STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - July 19, 2006)
By Mr. OBAMA (for himself, Mr. LUGAR, Mr. BIDEN, Mr. SMITH, Mr. BINGAMAN, Mr. HARKIN, Mr. COLEMAN, and Mr. DURBIN):
S. 3694. A bill to increase fuel economy standards for automobiles, and for other purposes; to the Committee on Finance.
Mr. OBAMA. Mr. President, 33 years ago, this Nation faced a crisis that touched every American. In 1973, in the shadow of a war against Israel, the Arab nations of OPEC decided to embargo shipments of crude oil to the West.
The economic effects were devastating. For American drivers, the price at the gas pump rose from a national average of 38.5 cents per gallon in May 1973 to 55.1 cents per gallon in June 1974. The stock market fell, and countries across the world faced terrible cycles of inflation and recession that lasted well into the 1980s.
Lawmakers in Washington reacted by calling for a nationwide daylight savings time and a national speed limit. They established a new Department of Energy that eventually created a strategic petroleum reserve. Perhaps most important, Congress enacted the Corporate Average Fuel Economy standards, or CAFE, the first-ever requirements for automakers to improve gas mileage on the vehicles we drive.
At the time, auto executives protested, saying there was no way to increase fuel economy without making cars smaller. One company predicted that Americans would all be driving sub-compacts as a result of CAFE. But CAFE did work, and under the direction of Congress, the National Highway Traffic Safety Administration, NHSTA, nearly doubled the average gas mileage of cars from 14 miles per gallon in 1976 to 27.5 mpg for cars in 1985. Today, CAFE standards save us about 3 million barrels of oil per day, making it the most successful energy-saving measure ever adopted.
Now 30 years later, Americans again are feeling the pain at the pump. The price of oil has reached $78 a barrel, and Americans are paying more than $3.00 a gallon for gas. America's 20-million-barrel-a-day habit costs our economy $800 million a day, or $300 billion annually. Because we import 60 percent of our oil, much of it from the Middle East, our dependence on oil is also a national security issue as well. Al-Qaida knows that oil is America's Achilles heel. Osama bin Laden has urged his supporters to ``Focus your operations on oil, especially in Iraq and the gulf area, since this will cause them to die off.''
At a time when the energy and security stakes couldn't be higher, CAFE standards have been stagnant. In fact, because of a long-standing deadlock in Washington, CAFE standards that initially increased so quickly have remained stagnant for the last 20 years.
Since 1985, efforts to raise the CAFE standard have been stymied by opponents who have argued that Congress does not possess the expertise to set specific benchmarks and that an inflexible congressional mandate would result in the production of less safe cars and a loss of American jobs. This has been a bureaucratic logjam that has ignored technological innovations in the auto industry and crippled our ability to increase fuel efficiency.
To attempt to break this two-decade-long deadlock and start the U.S. on the path towards energy independence, I have joined with Senators LUGAR, BIDEN, SMITH, BINGAMAN, HARKIN, COLEMAN, and DURBIN to introduce the Fuel Economy Reform Act of 2006. This bill would set a new course by establishing regular, continual, and incremental progress in miles per gallon, targeting 4 percent annually, but preserving NHTSA expertise and flexibility on how to meet those targets.
Over the past 20 years, NHTSA's efforts to improve fuel economy have been encumbered with loopholes and resistance. With this bill, CAFE standards would increase by 4 percent every year unless NHTSA can justify a deviation in that rate by proving that the increase is technologically unachievable, does not materially reduce the safety of automobiles manufactured or sold in the U.S., or can prove it is not cost-effective when comparing with the economic and geopolitical value of a gallon of gasoline saved. We specifically define the grounds upon which NHTSA can determine cost-effectiveness. By flipping the presumption that has served as a barrier to action, we replace the status quo of continued stagnation with steady, measured progress.
Under this system, if the 4 percent annualized improvement occurs over ten years, this bill would save 1.3 million barrels of oil per day--or 20 billion gallons of gasoline per year. If gasoline is just $2.50 per gallon, consumers will save $50 billion at the pump in 2018. By 2018, we would be cutting global warming pollution by 220 million metric tons of carbon dioxide equivalent gases.
The Fuel Economy Reform Act also would provide fairness and flexibility to domestic automakers by establishing different standards for different types of cars. Currently, manufacturers have to meet broad standards over their whole fleet of cars. This disadvantages companies like Ford and General Motors that produce full lines of small and large cars and trucks rather than manufacturers that only sell small cars.
In order to enable domestic manufacturers to develop advanced-technology vehicles, this legislation provides tax incentives to retool parts and assembly plants. This will strengthen the U.S. auto industry by allowing it to compete with foreign hybrid and other fuel efficient vehicles. It is our expectation that NHTSA will use its enhanced authority to bring greater market-based flexibility into CAFE compliance by allowing the banking and trading of credits among all vehicle types and between manufacturers.
Finally, the bill also would expand the tax incentives that encourage consumers to buy advanced technology vehicles. The bill would lift the current 60,000-per-manufacturer cap on buyer tax credits to allow more Americans to buy ultra-efficient vehicles like hybrids.
By ending a 20-year stalemate on CAFE, the Fuel Economy Reform Act will recapture the innovation that Congress and the auto industry launched in response to the OPEC crisis. In the process, we will safeguard our national security, protect our economy, reduce consumer pain at the pump, and protect our climate, environment, and public health. I urge my colleagues to join our bipartisan coalition and support the Fuel Economy Reform Act.