New and (insert adjective here) CAFE Standards

From Environmental Economics: (link to CBS Story here)
The U.S. Transportation Department imposed new fuel-economy standards on trucks, minivans and some SUVs, a move it said would cut consumers' gasoline bills, at a time when gas prices are at record highs. The National Highway Traffic Safety Administration said new calculation methods -- representing the biggest change to the fuel-efficiency regime in decades -- would encourage auto makers to build heavier vehicles, improving highway safety. But the new standards don't apply to cars or the biggest SUVs, such as the Hummer. And environmentalists said they were too lax to significantly cut gasoline costs or reduce America's dependence on foreign oil.

Despite what we think of CAFE standards, this is welcome news.

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Finally a sure way to make money with peak oil: Betting with Tierney, of the NYT

we kinda hit that one, about eight posts down.  :)  (would I be a gambler? post)

(no worries, lots of postings today...)

would encourage auto makers to build heavier vehicles, improving highway safety

I kind of get what the EnviroEcons are implying. Build heavier vehicles so that consumers will have to pay through the nose for gas, or else drive fewer miles. Kind of a Jevon's paradox with regards to mileage driven.

Considering all the press this MPG change is getting, you would think that they had made big alterations to the current system.  However, I was surprised to see how little the new rules improve fuel economy for light trucks!

By 2010 they want to "improve" light truck fuel economy from 21 miles to the gallon, to 23.5 miles to the gallon.  Are you telling me that in the next 5 years the biggest goal they could come up with was a 2.5 mile per gallon improvement for light trucks?

And since the rules are very flexible the manufacturer can basically alter the fuel efficiency of another car and carry over the balance gained to a low efficiency model, so it does not have to meet the standard.

Now, don't get me wrong, I hate regulation as much as the next guy.  In fact, I don't think they should even give out these kinds of demands.  But if they are going to bother to hand out orders to the auto industry, they could at least pretend they are concerned about rising gas prices.

I think this is a great example of the governments failure to understand, and respond to this energy crisis.  My hope lies in the public's response.  And they are responding!  People are starting to demand high fuel efficiency vehicles.  There are currently 18 month waiting lists for many Hybrid car models.  Hopefully, the auto industry will catch on to this new demand and respond with an MPG war among themselves.  A fuel efficiency war among the auto makers would go much further than any federal standard that is likely to be imposed.

Of course all the readers here understand that even a significant rise in fuel economy will not stop our march toward peak oil production.  

Though it would be nice to soften the landing, as we fall down the other side of Hubbert's Peak.      

Don't heavier vehicles use more gas than lighter ones?  I don't see why you want heavier vehicles to save gas ... I must be missing something here
I think the heavier vehicles was mentioned as a "safety" thing. As in if you're driving a 4000 lb suv and you schmuck into a 2100 lb honda, you're going to be in a lot better position than the other guy because you've got more momentum and kinetic energy, and thus you'll experience less violent decelleration. Similarly, if you get schmucked by a transport truck, you'll be a bit better off. As for anyone in a geo ... well, if they were rich, why were they driving a geo? And if they're not rich, why should america care, we're at war and omelettes and eggs and so forth. But I might be a bit cynical on that point.
I think the heavier vehicles was mentioned as a "safety" thing.

Yes, it has always been contended that CAFE standards have resulted in lighter vehicles, which in turn is blamed on more US highway deaths.  I don't have any studies (pro or con) about this claim, but it is frequently repeated in any discussion of CAFE standards.

How they can rule out things like speed, distractions (hey, was that my cell phone or my beeper?), substance abuse, etc. I don't understand.

I think that in order to be a candidate for congress one of the requirements (and I'd add quite a few) would be knowledge of what "post hoc ergo propter hoc" means. And heck, probably go so far as to actually have a 100 question test on logic. Make it elementary enough that a requirement 100% right wouldn't be too tough, but still such that it would show some argumentative skills other than rhetoric.
I think Forbes has a pretty good description:

Couple of quotes from the article:

But it was clearly designed to help out the automakers most thirsty for profits, the struggling General Motors and Ford Motor.

U.S. carmakers complain they now have to sell large numbers of money-losing smaller vehicles in order to sell high-profit larger vehicles and meet the overall fuel economy average. With the size-based system, they could sell no smaller vehicles and still meet the standards.
The thing I don't get about this "it helps the US automakers" stuff (which I've seen now in a few places) is how exactly it helps.

The US gov't is imposing "new rules" that effectively amount to no change at all.  With gas prices already giving drivers the willies, and surely set to go much higher before 2011, the market will put far more pressure on US automakers to increase MPG than these "new" regulations will.

If anything, the US companies, who collectively appear to be more pig-headed and just plain dumber than any other group of people on the planet, including the Major League Baseball owners, are being left to fend for themselves.  Unless the US automakers suddenly get religion about the energy efficiency of their products (as opposed to their manufacturing processes, where I believe they're competitive), they'll get crushed between the rising price of gasoline and the overseas competition.

If I'm missing something here, I sincerely wish someone would point it out to me.


I'm sure others have a better handle on this than I, but here's what I see:

For thirty years each automaker has had to meet some kind of "average fleet" fuel economy.  However, the profit margin on the gas guzzlers is much better than the profits on the econobox.  So to sell a bunch of Suburbans, Chevy has to offset the lower fuel economy of the trucks by selling little cars that get better mileage, something I think they've helped do by means of selling to rental car agencies, govt sales, etc.

By splitting the fleet into six (or however many) mini-fleets, they don't have to worry about their sales mix.  They can sell (sticking with Chevy here) nothing but Suburbans and as long as they meet the new gas standard for that size truck (whatever the number is) they are ok.  They don't have to sell any little cars at all, they can stop pushing Saturns, etc.

Now you know and I know that some people are clamoring for higher mileage vehicles as a response to higher gas prices.  But that is only some people, there are still plenty of people who don't mind paying $5,000 a year for gas if it means they can have their power windows and extra legroom and leather seats and big bumpers.  

So we've gone from requiring each automaker to at least offer a balanced fleet of cars to giving them the choice to offer whatever makes them the most profit -- that would be your pickup truck with a nice stereo in it, and your cadillac SUV, etc.  The example in the article was that Chrysler used to have to push the PT cruiser to offset the Dodge Ram with the big Hemi.  Now? Not so much.

What it DOESN'T do is restrict low MPG vehicles in any way; as far as I know we still fully encourage Hummer sales (and the like) by way of tax cuts and lax MPG standards.  

Lou, I agree completely. You are not missing anything at all. Extended "protectionism" for American auto makers is nowhere in accord with reality. The market will take care of this.

Sorting these things out is confusing because we have a government that
  • protects large corporate interests
  • always wants the market to decide
As usual, these two goals are mutually contradictory.
One thing I don't understand is the nature of the new DOT standards. They're not laws, right? So really, automakers don't have to comply with them (and I read somewhere that they can still choose to comply with the old standards.) So what force do these rules even have? I'm guessing it's like FDA regulations, which aren't really laws either, but which companies comply with because, well, I'm not exactly sure why.
Right, they might as well have done nothing at all. And in the timeframe of the "changes" (2008), these "regulations" are meaningless.
And (surprise, shock) GM has announced not only is it extending it's employee pricing for another month, but they are letting you buy 2006 guzzlers with it, too:

Effective immediately, Rios said the program would also now include most of GM's full-size pickups and sport utility vehicles from the 2006 model year. It had previously been limited to 2005 model vehicles.