CAFE (Corporate Average Fuel Economy), is the set of standards established by Congress in 1975 and subsequently managed by the NHTSA (National Highway Traffic Safety Administration) to limit the number and types of vehicles that Americans can buy – really.  Of course, the Congressional regulations weren’t sold to the public that way.  Officially, the standards were established under the guise of “improving automotive efficiency.”   Like Mom and apple pie, who can’t get behind “efficiency.”

As a knee-jerk reaction to the Arab oil embargo and the associated quickly rising gas prices in the 70s (relatively speaking, of course), Congress decided that it would force manufacturers – all of those that sold cars in the US – to produce cars with better fuel efficiency by setting MPG bars that they all had to leap over at specified periods of time.  By doing this, Americans were supposed to get exactly the cars we wanted.  So, instead of letting the buying public shape the marketplace with our choice of which cars to buy, Congress did it for us.

Not being the type of people who like being told what to do though, most Americans ignored the standards and spent their hard-earned dollars buying vehicles with gas mileage well below the average specified by CAFE (the average specified by the standards is of the cars a manufacturer makes – there is no weighting for which cars are actually being purchased).  As it turns out, the cars that the US government chose for us, were not the cars we wanted to buy.  Shocking, I tell you.

Over the past three decades, Americans chose to buy big cars – huge sedans, then station wagons, then SUVs.  The more sheet metal, the better.  And trucks . . . Americans made trucks, large ones at that, the most popular vehicles roaming our paved countryside.  CAFE standards be damned.

The fundamental problem with CAFE standards should be clear to everyone by now.  It’s not the mandate to car manufacturers and the follow-on limit to what products are available that makes people drive any particular vehicle – fuel efficient or not, it’s the choice of the car buyer.  That choice, of course, is driven by many factors – none of those being what the government says is better for them.

Does anyone believe that the current huge number of Priuses on the road are a result of more restrictive CAFE standards?  The current hybrid craze is entirely driven by the price of gas and the buyers of all those cars choosing, themselves, to find more fuel efficient cars.

Here’s an example.  Honda sold a car called the Insight for a few years in this country.  It was the highest mileage car ever sold here and, as you’d expect from Honda, it was fairly reasonably priced.  Sales of the car were so low, though, that Honda had to discontinue the model.  This was before $4.00+/gallon fuel.  Now, as with the Prius, there would be a waiting list for the car.  Even though the Insight’s fuel economy was above the CAFE standard of the time, no one cared.  The car made too many other tradeoffs to higher mileage ratings and people weren’t ready to make those sacrifices.  At $4.00+/gallon, such trade-offs seem pretty minor to many.  That’s what drives what we buy.

If the government needed to tinker with what we drive and consume (reasonable in some circumstances), then it should have done it by artificially increasing the cost of owning or driving a car.  If each gallon of gas had $5.00 of tax associated with it, driving and buying behavior would change VERY quickly.  Wagging the dog from the tail – enforcing policy through the manufacturer, however is like spitting in the wind.  It’s just stupid.

The bottom line is that if I want to drive a land-bruising monster that drinks gas like Homer Simson drinks Duff beer, then that should be my choice.  And, if the economics of driving such a vehicle motivates me to acquire a fuel-sipping petrol miser, that’s also my choice.  For most, the financial requirements of filling a $100/tank every day and half will drive us to think about more fuel efficient cars.  This, of course, is happening now.  CAFE standards create a synthetic economy that fundamentally fails to achieve it’s goals.  The standards haven’t changed the market.  Buyer choice, driven by loads of factors, but mostly economic ones, has.  High gas prices are making that abundantly clear right now.

This is clearly going to date me, but as I was getting my driver’s license, gas prices were jumping from about $0.40/gallon (that’s right – only a zero before the decimal point) to an astronomical $0.75.  At the time, many thought that the high prices would destroy America’s open road driving experience, ripping apart the very fabric of America’s car-based culture.

As we know, this didn’t happen.  We adapted, we changed, we downsized (somewhat).  We did everything in our power to refuse to give up the very definition of our modern cowboy mentality – our trusted multi-cylinder steeds, carrying us individually to wherever the hell we wanted to go whenever we wanted to.  Cars in the US are far more than vehicles, they are extensions of us as individuals.  They are our fortress of solitude, our embodiment of ego, our reliable companion and, in a pinch, a place to reenact Meatloaf’s Paradise by the Dashboard Light.  Ok, Ok, I’ll love you forever . . .

Well, if the increase in gas price from $0.40 to $0.75 weren’t enough to change our relationship with our cars, maybe $4.00+/gallon is.  But wait.  We’re American’s and we’re not going to give up our cars, damn it! 

We may not have a choice.  The current situation is beginning to look like the perfect storm, and trying to keep our love affair with the car alive may end up requiring a Herculean effort, if it’s even possible.  Not only are oil prices going straight through the roof, but it’s happening in an era where are cars are gaining weight rapidly.  Even compact cars are putting on enough weight to generate their own gravitational field.  Crash protection, pedestrian safety, airbags, redundant braking, navigation systems, sound deadening, leather-clad seats – all add loads of weight, and expense to a vehicle.  It’s why even little cars are having a hard time getting past the 30mpg barrier consistently.

OK, so that’s the one-two punch – gas prices combined with increased mass.  But here’s the kicker enabling the perfect storm.  The price of steel has nearly doubled since January.  The price of oil is a big factor (after all, it is steel and it’s heavy stuff to ship and creating it takes a lot of energy), but China and India are buying up steel like it was crack.  Something I remember from freshman economics . . . supply and demand . . . or something like that.  The bottom line is that the cost of steel required for an average car these days has gone up by about $500.  Yes, that’s the increase per car.  If that weren’t bad enough, the high price of steel also affects the prices of other metals used in cars.  Aluminum is also going up in price.

So there you have it.  Cars are not only way more expensive to fuel these days, they’re also a lot more expensive to build.  My guess is that the trends on both counts are not looking good, either.  Somethin’s gotta give here and it may be our car-based culture.  Can we still afford to maintain our relationship with our vehicles?  Do we have to find another friend?  The back seat of a bus is just not as romantic as the back seat of a Chevy Bel Air.

Shit.