Deficit fuel-hardiness
IN light of two of today's prominent news headlines -- the deficit and falling oil prices -- yet another confusing signal is coming from Washington. Just as the federal government is taking a hard line on deficit spending, it is lending a sympathetic ear and may give away $500 million to two unlikely re-cipients of federal largesse: Ford and General Motors. These two hugely profitable concerns will get -- and the government will lose -- almost $500 million if the Department of Transportation (DOT) accedes to their request to reduce the average fuel econ-omy level for the fleet of cars they sell in 1987 and 1988.
This half-billion dollar bonanza would be expensive gilding on the estimated $280 million gift received by the auto-makers when DOT lowered, at the automakers' request, the fuel efficiency standard (Corporate Average Fuel Economy standard, or CAFE) for 1986.
Congress established the CAFE standard in 1975 to promote increased fuel economy of automobiles.
The goal was to help insulate America from the economic havoc that excessive reliance on imported oil can wreak. Congress gave the automakers a full 10 years to implement the technology necessary to meet the 27.5 miles per gallon standard set for 1985 and beyond. The $500 million that might be given away to Ford and GM is for fines owed due to failure to meet the standard.
GM and Ford claim they cannot sell enough fuel-efficient cars to meet the standard because low gasoline prices induce consumers to buy gas-guzzlers. Well then, how can Chrysler make record profits while offering consumers a complete line of cars and complying with the standard? Clearly, the technology is there to meet the standard, and implementing the technology is in the national interest. Chrysler shows that under this sound national policy business may prosper.
Ford and GM didn't meet the standard because they consciously made the marketing decisions which caused them to miss it. They promoted sales of their largest cars, which yield the largest profits for them.
To reward their recalcitrance is out-rageous.
Today's headlines may lead one to ask why we should take the time to worry about oil vulnerability. We seem to be awash in oil; prices have dropped pre-cipitously and continue their downward slide. Yet, a glance even a short distance up the energy roadway gives one cause for deep concern.
Recent Interior Department estimates indicate that domestic oil production will fall from 11.1 to 7.6 million barrels per day between 1985 and 1995 and that net oil imports will rise during the same period from 5.1 to 11.7 million barrels per day. Certainly, today's low oil prices create no incentive for new exploration or production. Foreign sources inevitably will continue to supply a significant portion of our petroleum needs.
We cannot let today's sagging oil prices result in sagging enthusiasm for conservation. Prices at the pump, in inflation-adjusted dollars, are lower then they were 12 years ago. Price plays a sig-nificant role in creating incentives to conserve. Yet, other government policies, such as CAFE standards, are important, supplementary incentives to conserve. To lower the standard at a time when market forces are least able to maintain pressure for continued energy efficiency is the antithesis of responsible government.
A lowered fuel standard will only fuel the deficit. But preventing a lowered standard will demonstrate our commitment to an energy efficient future.
Sen. Daniel J. Evans (R) of Washington is a member of the Senate Committee on Energy and Natural Resources and is chairman of the Alliance to Save Energy.
