Auto Research and Regulation

Report Outline
Federal Prodding of the Industry
Scope of Government Regulation
Detroit Emphasis on ‘Re-Engineering’
Special Focus

Federal Prodding of the Industry

Threat of Oil Scarcity From Iran's Cutoff

One of the facts of American economic life is the intrinsic antagonism between government regulatory agencies and the industries they oversee. Nowhere is the difference of opinion between government regulator and regulated industry more sharp than in the U.S. automobile industry. American automakers have become one of the nation's most regulated industries since Congress passed the first federal auto regulations in the mid-1960s.

The Department of Transportation's National Highway Traffic Safety Administration oversees the industry's safety and fuel economy standards. The other main area of regulation — emission controls — comes under the purview of the U.S. Environmental Protection Agency. The automakers have complained loudly about the federal government's regulatory role since it first affected them. They argue that regulations interfere with production schedules and industry growth, and involve large financial outlays which are passed on to consumers in the form of higher prices. Moreover, industry leaders say, regulatory action hampers them economically. This, the argument continues, hurts the American economy.

Government regulators are joined by environmentalists, consumer leaders and others in arguing that not only does government regulation not harm the auto industry financially, it performs a worthwhile public service. They say that regulations help make automobiles safer, less harmful to the environment and more fuel efficient. Fuel efficiency has been a national goal since the 1973–74 Arab oil boycott made Americans fully aware their country had become dependent on foreign petroleum. It accounted for 36.1 percent of U.S. consumption in 1973 and 43.4 percent last year.