The federal bailout bucks propping-up GM and Chrysler’s bankrupt businesses come with political strings attached– that will turn into piano wire with each successive snuffle at the trough. And so it begins… Yesterday’s New York Times editorial called for higher federally mandated fuel economy standards. “[Now that Bush is history] The Obama administration now has a free hand to set its own standards that will save consumers money at the pump, reduce oil dependency and greenhouse gases, and help make the American car companies more competitive. The 2007 energy bill required new cars and trucks to meet a fleetwide average of 35 miles per gallon by 2020, a 40 percent increase over today’s average of 25 m.p.g. Congress intended this as a floor, not a ceiling, and ordered the National Highway Traffic Safety Administration to write specific regulations.” Uh-oh…
“Last May, as part of these regulations, the agency set an interim fleetwide standard of 31.6 m.p.g by 2015. This was initially praised for pushing carmakers more than halfway to the 2020 goal. The automakers have since suggested they can meet these goals without difficulty, while reputable studies have said they can do even better — at least as high as 35 m.p.g. by 2015, and 40 m.p.g. by 2020, with no changes in current technology.”
That’s a fleet-wide average, folks. Or maybe a fleet-wide average depending on a vehicle’s footprint. Factoring-in E85-capability credits [still]. And maybe extra credits for electric vehicles. Anyway, let’s connect the dots between the bailout and political goals.
“During Congressional hearings last year on the automakers’ troubles, General Motors and Ford provided production plans to show that they would make more fuel-efficient cars. The Obama administration should make such vehicles a condition of any future help. No matter what Detroit does, the new administration must set much tougher fuel-economy standards.”
Count on it.
Fuel economy SHOULD HAVE ALWAYS BEEN MANDATED BY LAWMAKERS
First of all, oil reserves and oil imports are obviously connected to national security. If this country spends petrol dollars to countries that as McCain says: “don’t like us very much” and are financing terrorism, all we are doing is making things dangerous for ourselves down the road.
But, Congress can’t be stupid either – they gotta make the laws bullet proof. After all, the Big 3 got around CAFE standards years ago by creating SUV’s…who’se to say they won’t try something slick again?
ALL CARS should be MANDATED to get 50 MPG (combine) + have ultrasonic backup/front sensors + Electronic stability + theft deterence + adaptive headlamps.
I know alot of people bitch and moan about the government entering our lives, but you can take that argument and stick it.
Any congressperson who wants my vote better be on the same page as me. I’m only voting for those who represent my interests.
At the risk of somewhat agreeing with Flashpoint,
DET has proven that it can’t cover it’s own ass when left to it’s own devices.
A garotte around the neck of GM might actually provide results. God knows nothing else has.
I’ve never understood these “X should be ordered” mandates.
Why stop at 40 mpg? why not mandate 100 mpg? These mandates are pie-in-the-sky and are usually made without regard to the basic physical science. Also what if 99 mpg costs you $100 to obtain and 100 mpg costs $1,000,000 to obtain? Obviously, any reasonable person would choose 99 mpg. It’s called a cost-benefit analysis. The experts at the NYT don’t know how to do one or even understand the basic physical science.
How are electric cars counted for MPG? Using 11kWh as an equivalent of a gallon of gas?
If I recall correctly the domestics had a loophole that any flex fuel E85 capable vehicle counted for 2 or 3X its rated mileage.
This may not be as hard as the OEMs are (again) making it sound. There are many cars today that, when driven without drama, return mid-30 mpg’s.
In an era of 6000 lb. SUVs and 4000 lb Accords, simple weight reductions might go a long way to meeting the mark without huge R+D driveline expenses.
Remember also that “average” (actually mean) mpg numbers are based on distributions above and below the line.
But (sigh), they’ll continue to find a way to game the system, and trucks of course fall under a different classification system entirely.
I can see every, or almost every, vehicle being a hybrid by 2020, with significant progress towards such by 2015. That would meet said goal. Of course, there are currently supply problems which would have to be overcome, but barring those (build a lot of battery factories), there’s no technical limitation to prevent this, and (again, assuming more batteries can be built) no real cost problems, either. By 2020, the cost between a standard and a hybrid vehicle would be less than a grand, IMHO. Plus, hybrids are inherently more reliabile than a standard vehicle (less wear and tear on the gas motor and standard brakes), so they last longer, so that extra grand is eventually made up in fewer repairs.
