehow doing any of these things will decrease our reliance on imported oil in a measurable way is a fallacy," Crandall told UPI. "I don't think this will have any national security impact."

One of the major flaws in the plan, Crandall said, lies in the number of cars that will be subject to the new regulations compared to those already on the road, which do not have to comply with the increased fuel-efficiency standards. Because these new cars will also cost more, a belief supported by most experts, Crandall said he believes fewer people will buy them.

"(The higher CAFE standards) will decrease the number of new vehicles on the road, so this is not going to have a very big effect," Crandall said, adding that decreased auto sales are also likely to decrease jobs.

However, the Union of Concerned Scientists, a nonprofit research organization, directly disagrees with Crandall, particularly on his projection of how the CAFE standards will affect the job market.

An analysis conducted by UCS calculates the new fuel provisions will create 150,000 new jobs in the United States in 2020, rising to 340,000 by 2030. While UCS expects 10,000 to 20,000 of these jobs to be in the auto industry, the others will probably be spread across all economic sectors, said Brendan Bell, UCS's Washington representative.

"Consumers will no longer be spending as much money at the gas pump," Bell told UPI. "Instead, they'll be spending it on other services and products."

While Bell agrees consumers will have to fork over more cash for a new car after the updated CAFE standards come into force, a gradual process culminating in 2020, he said the higher fuel efficiency of the vehicles will more than compensate for theincreased cost upfront.

"It'll be about $1,000 more on average for a vehicle, but (consumers) will save $4,000 to $5,000 -- after paying off the extra cost of the car -- on gas," Bell said.
Representatives from the auto industry itself have responded positively to the bill's passage, including Mike Moran, Ford Motor Company spokesman.
"We really worked with lawmakers to enact a nation-wide requirement," Moran told UPI. "We're really looking forward to providing safer, quality products with high fuel efficiency."

Although Moran would not definitively state whether Ford expected the new law to cost them sales or force them to cut jobs, he did say the company was up to the challenge presented by the law.

"There are costs associated with any regulation, but
I think we find ourselves in a position to compete," he said.

One of the reasons car companies may be so eager to embrace the new law lies in a sticky situation unraveling between the Environmental Protection Agency and the California state government. The same day the president signed the Energy Independence Act, EPA Administrator Stephen Johnson used the law as part of his reason for denying California a waiver which would allow the state to regulate greenhouse gas emissions from vehicles.

In his letter to California Gov. Arnold Schwarzenegger explaining the waiver denial, Johnson pointed to the need for one national policy.

"(The Energy Independence and Security Act) will deliver energy security benefits and bring a much needed national approach to addressing global climate change," Johnson wrote in his Dec. 19 letter.

While most environmentalists aren't happy the waiver was denied, representatives from the auto industry supported Johnson's action, and, as a result, the law containing the national approach. Dave McCurdy, president of the Alliance of Automobile Manufacturers, a trade association, released a statement praising the decision.

"Enhancing energy security and improving fuel economy are priorities to all automakers, but a patchwork quilt of inconsistent and competing fuel economy programs at the state level would only have created confusion, inefficiency and uncertainty for automakers and consumers," McCurdy wrote in his statement.

The increased CAFE standards represent just one aspect of the law's efforts to solve the nation's energy dilemma. Other measures include a variety of grants dedicated to research and development of renewable energy sources, higher efficiency mandates for appliances, steps toward greener buildings and a mandate for increased production of biofuels.