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>Gas tax or CAFE standards? That’s the age-old question, isn’t it? Well, maybe not… but it is something we all should start thinking about.

It’s a question of focusing on the consumer or supplier. A gas tax would hit the pockets of vehicle owners, forcing them to rethink the ways they use their cars and gas. CAFE is a mandate for the manufacturers. But where big business is concerned, there are always ways of slipping by regulations. This is America.

CAFE (Corporate Average Fuel Economy) was implemented by congress in 1975 to conserve fuel after the 1974 Arab Oil Embargo. The current rule sets a “maximum feasible level” mpg cap for passenger cars (27.5 mpg) and light trucks (22.2 mpg). Manufacturers that do not meet these standards are forced to pay a fee.

But what exactly does “maximum feasible level” mean? Congress maps out four criteria: technological feasibility, economic practicality, effect of other standards on fuel economy, and the needs of the nation to conserve energy. This criteria avoids make any concrete rules for CAFE – Congress leaves “feasible” open to interpretation.

Policies that are by nature vague and ambiguous complicates and slows down the process. CAFE standards do not actually force manufacturers to go green, it just makes them pay up if they don’t. But it’s a price that many manufacturers would rather shell out than create more fuel efficient vehicles. Since 1983, more than $500 million in penalties have been collected.

CAFE did work quite well for awhile – fuel economy saw a steady rise up until the 80’s. But it only works well within a stable economy. Though it seems that fuel economy should always rise with gas prices, gasoline turns out to be one of those tricky economic glitches: as gas prices rose dramatically in the early part of the 2000’s, fuel economy remained fairly stagnant.

CAFE is so dependent on a stable market that the government is forced to give “get out jail free” cards to manufacturers who occasionally go over standards. Times of economic downturn make it impossible for manufacturers to comply with the regulations.

A gas tax would work faster than CAFE independent of any economic climate. More on this in a later blog.