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Tuesday May 19, 2009
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The Obama administration's plan to raise fuel economy to 35.5 MPG and lower car-truck emissions by 2016 is a victory for just about everyone. That is, if you think lofty thoughts about the future, not just the present.
In this case, the victory comes with near-term costs to the customer, particularly higher car prices and a bit less choice in vehicle size. Political hawks driving Hummers will have mixed emotions: The less we rely on foreign oil, the safer America is from the people who don't like us, but it means even more power and control in Washington, and the big vehicles that remain will be priced higher. What a surprise.
After the jump: ten reasons how the changes affect you and why it's (mostly) a good thing.
- Your next car costs $1,300 more. More or less. The government figures say that's what it will cost extra in technology to put you a higher-mileage, lower-pollution car come 2016. The $1,300 figure is a WAG (wild guess), I suspect, and critics will say it's a lot more. Think how often the government accurately projects the cost of a new airplane, destroyer, or post office.
- Net cost to society - zero? How do you calculate the money saved when an asthma sufferer breathes cleaner air and goes through fewer inhalers? When the family dog doesn't get run over by the gasoline tanker that wasn't needed to deliver extra gasoline? When a neighbor's son isn't wounded defending American interests in a despotic country that sort of leans our way, treats women like cattle, and, just coincidentally, has mondo oil reserves?
- Used car prices rise. Since new cars will cost more, more people with marginal incomes will hang to older cars, driving up demand (prices) for used cars on the market.
- Pollution doesn't go down quite so fast. Unless there's a scrappage incentive for old cars (and Detroit has been talking about it this year to keep the factories running), the older cars that stay on road (because new cars cost too much) will undercut some of the hoped-for pollution and mpg gains. As a rule of thumb, the worst 10% of the cars on the road account for half the emissions, and they're often driven by people who can't afford newer, cleaner cars.
- A victory for automakers. They know how to make lower-emissions cars since they sell in California, which has tougher pollution rules. What automakers hate most is separate rules for California (and the dozen states the follow California rules), the rest of the U.S., and the world. This heads off a legal showdown with California, which was set to regulate carbon dioxide as a pollutant. But CO2 regulation is really an mpg rule, since the amount of carbon dioxide blown out the exhaust pipe is directly proportional to the fuel the vehicle consumes.
- A bigger victory for Asian automakers. Japan and Korea produce a higher proportion of fuel-efficient cars now. U.S. automakers are behind, but they also have five years to catch up. European automakers get another chance to show how efficient diesels can be and convince us (it's true) that they're better on the highway than hybrids.
- A victory for automotive diversity. You'll see diesel hybrids alongside gasoline hybrids, mostly battery cars such as the Chevrolet Volt that switch to a combustion engine after 40 miles (plug-in hybrids), ultra-low-emissions gasoline car that shut down at stoplights, and more variety in smaller cars. It could also be a reason to move to New York, Boston, San Francisco, Chicago, or Washington - cities with great (by U.S. standards) mass transit systems.
- Washington ducks the $1-a-gallon fuel tax (again). Economists of all political stripes say a higher floor on fuel prices - by which they mean more taxes - would pull Americans into more efficient cars. Instead of pull demand, we're being pushed by the new mpg rules. State and federal taxes now are about 50 cents a gallon. Raising it to $1 total, or $1 for the federal part, would likely lead to more, smaller, more efficient cars. Just look at Europe (which admittedly also doesn't have the open spaces and long distances to the nearest 7-Eleven we have in the West) to see how fuel prices of $5-$10 a gallon lead buyers to prefer smaller cars. It would also lead to the electoral defeats of anyone voting for such a measure, which is why it has never happened, and may never. Would you elect someone with the slogan, "Vote for me - I made America's future safer and brighter by bringing back $3.50-a-gallon gasoline"?
- America is safer. If we use less oil, we're less dependent on politically disagreeable countries that pump oil and pull our chains.
