Energy Department Split Over Fuel Economy

AN internal memorandum from the Department of Energy claims that higher efficiency standards for automobiles would save over 1 million barrels of oil a day. That is more than twice the level of savings publicly estimated by US Energy Secretary James Watkins. Admiral Watkins strongly opposes new mandatory auto-efficiency standards, and Energy Department officials say President Bush would veto such a bill if passed by Congress.

Following the Persian Gulf war, many members of Congress are calling for new, tougher fuel standards, known as Corporate Average Fuel Economy (CAFE). A bill sponsored by Sen. Richard Bryan (D) of Nevada would boost the standard to 40 miles per gallon from a current 27.5 m.p.g.

Energy officials publicly condemn higher CAFE standards, charging that they would result in small, unsafe cars and would hurt the US economy. But the memo, written by Energy Department analyst Barry McNutt, states that higher CAFE standards could prove beneficial. It says:

"Significant fuel economy gains (through technical improvements or changes in fleet size and performance characteristics) remain to be made. Potential savings from cost-effective improvements are over 1 mm b/d [million barrels per day]."

Mr. McNutt wrote: "My point here is that the past and current focus on CAFE is not due to blindness to newer, more clever ideas. Auto fuel economy is important and CAFE is an effective approach."

CAFE rules were first adopted in the 1970s, during an earlier Middle East oil crisis, despite the rigorous objections of the auto industry. Automakers are equally opposed to new rules now. But McNutt's memo says:

"The CAFE standards have worked; the industry responded to CAFE (and rising fuel prices) by delivering greater technology-based fuel economy without sacrificing consumer needs or reducing transportation activity. Over 2 millon barrels per day of fuel are being saved because of this increased fuel economy."

McNutt's memo, dated May 25, 1990, was obtained from a source with no official or unofficial connection to the Energy Department.

Bush adminstration officials claim that raising CAFE standards to 40 m.p.g. would make it hard for US firms to compete with Japanese automakers, which specialize in small cars, costing thousands of jobs.

Watkins recently asked the National Academy of Sciences, which is conducting a study of CAFE at his request, to resolve the arguments over fuel standards. The NAS's findings are due in June. But Deputy Energy Secretary W. Henson Moore argues that if Congress imposes tough efficiency standards, Americans will be riding to work in tiny "two-seater motorscooters."

Conservationists claim that a 40 m.p.g. standard would save the United States 2.5 million barrels of oil a day by the year 2005. Watkins has said such estimates are "hyped" and "misleading." He says savings would be closer to 500,000 barrels per day.

The memo appears to indicate that even within his own department, Watkins's estimate is low.

The debate over CAFE could be pivotal to congressional passage of a new US national energy strategy later this year.

The CAFE bill sponsored by Senator Bryan this month sailed through the Senate Committee on Commerce, Science, and Transportation. The bill would mandate a 20 percent improvement in mileage for US and foreign cars by 1996, and a 40 percent improvement by 2001.

Manufacturers such as General Motors, Ford, Chrysler, and Toyota complain that government can mandate higher mileage, but it cannot make the American people buy small, high-mileage cars. In fact, Chrysler says that with the Baby-Boom generation getting older and wealthier, the trend during the 1990s will be toward larger, high performance cars.

"Cars will be more fuel-efficient, but larger on average than today. That's what our customers want," says Ronald Boltz, a Chrysler vice president.

GM vice president Marina Whitman says CAFE is no longer effective because it cannot force customers to buy small cars.

Energy fee an alternative

Dr. Whitman says: "If the nation is to encourage further energy conservation, consideration should be given to imposition of a broadly-based energy fee as a more effective and less costly means."

Carmakers are especially concerned about the short time frame of the Bryan bill. It takes US manufacturers, on average, five years to design a car. The normal life-cycle for a model, such as the Ford Taurus, is eight years. The Japanese work on a four-year product cycle. Shortening the US time frame, which the Bryan bill would require, would cost billions of dollars.