BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AJR 5|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AJR 5
Author: Oropeza (D), et al
Amended: 4/28/05 in Assembly
Vote: 21
SENATE ENER., UTIL. & COMMUN. COMMITTEE : 7-3, 6/21/05
AYES: Escutia, Alarcon, Bowen, Dunn, Kehow, Murray,
Simitian
NOES: Morrow Campbell, Cox
NO VOTE RECORDED: Battin
ASSEMBLY FLOOR : 48-24, 04/28/05 - See last page for vote
SUBJECT : Corporate average fuel economy standards
SOURCE : Author
DIGEST : This resolution requests the federal government
to gradually double fuel efficiency standards.
ANALYSIS :
This resolution notes that:
1. Californians consume more than 18 billion gallons of
motor fuel annually.
2. Gasoline demand is projected to increase 1.6 percent
annually through 2020.
CONTINUED
AJR 5
Page
2
3. California's refineries are operating near capacity and
California is importing gasoline and diesel fuel to meet
growing demand.
4. Motor vehicle fuel economy dramatically affects fuel
demand.
5. A study adopted by the California Energy Commission
(CEC) and the California Air Resources Board determined
that doubling the fuel economy of the nation's light-duty
motor vehicle fleet is technically achievable;
This resolution urges that Congress and the President
increase average fuel economy by 1.5 miles per gallon
annually until total average fuel economy for new light
duty motor vehicles sold in California is double today's
average.
Background
Corporate Average Fuel Economy (CAFE) standards were
established by the federal government in 1975. According
to the author, CAFE standards have increased new car and
truck fuel economy by 70 percent between 1975 and 1988,
though CAFE standards have not increased for cars since
1985. Current California fuel economy for California cars
and light trucks are 27.5 mpg and 21 mpg respectively.
These averages have dropped a bit over the past few years
as Californians have purchased less fuel-efficient
vehicles.
In a May 13, 2005 letter to Congressman Pete Domenici,
Chairman of the House Energy and Commerce Committee, the
Governor had this to say about motor vehicle fuel
efficiency:
Between 1970 and 1985 on-road fuel economy of cars and
light-duty trucks in California increased from 12.6
miles per gallon to 20.7 mpg as a result of federal
CAFE standards. Unfortunately, fuel economy has
actually decreased in recent years. Because CAFE
standards have been largely unchanged since 1985, most
automotive technological improvements to engines and
vehicles have been used to increase performance and
AJR 5
Page
3
overcome gains in weight. To avoid the adverse
environmental and economic consequences of our
nation's dependence on foreign petroleum fuels, I
strongly urge Congress to take advantage of these
existing technologies and to establish national fuel
economy standards that double the fuel efficiency of
new cars, light trucks and SUVs.
Gasoline prices are at or near historic highs. California
efforts to reduce gasoline prices and price volatility have
been consistently unsuccessful.
Comments
Increasing the CAFE standard will reduce gasoline and
diesel demand but will still keep transportation fuels
totally dependent on oil, most of which is foreign. A
second, complementary strategy is to manufacture
transportation fuels from non-petroleum sources. Typically
these fuels are made from agricultural crops, such as sugar
cane, and blended with traditional fuels. Brazil has made
ethanol, derived from sugar cane, a significant
transportation fuel with Brazilian car companies
manufacturing vehicles that can operate on either gasoline
or blends of gasoline and ethanol.
Rather than establish fuel economy standards, some nations
have instead substantially increased taxes on
transportation fuel. Consequently gasoline in Western
Europe costs more than double what it costs in California.
An argument against increasing CAFE standards is that
individuals can make their own decisions about fuel
economy. When there is a demand for fuel efficient
vehicles car manufacturers will make them, as they have
with fuel efficient hybrids. As oil supplies grow short
prices will increase, raising gasoline prices and causing
people to drive less while further encouraging car buyers
to purchase fuel efficient vehicles. The weakness in this
argument is that oil supplies are tight and worldwide
demand is increasing rapidly; demand in China and India has
doubled in the last ten years. This means that prices
could raise rapidly, a situation made worse because much of
the supply is held in politically volatile countries. As
AJR 5
Page
4
evidence, consider that the price of oil has doubled since
2002. While the American economy seems to have weathered
this jump in oil prices, it's clear that individual
motorists and certain businesses are feeling the pain.
Such pain can be moderated for everyone by increasing fuel
efficiency through an increase in the CAFE standard.
In a sign that gasoline consumption is sensitive to price,
at least in the long term, sales of large,
energy-inefficient SUV's are down by about ten percent
since 2001, sales of Hummers were down 17 percent last
year.
The United States will always be dependent on foreign oil,
as Americans consume 25 percent of the world's oil but have
less than three percent of its proven reserves.
Related legislation: SB 757 (Kehoe) requires state
agencies to take all feasible and cost effective actions to
reduce the growth of transportation fuel consumption,
increase transportation energy efficiency, and increase the
use of alternative transportation fuels. This bill passed
the Senate 21-15 and is pending hearing in the Assembly.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 6/22/05)
Association for Commuter Transportation
Attorney General
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
ASSEMBLY FLOOR :
AYES: Arambula, Baca, Bass, Berg, Bermudez, Canciamilla,
Chan, Chavez, Chu, Cohn, Coto, De La Torre, Dymally,
Evans, Frommer, Goldberg, Hancock, Harman, Jerome Horton,
Shirley Horton, Jones, Karnette, Klehs, Koretz, Laird,
AJR 5
Page
5
Leno, Levine, Lieber, Liu, Matthews, Montanez, Mullin,
Nation, Nava, Negrete McLeod, Oropeza, Pavley, Richman,
Ridley-Thomas, Ruskin, Saldana, Salinas, Torrico, Umberg,
Vargas, Wolk, Yee, Nunez
NOES: Aghazarian, Blakeslee, Bogh, Cogdill, Daucher,
DeVore, Garcia, Haynes, Houston, Keene, La Malfa, Leslie,
Maze, McCarthy, Mountjoy, Niello, Parra, Plescia, Sharon
Runner, Spitzer, Strickland, Villines, Walters, Wyland
NO VOTE RECORDED: Benoit, Calderon, Emmerson, Gordon,
Huff, La Suer, Nakanishi, Tran
NC:do 6/22/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****