- The pressure's off Al Gore's 10,000-square-foot house (for now). Motor vehicles account for about half of U.S. energy usage. So it might make sense to get a little tougher on big houses, energy-inefficient houses, cabin cruisers, private jets, snowmobiles, and taking ocean cruise vacations when you could use less energy hiking the Appalachian trail. It would also make sense for everyone to move to Newport Beach, California, where you don't need much heating or air conditioning year-round. Or to spend $25,000 on solar panels to save $1,000 a year in electricity costs. But it's a lot easier to demonize cars and trucks again.
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May 19, 2009 12:03 PM
This all sounds reasonable. First, gov't cost estimates are always fraught with errors. The cost figures do give the manufacturers license then to raise price and always blame it on emissions compliance. I find the mileage figures could be compromised if the standards are allowed to reflect mileage attained in a test cell and reflected as HWY mileage rather than a real world "urban loop" standard.
Last on the list; the real culprits for mileage will be the large trucks and SUV's which Americans
love. Size matters for any number of reasons and
with that the road to higher mileage will be strewn with compromises that will not meet any standard.
Nice efforts but still a lot of questions and perhaps misfires. Better to make an effort than none at all.
Take care.
May 19, 2009 1:10 PM
What's the net cost to society to take $1300 from each person to give to government for a new car?
or to give the government $1 per gallon of gas used. This is a tax on rural, and suburban drivers who don't have a choice on whether to drive, or not. Not to mention the price of every single consumer good shipped on our highways. $2/gal of gas led to $1/gal increase in the price of milk. How will this tax reduce the standard of living, and lower nutritional standards for the poor.
And we don't need to go to other countries to find oil, we've got lots off our shores, oil shale, and in Alaska. The eco-whackos just won't let us go get it.
Giving money to the government is one of, if not the worst use of hard-earned income.
Seems strange for a technology web site. I guess the author's liberal, green, socialist roots are showing.
May 19, 2009 2:38 PM
It's unfortunate that any effort to clean the air and improve technology is labeled "liberal, green, and socialist," completely missing the definition of all of those words.
In any event, this is a good thing. The money isn't even going to the government, I don't know where THAT came from - although I would like to see the government incentivize car buyers to buy fuel-efficient vehicles and offset the costs to manufacturers and consumers in the short term. As usual, and as with every improvement in automobile technology, everyone will whine and cry about how THEIR TAX DOLLARS are blah blah blah using misdirected facts and half-baked conclusions (PS - oil offshore and in Alaska is estimated to be a couple billion barrels...less than America's consumption in ONE DAY, even if it were possible to get to all of it. Doesn't take an eco-whacko to research that) - in a couple of years when the technology is in place and mainstream and we have both better cars, cheaper fuel costs, and cleaner air as a result, the whining and crying about taxes will be directed at something else that's probably actually in the public interest.
May 19, 2009 5:04 PM
1. Why will my next car cost $1,300 more? A 2010 Toyota Corolla starts at just over $15,000 and gets 35 highway. A Chevy Cobalt start sat just over $16,000 and gets 30 highway. I used to drive a Chevy, made in lovely Freemont California that got almost 40 highway. Turn the Cobalt into a Geo Prism, and I would save over $1,000 and get almost 15% more mileage. Problem Solved
2. Net cost to society is never zero when goverment controls large portions of an industry and limits freedom of choice.
3. Used car prices will rise until the governmentally controlled auto industry realizes that competition is interrupting their plans for the new car industry. They will offer incentives to turn in used cars (as they do in Europe), which means we will all have to pay to get our older cars off the road.
4. Pollution has already been reduced by increases in CAFE standards, but it will not be reduced by the amount expected by an 8 MPG rise in the average standard
5. US carmakers do know how to make lower emission and higher efficiency cars. Unfortunately, they are misguided by their faulty interpretation of what the American buying public wants in a car.
6. The CAFE standards will increase 5% per year for five years. European and Asian carmakers won't have make as many changes to meet the standards, so they will benefit.
7. Automotive diversity is based on choices. There won't be as many choices with new regulation.
8. Washington ducks the $1 a gallon fuel tax by imposing regulations on an industry, who, in turn, imposes a higher cost to the consumer. Thank you sir, may I have another?