Now, car buffs might hate this, since this means cars are quieter (no exhaust note when the batteries are moving the car) and manual transmissions will be eliminated (the best hybrid design is the one Toyota and Ford uses, which has, as part of the design, a form of a CVT transmission-no manuals are possible). But the general public won’t care. However, other than that, there’s no techincal limitation that prevents GM from making a hybrid Corvette or BMW from making a hybrid M3-there will still be performance vehicles out there.
I generally don’t like the idea of government mandates. They’re usually a very blunt instrument.
In the 70’s I hated the mandatory pollution controls because they made cars terrible to drive.
Having said that, 40 years later, cars have a level of performance that never would have been possible without the technological advances driven by pollution controls… engine computers etc. So, ultimately, for the enthusiast, pollution controls turned out to have been a good thing.
I believe that this will be true again. The lesson I learned from the 70’s is that efficiency equates to increased horsepower per liter. It’s up to you whether you want to use that efficiency for better gas milage or better performance. Thus, speaking purely as an enthusiast, I’m not opposed to increasing the CAFE standards.
Having said THAT, the CAFE standards are what put Detroit in the mess it’s in today, and I don’t think that they will survive the proposed 2020 standard. As I stated in a different post, Americans are “big” people, and want big cars. Detroit either has to be allowed to cater to that market without government interference, or it will die.
The NYTimes requiring fuel economy numbers makes as much sense as the Big 2.25 demanding that all newspapers to use only 100 percent recycled newsprint and 0 carbon footprint ink.
40 MPG is easy… with Diesel. No need to wait until 2010, 2020, whenever… you can have it TODAY.
My 2002 Jetta TDI has averaged over 45 MPG its entire lifetime. Seats 4 comfortably, carries vast amounts of luggage, and has been fun to drive. 140,000 reliable, trouble-free miles and counting.
Diesel has been available for decades, yet Americans think it is only for trucks. Go figure. Until ULSD came along very recently it has also been less expensive than gasoline.
California (CARB) and GM aborted the notion of Diesel cars in the USA back in the 80s. Perhaps it is time to bring it back?
–chuck
If this mandate is put in place and it kills muscle cars, I. Will. Be. Pissed.
They are right – living in a Socialist utopia is paradise!!! The trains run (though not on time), and the ruling elite make all the decisions – they know what is best for you.
I’ll just not buy any new vehicles if I cannot get what I want. I can keep my old cars running a long time.
Not to mention, every new car will also contain technology to allow those in power to track your every move, just to make sure you are not acting in a way that makes you an enemy of the “State”.
I wonder how much crap Amercians will continue to put up with until a majority decides our Founding Fathers had it right after all.
Is your government handout worth your soul?
Flashpoint,
Wow.
The best way to stimulate the public to buy more cars is to increase the price by several thousands by “MANDATED to get 50 MPG (combine) + have ultrasonic backup/front sensors + Electronic stability + theft deterence + adaptive headlamps.”
You may want to have a talk with a SAE engineer.
If you want to make things expensive that inefficiently use gas, jack up the fuel tax. Soak everyone three dollars a gallon or whatever. But politicians and wonks mandating product specifications reminds me of Hitler telling the stunned builders of the Me-262 it should be a bomber. People who aren’t technically informed have every right to an opinion, even if its wrong. But making that ill-informed opinion a law for everyone else is nuts.
CAFE has helped breed the modern SUV and minivan segments by explicitly giving a pass to “light trucks.” I would call a Hummer H2 counterproductive to the spirit of CAFE. The most effective way to increase fuel efficiency is to let the fuel get expensive. Look at the past fourteen months. The oil boom/bust did more to modify American’s driving habits towards efficiency and frugality than any government mandate. What was the response to this “mandated” efficiency program? The response of course is that Big Oil is Evil – one of Darth Cheney’s minions -and we should essentially take all their ill-gotten profits and give them to…politicians of course! Can’t win here. Best way to affect oil prices for the sake of the Earth would be to pull the U.S. 5th Fleet out of Qatar after we leave Iraq and let the locals sink or swim vs. the Iranian navy. Resulting $5/gallon gas will get the Excursions off the road again in short order.
Besides, what moral or ethical authority do the masters of the New York Times Company have in lecturing others on what to do? Last time I checked that outfit is the scion of a dying industry that depends on decimating whole forests to basically turn into advertisements. Their own head-in-the-sand attitude regarding the internet in their business, their lack of ability in making any money on it, and the insistence on riding the newsprint-money-bomb all the way into the dirt a’la Slim Pickens has left them with ~$500 million in debt maturing in April and they’ve got about a tenth of that in the bank. Not the best situation in a correcting credit market with no liquidity. Now doesn’t that situation sound familiar fellow TTAC readers?
