One CAFE For All

Props to Mike Allen, who's getting this story first.  Details are still, as they say in local TV news, sketchy, but the White House plans a major public relations event tomorrow with governors, auto industry executives and environmentalists. There, Obama will propose to harmonize fuel efficiency standards nationwide. According to an environmental policy official who consults with the White House, the standard "will be very much like California's."  

Gov. Arnold Schwarzenegger (R-CA) will attend the announcement in Washington.  California's standards are very touch, which is one of the reason why auto makers had been fighting them in court. Now, there'll be one standard, nationwide, which provides that all important certainty for automakers....even as they face the task of reaching CA's Corporate Average Fuel Economy standards, which would see auto emissions decline by 33% in seven years, well ahead of the current national standard, which would achieve such a reduction by 2020. On average, cars sold in California would have to run 35 miles on every gallon of fuel.  

Nationwide, that means a 40% increase in the efficiency of automobiles. A spokesman for the Environmental Protection Agency referred requests for details to the White House; a spokesman did not immediately return a call for comment. The Department of Transportation regulates CAFE standards. 

The bargaining power of the automakers is very weak these days, and one could argue that the administration, essentially owning a substantial part of the auto industry, is imposing these changes by fiat, and that the participation of automakers in tomorrow's event is not voluntary.  The White House, and chief of staff Rahm Emanuel, seem taken with the idea of grand policy gestures where all stakeholders come together and promise to act. 

Earlier this year, Obama ordered regulators to allow states more leeway to set their own standards until the federal government adopted a uniform policy. It's not clear whether this order will supersede those instructions, and it's not clear how long it will take for the Transportation Department to implement the rule.