9. We will still be driving vehicles with internal combustion engines, vehicles still made with petroleum based components (plastics), and vehicles lubricated by oil. Making a connection between mileage standards and safety is an impossible stretch of the imagination.
10. Does anyone still listen to Al Gore?
May 19, 2009 5:27 PM
Well, from the list #8 and #10 hit it spot on. The rest? pure speculation at best.
Unfortunately, CAFE standards have done nothing to reverse the upward trend of the use of oil in the USA. We've had CAFE standards for what, 30 years? We use more oil now than we did then. We use more oil every year than we did the year before.
If the government really, REALLY wants us to reduce our oil use, they would find the political will to place a big tax on gasoline. There are ways to do it so it wouldn't raise the cost of food transport. The biggest issue is listed in #8... they don't have the guts to do it. We saw gasoline usage drop last summer when gas hit $4 a gallon.
Price is the only thing that will reduce oil consumption. Would we be better off paying that price to our government as tax, or to some foreign country in fuel price?
May 19, 2009 6:16 PM
First, while this may be popular, it misses the point of a market based economy -- people buy what they feel they need.
I have no love of the "Urban Assault Vehicles" driven by soccer-moms, and see such vehicle usage as a waste of gas. I would love to have a plug in electric/hybrid that is matched to my mission profile. But such a vehicle doesn't presently exist.
Not everyone has the same or similar driving profiles, nor can every family afford 4-6 different vehicles to cover those various needs.
The new standards will hurt the lower income, the farmers, and many families.
A better approach is to recast the CAFE a bit so it takes into account "Passenger Miles per Gallon" (PMPG). Then you can add a gas-guzzler tax on larger vehicles UNLESS you have a larger family or can demonstrate a specific need (perhaps medical). Exempt trucks when used in business.
This way, if I want a pick-up, I pay more for it than a farmer or a contractor or the like. If I want a van, it would cost me more than it would someone with a large family (unless I'm a child-care provider for grandchildren, perhaps).
And if I simply want a slightly bigger vehicle because I would be safer, then I could pay for it.
But don't regulate all people into the same little card-board, cracker-box cars ... one size simply doesn't fit all.
May 19, 2009 11:28 PM
The author neglected to mention on the minus side that higher mileage cars are often smaller cars. smaller cars offer occupants less protection in an accident, particularly when the accident includes a larger vehicle or immovable object. This will result in higher injury rates, as a recent survey mentions, as well as higher death rates, also covered in this survey.
I wish I had been paying more attention, but it was rush hour and i was paying more attention to the traffic so that may smaller car, which will average mileage in the low 30's outside the metro area, would not come into contact with a larger vehicle, thus risking my life and limb.
What is the cost to society for this? What is the cost of all the government regulation to society? How many realize that local, state, and government taxes suck down 50-70% of your income, mostly in hidden ways?
There was a woman on the TV this morning who opined that the people wanted this kind of regulation. What people? If they wanted small cars that get outrageous mileage, the auto makers would be falling over themselves to produce such cars to get them in the hands of the people. As it is,the concentrate on the large, less fuel efficient vehicles because that is where they make their money. Those are the vehicles that sell.
The government has regulated the American car industry nearly into oblivion already, this will probably be the final nail in the coffin. Perhaps, the government should be listening to the true scientists who debunk those who press the global warming and rising pollution arguments to enrich themselves.
This, plus the outstanding deficits being run up along with the cap and trade plan will quickly put us onto the road to a third world country status. Are you ready for that?
May 20, 2009 10:59 AM
This to me just seems like yet another thing that doesn't need to be done right now - The economy is in the toilet and oh lets just give everyone a kick while we are down.
More taxes more taxes more taxes.
The biggest problem is that all these new standards are going to do is drive up the price of gas even more than it already is.
This whole thought process that Americans must be forced into driving more fuel efficent cars is just pathetic. Yet another thing that the Obama administration thinks that they should make decisions on because they know better than anyone what we should be driving.