Policy Conflict--Energy, Environmental, and Materials

A review focused on the fuel-economy standards for new cars and light trucks and how these regulations indirectly affect future price and availability of aluminum, iron and steel, plastics, and rhodium used by American industry. While previous evaluations of standards, enacted to reduce oil imports, were concerned with increasing fuel efficiency, the complex and competitive relationship between energy and material availability was never explicitly evaluated.

The net result of these competing demands suggests that: (1) the U.S. balance-of-trade deficit may suffer rather than benefit, (2) the automobile pollution control devices may require more rhodium than will be available and force the price drastically higher, and (3) the automobile industry's strategy of weight reduction to meet the fuel-economy standards will change significantly the quantity and availability of materials and how they are used in automobiles and light trucks. Therefore, a means for resolving policy conflicts, which may be brought to light through coordinated economic and policy analyses, is needed. However, recent experience suggests that future regulatory changes, when made, will probably be in response to crises rather than as part of an effort to anticipate future needs.