Crandall and Singer Discuss CAFE Standards on WJR Radio (Detroit)

December 3, 2007

Criterion co-founder Robert W. Crandall and President Hal J. Singer were interviewed by Frank Beckmann of WJR Detroit today. Crandall and Singer critiqued the new CAFE proposals in Congress, echoing their comments in a Wall Street Journal op-ed entitled "Don’t Drink the CAFE Kool-Aid."

During their interview, Crandall and Singer explained that an increase in fuel economy standards to 35 miles per gallon would induce car makers to produce smaller, lighter, less-performing cars. They noted that proponents of strengthening the CAFE standards do not consider the entire cost of the reform, including the reduction in consumer value associated with less attractive cars. Alternatively, cars would become more expensive because the cost of fuel-saving technology would be passed onto consumers.

Crandall cautioned lawmakers to scrutinize the claim that strengthening CAFE standards would create jobs – if anything, strengthening standards would reduce jobs because of the reduction in the demand for more expensive or less attractive cars. Crandall explained that legislating more stringent standards would put car companies in difficult straights, as the car companies were in 1986 when they had to seek relief from CAFE.

Crandall and Singer suggested that lawmakers focus their attention on oil consumption by all sources, not just oil consumed by cars. To the extent that lawmakers focus on cars only, they concluded that a gas tax would be the cost-effective way to achieve a given reduction in oil consumption.

To listen to their interview, click here.

To read their Wall Street Journal op-ed in full, click here.