The Twenty-Five Years' War: The Impact and Effectiveness of CAFE Standards

Corporate Average Fuel Economy (CAFE) standards were enacted in 1975 as part of the Energy Policy and Conservation Act. They were designed and implemented in response to the oil price shocks of that period. Over the last 25 years, the standards have been highly criticized by industry, consumer groups, and legislators. There are many arguments surrounding several key issues regarding this legislation. This paper attempts to analyze each issue and form some conclusions regarding the effectiveness of the CAFE standards over their lifetime. This paper also attempts to allow the reader to form an intelligent and informed opinion on this issue.