With the increasing prices of sweet light crude oil forcing petrol prices to increase, there’s talk on The Hill about how to “fix” the problem. After all, the United States is built around the automobile – one of the most misguided evolutions in the history of nation building, but I digress.

Personally, I believe that his gas prices are here to say – and I’m all for that. The amount of subsidies in place to keep petrol prices low is incredible. Without any of these subsidies (which prop up the “Big Three” Detroit automakers and helped drive the suburban sprawl that’s evident in and around most major U.S. cities), drivers would pay close to $15 per gallon. While that price would be excessive, $3 a gallon is still ridiculously cheap on the world scale.

The one thing that no politician will touch is the fact that behavioral change is needed in the U.S. We need to get over the post-war dream of “a chicken in every pot and two cars in every garage,” because it’s not a sustainable model if oil starts to decline in quantity – something it’s already doing as of this year.

But I’d like to focus on one aspect of adapting to this reality that the government is unwilling to really touch: CAFE standards.

The Corporate Average Fuel Economy (CAFE) standard was first put into practice in 1975, during the Arab Oil Embargo. This standard mandates an average fuel economy across the board that all automobile manufacturers need to address. In basic terms, you can have cars on either end of the spectrum – Ford’s Focus getting 30 miles per gallon (mpg) to Ford’s Excursion getting 10 mpg) – but the average for the corporation’s offerings for a model year needs to be a certain level. The standard only applied to cars and light trucks. Any manufacturer that doesn’t adhere to the CAFE average is charged a penalty (currently paying the price are DaimlerChrysler imports, BMW, Fiat, Lotus, Porsche, and to a more limited extent, Volkswagen).

There are other interesting aspects to the CAFE regulations:

  • As a method of protecting the “Big Three,” CAFE is calculated separately for cars produced domestically and those produced overseas, even if they appear under the same brand.
  • Hybrid and alternative fuel cars are weighted more for their fuel efficiency – regardless of whether they’re more efficient or not.
  • Manufacturers are allowed to earn CAFE “credits” in any year they exceed CAFE requirements, which they may use to offset deficiencies in other years.

The current CAFE standard is 27.5 mpg for cars and 20.3 mpg for light trucks, with the latter value rising to 23.5 mpg in 2010 (all figures are for average driving in city and highway use). Read the WikiPedia article to learn more.

However, there’s a flaw with the entire CAFE setup: it doesn’t really do anything to improve fuel economy due to its system of averages and loopholes. It doesn’t really encourage automakers to make fuel economy better on trucks and SUVs because they can introduce a single hybrid or economy model to “regain balance” and hit the CAFE standard.

Furthermore, automakers abuse the loopholes. For example, DaimlerChrysler is introducing a hybrid version of their Durango SUV, where the hybrid engine isn’t used to improve fuel economy; rather, it’s used to boost horsepower in “critical situations.” The EPA estimated fuel economy for the hybrid Durango is 15 mpg – pathetic.

So what’s the solution? Scrap CAFE and introduce MAFE: Minimum Acceptable Fuel Economy standards:

  • Set an absolute minimum fuel economy for saleable cars in the U.S. As a start: make it 20 mpg for light trucks and 27 mpg for cars. If a car ot truck doesn’t meet this standard, it can’t be sold in the U.S.
  • Increase this standard by 3.5 mpg every model year.
  • Provide tax incentives for consumers to purchase high mpg cars (e.g. cars that get over 35 mpg, trucks that get over 27 mpg).
  • In the same vein, provide tax credits for those who drive older cars that meet the new MAFE standard, and penalize those who drive the most egregious violators.
  • As a dovetail measure, provide incentives to manufacturers to make their cars adhere to the Super ULEV standard – something that’s easily achieved with more efficient engines and hybrid technology.

Yes, this’ll “hurt” the American psyche, as more fuel efficiency usually means lower horsepower. But honestly: why do people need a 195 horsepower sports car or SUV? It’s not like we have the Autobahn for folks to test the speed of their cars. And a car with a small engine can be peppy and speedy – the Nissan Almera we used while in England last fall was fast and agile, and kept up with the fastest cars on the motorways without any problem – this with a 1.5 liter engine that tops out at 105 horsepower. Better yet: the Almera is coming to the U.S. as the Versa, basically unchanged from it’s European form and with very good fuel economy.

It’s going to be a tough sell on the rather inert and pride-driven American populace. But it’s a sell that must happen. And it’s only part of the solution: as I mentioned earlier, moving away from an oil-based economy is a major behavioral change that will ruffle a lot of feathers and force people to make life-altering decisions:

  • Do I need more than one car – or any car at all?
  • If I need a car, do I need a big SUV or van, or can I get by with a smaller, more efficient model?
  • Do I need to live far away from work?
  • Do I need to drive the car to run errands within a 3-to-5 mile radius of my home? Can I use mass transit, a bike, or walk instead?
  • Do I need to have a manicured lawn and garden with non-native plants living in it?
  • Do I need to buy all my food at the supermarket, rather than grow some of my own fruits and vegetables?
  • Do I need the big house in the suburbs that has all the extra rooms?
  • Is my house properly insulated?
  • Do I need to have the heat cranked in the winter or the A/C cranked in the summer?

The basic question is this: what do you need to live, as opposed to wht you want. As my friend John says, this question has become twisted to a point where people can’t (or won’t) recognize the difference between what’s truly necessary, and what’s simply a wanted creature comfort.

Bringing it home for me: while I’d like to live in a bigger apartment, I don’t really need one. I live close to work, and seldom have to drive anywhere for anything. I have mass transit (subway, bus) within a couple of blocks of my home, and I walk or ride my bike as my primary means of transportation. I tend to shop for most of my vegetables and fruit at a local farm market, which allows me to eat locally-grown food and keep use of oil-based fuel to a minimum.

It’s a matter of choices: live where you want, how you want, but be willing to pay the price. For every choice in life, there are consequences, both good and bad. For example, many parents want to have their children attend the best schools, or need special education for their kids. And these parents will often swallow the cost of a longer commute to get their kids’ situation in order. But it is, after all, a choice, so these people shouldn’t complain if gas prices rise and their commute is suddenly putting a crimp on their comfort level: they made the choice to live where they do, and need to “eat their own dog food.” If it isn’t going to work for them, they need to alter something: move, cut back on driving, look into a more fuel efficient car, or something similar. But it’s a choice they will need to make if they want to make a positive change – simply complaining and passing the blame to others is a fruitless endeavor.

There is no magical solution to this issue, and the longer we wait to adapt and adjust, the worse the crash will be. This is a lifestyle change that will require actual work for people to see a positive change – something that many Americans, it seems, are not willing to do without a bit of a push. Perhaps the combination of tougher, more absolute standards (combined with a few incentives for consumers) will help get things going.