BILL ANALYSIS
AJR 5
Page 1
Date of Hearing: April 4, 2005
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jenny Oropeza, Chair
AJR 5 (Oropeza) - As Introduced: January 31, 2005
SUBJECT : Corporate Average Fuel Economy (CAFE)
SUMMARY : Requests the federal government to gradually double
fuel efficiency standards. Specifically, this bill :
1)Documents the prevalence of vehicle ownership in California
and the corresponding consumption of large amounts of vehicle
fuel.
2)Quotes a state study projecting significant annual increases
in the demand for gasoline and diesel fuel between now and
2020.
3)Cites the inability of domestic refiners to keep pace with
demand and the resulting vulnerability of the state to price
spikes.
4)Cites expert opinion that a doubling of vehicular fuel economy
is technically achievable and would result in important
reductions in consumer demand for fuel.
5)Acknowledges that CAFE standards fall within the jurisdiction
of the federal government.
6)Cites current federal rulemaking that raises CAFE standards
for light-duty trucks and sport utility vehicles (SUVs) by
just 1.5 miles per gallon above the 1996 levels, over three
years.
7)Memorializes the Congress and the President to increase CAFE
standards by at least one and one-half miles per gallon each
year until total average fuel economy for the new light-duty
motor vehicle fleet sold in California is double today's
average.
EXISTING LAW : Allows vehicle fuel economy standards to be
adopted only by the federal government.
FISCAL EFFECT : Unknown. This bill is keyed nonfiscal.
AJR 5
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COMMENTS : More than 30 years ago, the first of two "oil
shocks," when the Organization of Petroleum Exporting Countries
(OPEC) cut off crude oil supplies to the United States, first
alerted Americans to the dangers of being dependent upon a
tenuous supply of fossil fuels that is largely concentrated in a
region of the globe characterized by chronic political
instability. At that time, the auto industry, with some
prodding by the federal government, vastly improved the fuel
economy of the vehicles it offered for sale in this country.
(Cars and light trucks from that era were heavy and inefficient,
with cars averaging 13.5 mpg and light trucks averaging 11.6
mpg. Those figures are now 27.5 mpg and 21 mpg respectively.)
The reductions in gasoline consumption achieved through industry
efforts and federal standards not only weakened, for a time, the
OPEC cartel, but also helped to improve air quality, ease
inflationary pressures on the economy, and reduce the nation's
trade imbalance.
Three decades later after that first oil shock, the competition
of rapidly industrializing nations in a global marketplace for a
static supply of fuels is once again putting upward pressure on
fuel prices. Unfortunately, at the same time, American driving
habits and vehicle choices have not sustained the automotive
fuel economy advances achieved during the 1970's and 1980's.
CAFE standards were initially established by the federal
government in 1975. While the benchmarks slowly escalated over
time, they have remained static since 1985 for passenger
vehicles and have barely increased since 1996 for light trucks
(which include most vans and SUVs). The current targets are
27.5 mpg for passenger vehicles and 21.0 mpg for light trucks,
although light truck standards are scheduled to increase to 21.6
mpg for 2006, and 22.2 mpg for 2007.
According to the National Research Council, "the CAFE program
has significantly reduced U.S. gasoline consumption by first
contributing to a rise in fuel economy and, in recent years, by
maintaining fuel economy levels, even during periods when oil
prices were dropping and demand for fuel-efficient cars and
trucks was low. Consequently, gasoline consumption is down
roughly 2.8 million barrels of gasoline per day from where it
would be in the absence of CAFE standards." In 2000 alone, CAFE
saved American consumers $92 billion, reduced oil use by 60
billion gallons of gasoline, and kept 720 million tons of global
warming pollution out of the atmosphere.
AJR 5
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Nevertheless, total fleet fuel economy peaked in 1987 at 26.2
mpg when light trucks made up a mere 28.1% of the market. By
2001, with light trucks making up 46.7% of the market, total
fleet fuel economy fell to 24.4 mpg. Currently, light trucks
make up more than 50% of new vehicle sales.
Engineering analyses show a substantial improvement in fuel
economy over the next 10-15 years is feasible and could be
achieved using "conventional" (non-hybrid) technologies through
a combination of streamlining, reduced tire rolling resistance,
engine improvements, optimized transmissions, and effective use
of the upcoming transition to higher voltage automotive
electrical systems.
In response to rapidly increasing fuel prices, the Assembly
Transportation Committee in 2004 held a series of hearings to
determine the cause and impact of these price spikes and to
explore possible solutions. While much of the focus of the
testimony at these hearings was on supply constraints and market
behaviors, it became clear that long-term trends make sustained
high prices inevitable unless consumption patterns are radically
altered. An increase in federal CAFE standards is clearly the
most effective means of changing those patterns.
The author of this bill readily acknowledges that the issue of
automotive fuel economy is within the exclusive province of the
federal government. She believes, however, that a state
suffering from gasoline prices that have been, at times, twenty,
thirty, or even forty cents per gallon higher than the already
inflated prices evident elsewhere in the country must put itself
on record as encouraging federal action to reduce fuel
consumption. In the long term, fuel conservation is the only
strategy that can temper incessant price increases. And, as
noted above, fuel conservation has the concomitant benefits of
improving air quality and strengthening the national economy.
Legislative history : This bill is a reintroduction of the
author's AJR 89 from 2004. That bill passed this committee by a
vote of 9-0 and the Assembly floor by a vote of 54-13, but was
received by the Senate after the policy committee hearing
deadline and was never acted upon in that house.
REGISTERED SUPPORT / OPPOSITION :
Support
AJR 5
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Association for Commuter Transportation, Northern California
Inland Chapter
California Air Pollution Control Officers' Association
California Alliance for Consumer Protection
California League of Conservation Voters
Planning and Conservation League
Sacramento Metropolitan Air Quality Management District
Sierra Club California
WalkSacramento
Opposition
None received
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093