Maybe Rick Wagoner should pen an editorial on the GM blog about the onslaught of New Media and how the Times needs to right the ship, and include a newsprint tax based on words-per-carbon, unless its just pine trees you use…you can chop all those ones down you want for paper, but only pine trees. Makes about as much sense.
Chuckgoolsbee is right. Why are diesel prices so screwed up in the US? In Portugal, most people prefer diesels because…um…it is cheaper than gas, better milage, longer life and performance is about equal.
I believe ther is a place for everything (I wouldn’t want a diesel dirt bike and don’t want to trade for an oil burner for my Corvette, but my daily Fiesta or BMW are just fine~!
“Having said THAT, the CAFE standards are what put Detroit in the mess it’s in today”
Not quite. It was the light-truck loophole (and the seemingly insatiable consumer demand for same) that had a lot to do with it, as did the “deduct 100% of your monster SUV for ‘business purposes\'” tax regulation.
And there’s the rub. Either go completely free-market (no government mandates and let the market sort it out) or go with mandates without giant loopholes. It’s this two-faced sort of regulation that creates unnatural market imbalances.
I wonder how much oil and C02 emissions could be saved by ceasing the production and delivery of the NYT.
It still has not been explained satisfactorily how/if doubling auto fuel economy is going to help the environment. Heck, this purported “evidence” of global warming is being torn to shreds on a daily basis.
So what are we going through all this trouble for? Europe and China are building coal plants at a record pace and nations are fighting wars over energy resources.
All the while, we in the U.S. throw billions of dollars at unviable energy sources and have an entire industry devoted to litigating any attempts to reach the supply of our own resources.
Those in the higher-income brackets may be “rah-rah”-ing higher gasoline prices, but the fact is that they will be a devastation to lower-income and rural folks.
Higher energy prices equal less production, which is an absolute roadblock to having a stable economy.
Carbon tax. and/or geopolitical vulnerability tax.
A CAFE standard with flex fuel credits and separate standards for SUVs is a bad joke. When it comes to improving fuel efficiency, stick with the KISS principal (keep it simple, stupid).
They call for reduced fuel consumption and decreased C02 emissions, which are at conflict with one another. Why do you think that the 60+ mpg turbodiesels that europe gets aren’t for sale here? There is the fact that they are hooked up to manual gearboxes, and no fuel economy gain is worth the complication of having to push a pedal AND move a lever, to the average American buyer. But it’s mainly because they don’t pass our super-strict emissions standards. The new clean diesels from VW and M-B actually get slightly worse mileage than their pee-free counterparts. Now reducing actual harmful emissions is a good thing, but I’m pretty sure that the euro diesels we don’t get are the grumbly smoke bombs we remember when we think of a diesel. The only solution that reduces fuel consumption and reduces CO2 emissions is a hybrid system, which is generally more expensive than a diesel. While I think the simple enlarged-alternator system of the GM “mild” hybrids is a clever and cheap way to eke out a few extra mpg, the “full” hybrid system is quite expensive, and I doubt consumers in this market will want to pay thousands more than before for a new car. Plus, what about pickups? How in God’s name will a 3-ton pickup get 40MPG!?!?!?
“I’ve never understood these “X should be ordered” mandates.”
Oddly enough, the process worked in the 1970s and 80s. Government mandated ever increasing fuel economy for new vehicles. Most of the industry predicted carmageddon. Instead, fuel economy improved and the industry did fine. The plot was lost in the 1990s when industry succeeded in getting further improvements put on ice. Then, carmageddon did eventually happen!
“Fuel economy SHOULD HAVE ALWAYS BEEN MANDATED BY LAWMAKERS”
An Inquiry Into The Nature And Causes Of The Wealth Of Nations;
By Adam Smith, LL.D. and F.R.S. of London And Edinburgh;
Formerly Professor of Moral Philosophy in the University Of Glasgow;
Edinburgh: 1776
BOOK II. Of the Nature, Accumulation, and Employment Of Stock.
CHAPTER III. Of the Accumulation of Capital, Or Of Productive and Unproductive Labour.
But though the profusion of government must, undoubtedly, have retarded the natural progress of England towards wealth and improvement, it has not been able to stop it. The annual produce of its land and labour is, undoubtedly, much greater at present than it was either at the Restoration or at the Revolution. The capital, therefore, annually employed in cultivating this land, and in maintaining this labour, must likewise be much greater. In the midst of all the exactions of government, this capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times, and which, it is to be hoped, will do so in all future times. England, however, as it has never been blessed with a very parsimonious government, so parsimony has at no time been the characteristical virtue of its inhabitants. It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.
