[Congressional Record Volume 152, Number 95 (Wednesday, July 19, 2006)]
[Senate]
[Pages S7926-S7927]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. OBAMA (for himself, Mr. Lugar, Mr. Biden, Mr. Smith, Mr. 
        Bingaman, Mr. Harkin, Mr. Coleman, and Mr. Durbin):
  S. 3694. A bill to increase fuel economy standards for automobiles, 
and for other purposes; to the Committee on Finance.
  Mr. OBAMA. Mr. President, 33 years ago, this Nation faced a crisis 
that touched every American. In 1973, in the shadow of a war against 
Israel, the Arab nations of OPEC decided to embargo shipments of crude 
oil to the West.
  The economic effects were devastating. For American drivers, the 
price at the gas pump rose from a national average of 38.5 cents per 
gallon in May 1973 to 55.1 cents per gallon in June 1974. The stock 
market fell, and countries across the world faced terrible cycles of 
inflation and recession that lasted well into the 1980s.
  Lawmakers in Washington reacted by calling for a nationwide daylight 
savings time and a national speed limit. They established a new 
Department of Energy that eventually created a strategic petroleum 
reserve. Perhaps most important, Congress enacted the Corporate Average 
Fuel Economy standards, or CAFE, the first-ever requirements for 
automakers to improve gas mileage on the vehicles we drive.
  At the time, auto executives protested, saying there was no way to 
increase fuel economy without making cars smaller. One company 
predicted that Americans would all be driving sub-compacts as a result 
of CAFE. But CAFE did work, and under the direction of Congress, the 
National Highway Traffic Safety Administration, NHSTA, nearly doubled 
the average gas mileage of cars from 14 miles per gallon in 1976 to 
27.5 mpg for cars in 1985. Today, CAFE standards save us about 3 
million barrels of oil per day, making it the most successful energy-
saving measure ever adopted.

[[Page S7927]]

  Now 30 years later, Americans again are feeling the pain at the pump. 
The price of oil has reached $78 a barrel, and Americans are paying 
more than $3.00 a gallon for gas. America's 20-million-barrel-a-day 
habit costs our economy $800 million a day, or $300 billion annually. 
Because we import 60 percent of our oil, much of it from the Middle 
East, our dependence on oil is also a national security issue as well. 
Al-Qaida knows that oil is America's Achilles heel. Osama bin Laden has 
urged his supporters to ``Focus your operations on oil, especially in 
Iraq and the gulf area, since this will cause them to die off.''
  At a time when the energy and security stakes couldn't be higher, 
CAFE standards have been stagnant. In fact, because of a long-standing 
deadlock in Washington, CAFE standards that initially increased so 
quickly have remained stagnant for the last 20 years.
  Since 1985, efforts to raise the CAFE standard have been stymied by 
opponents who have argued that Congress does not possess the expertise 
to set specific benchmarks and that an inflexible congressional mandate 
would result in the production of less safe cars and a loss of American 
jobs. This has been a bureaucratic logjam that has ignored 
technological innovations in the auto industry and crippled our ability 
to increase fuel efficiency.
  To attempt to break this two-decade-long deadlock and start the U.S. 
on the path towards energy independence, I have joined with Senators 
Lugar, Biden, Smith, Bingaman, Harkin, Coleman, and Durbin to introduce 
the Fuel Economy Reform Act of 2006. This bill would set a new course 
by establishing regular, continual, and incremental progress in miles 
per gallon, targeting 4 percent annually, but preserving NHTSA 
expertise and flexibility on how to meet those targets.
  Over the past 20 years, NHTSA's efforts to improve fuel economy have 
been encumbered with loopholes and resistance. With this bill, CAFE 
standards would increase by 4 percent every year unless NHTSA can 
justify a deviation in that rate by proving that the increase is 
technologically unachievable, does not materially reduce the safety of 
automobiles manufactured or sold in the U.S., or can prove it is not 
cost-effective when comparing with the economic and geopolitical value 
of a gallon of gasoline saved. We specifically define the grounds upon 
which NHTSA can determine cost-effectiveness. By flipping the 
presumption that has served as a barrier to action, we replace the 
status quo of continued stagnation with steady, measured progress.
  Under this system, if the 4 percent annualized improvement occurs 
over ten years, this bill would save 1.3 million barrels of oil per 
day--or 20 billion gallons of gasoline per year. If gasoline is just 
$2.50 per gallon, consumers will save $50 billion at the pump in 2018. 
By 2018, we would be cutting global warming pollution by 220 million 
metric tons of carbon dioxide equivalent gases.
  The Fuel Economy Reform Act also would provide fairness and 
flexibility to domestic automakers by establishing different standards 
for different types of cars. Currently, manufacturers have to meet 
broad standards over their whole fleet of cars. This disadvantages 
companies like Ford and General Motors that produce full lines of small 
and large cars and trucks rather than manufacturers that only sell 
small cars.
  In order to enable domestic manufacturers to develop advanced-
technology vehicles, this legislation provides tax incentives to retool 
parts and assembly plants. This will strengthen the U.S. auto industry 
by allowing it to compete with foreign hybrid and other fuel efficient 
vehicles. It is our expectation that NHTSA will use its enhanced 
authority to bring greater market-based flexibility into CAFE 
compliance by allowing the banking and trading of credits among all 
vehicle types and between manufacturers.
  Finally, the bill also would expand the tax incentives that encourage 
consumers to buy advanced technology vehicles. The bill would lift the 
current 60,000-per-manufacturer cap on buyer tax credits to allow more 
Americans to buy ultra-efficient vehicles like hybrids.
  By ending a 20-year stalemate on CAFE, the Fuel Economy Reform Act 
will recapture the innovation that Congress and the auto industry 
launched in response to the OPEC crisis. In the process, we will 
safeguard our national security, protect our economy, reduce consumer 
pain at the pump, and protect our climate, environment, and public 
health. I urge my colleagues to join our bipartisan coalition and 
support the Fuel Economy Reform Act.
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