“They call for reduced fuel consumption and decreased C02 emissions, which are at conflict with one another.”
Uh, no. Burning less fuel means creating less CO2.
Chemistry 101:
http://upload.wikimedia.org/math/d/f/4/df4ef2f0549d1e46f1bb03d0a7bbd979.png
How does the gospel according Adam Smith explain the explosive economic growth of modern China, which economy is very much directed by the government at all levels from village up through the national government?
How does the gospel according Adam Smith explain the explosive economic growth of modern China, which economy is very much directed by the government at all levels from village up through the national government?
The success of China economically over the past couple of decades is a result of Deng Xiaoping relaxing state control into the economy, and institutionalizing that effort in the CCCP.
People don’t remember, but Guangdong used to be a “Special Economic Zone.” It was a pilot project of Deng’s which allowed foreign direct investment, 100-year leases, and no central planning or quota figures on output. Did the same thing with farms. It was a huge risk, but its outrageous success made it a pillar that was unassailable by the still-strong Maoists in the Central Commission, who never wanted any such social development.
China improved its lot by moving towards Adam Smith type principles, relative to where it had been before. If you want to see state-planning Chinese style, check out the Great Leap Forward or the Cultural Revolution.
But if 35 mpg is good why not order 100 mpg or 200 mpg?
Oddly enough, the process worked in the 1970s and 80s. Government mandated ever increasing fuel economy for new vehicles. Most of the industry predicted carmageddon. Instead, fuel economy improved and the industry did fine. The plot was lost in the 1990s when industry succeeded in getting further improvements put on ice. Then, carmageddon did eventually happen!
First of all, “did eventually happen” is a bad argument for anything. Cars bought, like miles driven, go down in times of high gas prices or a poor economy anyway.
Secondly, one might note that fuel prices went up dramatically in the 1970s and early 1980s, and then declined in the 1990s. That had a lot more to do with fuel economy than the mandates.
Not quite. It was the light-truck loophole (and the seemingly insatiable consumer demand for same) that had a lot to do with it, as did the “deduct 100% of your monster SUV for ‘business purposes’” tax regulation.
But some people do need trucks and other work vehicles that can haul things for business. That’s precisely why mandates like CAFE don’t work– those “loopholes” are fundamentally necessary because some people do need work vehicles. If you only want people who really need those vehicles to buy them, then you must raise the gasoline tax. Only that will cause people for whom light trucks are a luxury to stop buying them, while people who need them will continue to do so. (But complain, of course.)
Otherwise you expect Congress and the IRS and the rest of the government to somehow determine who really needs a work vehicle, and who should be allocated that portion of the fleet set aside for those vehicles. The compliance and regulatory costs are ridiculous.
CAFE is a stupid answer to the problem.
I think some of the CAFE opponents here are overstating the matter — particularly the nature of the “mandate” that CAFE creates.
Unlike some sort of Stalinist dystopia, where I suppose a factory manager might get shot for not producing according to the plan, the CAFE “mandate” is really just a moderate gas-guzzler tax. Companies violate it all the time, and the result is a fairly small fine, all things considered. That fine is then just priced into the cost of the cars sold by the company.
The exact formula for determining the CAFE fine is explained here, and it gets pretty complicated when you have to figure out available offsetting credits, and the like. But the basic cost is $5.50 per car per 0.1 mpg that the fleet average is below the standard. In a simple hypothetical, then, imagine a small car company has one model which violates the CAFE standard by 10 mpg. That company is then fined $550 per car that it sells, which is a fairly modest markup.
I personally agree with the contention that a gas tax is a better way to encourage conservation. It does not discriminate between a motorist who conserves by driving less (even if he keeps his gas guzzler) and the motorist who conserves by driving the same distance in a more efficient car. This non-discrimination allows people the freedom to achieve the desired result in the most flexible and efficient manner they can devise.
At the same time, one can argue that private motorists systematically miss the mark when calculating, at the time they enter the market to purchase a car, what outcomes are most likely and what courses of action will really get them to where they need or want to go, over the life of the purchase. This can be a tendency to underestimate the amount of driving they’ll do, the economy they’ll get under their normal driving conditions, or even the degree of variability of motoring costs over the years, and the extent to which that variability will hurt them. Under such circumstances, it is reasonable for the government to give consumers a bit of a nudge to help them correct for their bad calculations or estimations. Personally, I would like to see good evidence of a tendency of people to mis-calculate in a predictably wrong direction before endorsing an mpg tax, though.
I am getting compensation for riding a motorcycle for 40% of the year @ 61 miles per gallon.
Get it on two wheels!!!!!!!!!!!!!!!!!!!!!!!
Ride more in the US. That is where its at!
quote by taxman100
“I’ll just not buy any new vehicles if I cannot get what I want. I can keep my old cars running a long time”.
Most ultra secret bill is in the works to make it illegal to repair your own vehicle unless you are certified or purchase a license to do repairs. That license must be renewed annually at 250 clams. When will this come to pass . . . Omama?
I think Obama said it best
“If the coal industry doesn’t clean up – ILL BANKRUPT THEM”
replace coal with the word “automotive” now !
Companies violate it all the time, and the result is a fairly small fine, all things considered. That fine is then just priced into the cost of the cars sold by the company.
But as your linked articles note, only six automakers paid the fine, Daimler (from the imported Mercedes), VW (for light trucks), Ferrari, Porsche, Maserati, and the tiny Saleen. As the study in the pdf notes, the CAFE standards appear to be binding for US domestic manufacturers, as they produce right at the CAFE level and tend not to pay fines. (Sometimes they don’t quite meet the standard, but get credits from other years.) This is perhaps, as the study notes, because they wish to avoid the bad press that would come with ignoring CAFE. The D3 would rather lose money on producing small cars designed to satisfy CAFE rather than man up and pay the tax like the Euros.
At the same time, one can argue that private motorists systematically miss the mark when calculating, at the time they enter the market to purchase a car, what outcomes are most likely and what courses of action will really get them to where they need or want to go, over the life of the purchase.
You could, but like you I’d like more evidence. In any case, the evidence from an increase (and then decrease) in short-term gas prices (and long-term expectations) was dramatic in both vehicle miles traveled and in car sales. Even if people consistently under-estimate their calculations, they still respond in the correct direction to a gas tax, and so a proper level of a gas tax would still result in the optimal result under such assumptions.
Our problems are solved! Heil Flashpoint! Lets all sit back and await the issue of our supermileage, electronic-traction-controlled, ultrasonic-sensored, adaptive-headlighted Trabants. We obviously will not need theft deterrence.
I love it when the NYT doles out advice to other industries. I forgot… how many automotive engineers do they employ?
They forgot to say that the 40 mpg figure also means that cars run on unicorn farts.
tced2 wrote: “The experts at the NYT don’t know how to do one or even understand the basic physical science.”
What is your evidence for this? Have you ever read the Science Times on Tuesdays? Can you explain String Theory to us?
Why should the U.S. have lower fuel economy standards than China or the EU? Because we are retarded?
I must say, it’s a pleasure to be in the company of such thoughtful and well spoken people (Carnotcycle, Robert Schwarts, NKB Boston) and always fun to make fun of others whose thinking is not as clear (you know who you are, closet socialists).
What has not been said, however, is the detrimental effect that a higher gas tax would have on the overall economy. In the USA, where 2/3 of our economy is based on consumption, higher gas prices would mean less to spend on other goods and services. The more I have to pay at the pump the less I’m going to eat out, or buy clothes or go on a cruise. It happened only months ago that this cause and effect was in plain view and yet some morons around are calling on government mandated gas price floors.
Brilliant. How many overpaid Ivy League graduates did it take to come up with this idea?
All of their premises, all of them, are based on fallacies. Global warming is a myth and I’ll do nothing to *combat it*. Dependence on foreign oil will never end as long as theirs is cheaper than ours. And real economic impact will always trump pie in the sky future rewards (CA’s CARB is going to mandate costly retrofitting of diesel engines which they argue will save lives over the long run [won’t someone please think of the children?!])
Ronald Reagan said it best: government is not the solution, government is the problem.
Don’t forget that the average of 50mpg and 30mpg is not 40mpg – it is 37.5mpg.
A 40mpg fleet average means that for every 50mpg Prius, an automaker would be allowed to sell one 34mpg Camry Hybrid.
To be allowed to sell one 25mpg Highlander Hybrid, the automaker would have to sell one 100mpg vehicle (that does not exist yet).
Current technology, including hybrids, cannot get you to a 40mpg fleet average. The cars for sale in 2020 will be carrying expensive 1st and 2nd gen technology to meet fuel economy targets yet still retain some level of utility. At those prices, car sales will suffer greatly.
I guarantee that more than half the cars on the road in 2020 will be built pre-2010. And they will not be replaced with government-mandated fuel-sippers at a rate that has any measurable effect on fuel consumption or emissions.
The only thing that will EVER have an impact on how much oil Americans use is the price of gas.