Skip to comments.Mandated Mischief: Obama’s 54.5 MPG Standard
Posted on 07/30/2011 6:10:10 AM PDT by IbJensen
President Obama today announced a deal with 13 automakers to boost new-car fuel economy standards from 35.5 mpg in 2016 to 54.5 mpg in 2025. Obama claimed the new standards will save Americans $1.7 trillion over the lifetime of vehicles and $8,000 per vehicle by 2025.
But youve got to wonder, if the fuel-saving technologies requisite to meet the new standards are such a great bargain, why do we need a law forcing automakers to adopt them? After all, auto companies are in business to make money, they compete for customers, and theres not a consumer alive who enjoys pain at the pump.
What we can likely expect from the new fuel economy standards is more costly vehicles that impose net losses on consumers, lighter vehicles that provide less protection in collisions, and a less competitive auto industry.
The U.S. governments 40-year-old corporate average fuel economy (CAFE) program is a case study in unintended consequences. During its first 25 years, CAFE boosted domestic sales of Japanese and European imports, which typically had a 50% higher mpg rating than American automobiles in 1975. Partly as a consequence of CAFE, the U.S. market share of foreign-designed vehicles increased from 18% in 1975 to 29% in 1980 and 41% in 2000 (National Research Council, p.15). Few members of Congress anticipated or desired such disastrous results when they created the CAFE program in 1975.
There are two main ways to increase a cars fuel economy: (1) downsize the vehicle and (2) add new technology. Adding new technology raises new car prices, forcing some consumers, especially those with low incomes, to hold on longer to their old cars, observes my colleague Sam Kazman. In general, old cars are more polluting than comparable newer vehicles. In any event, lawmakers did not think they were voting to keep clunkers on the road when they created CAFE.
In addition, Kazman notes, CAFE restricts consumer choice, since manufacturers are forced to pay more attention to what the law requires rather than to what consumers want. Indeed, CAFE destroyed the market for what once was Americas most popular family car the large station wagon. Automakers could not comply with CAFE and produce millions of large, low-mpg station wagons. In 1975, how many members of Congress knowingly voted to kill the family car?
A related unintended consequence was the much-derided SUV boom of the 1990s. No longer able to purchase big wagons, consumers started buying trucks with car-like body designs. Fuel economy zealots decried what they called the SUV loophole in the CAFE rules. But to millions of consumers, the supposed loophole was an escape hatch. The caption of a New Yorker cartoon on bureaucratic myopia should be required reading on Capitol Hill: These regulations will fundamentally change how we get around them.
Last and certainly not least, CAFE kills. This is hard for some folks to swallow, but its a matter of physics. Fuel economy regulation restricts the sale of larger, heavier vehicles. Such vehicles get fewer miles to the gallon than similarly equipped smaller vehicles, but they provide more protection in collisions. Heavier vehicles have more mass to absorb collision forces, and larger vehicles provide more space between the occupant and the point of impact.
A 2002 National Research Council study (p. 26) estimates that in a typical year (1993), CAFE contributed to 1,300-2,600 additional auto fatalities and ten times as many serious injuries.
Were often assured that the reformed CAFE program established via the 2007 Energy Independence and Security Act (EISA) fixed the problem (often by the same folks who denied there was a trade-off between fuel economy and safety under the original CAFE program). However, even under the reformed program, which supposedly constrains down-sizing in favor of technological innovation, EPA and the National Highway Traffic Safety Administration (NHTSA) estimate that achieving fuel economy standards of 47 to 62 mpg will require weight reductions of 15% to 30% (Interim Joint Technical Report, p. 3-8).
Automakers will undoubtedly incorporate new technology to meet the 54.5 mpg standard. Nonetheless, Kazman explains, No matter what fuel-saving technologies we put into the car of the future, adding weight to the car will both lower its fuel efficiency and increase its safety. Inevitably, fuel economy standards prevent people from buying all the vehicle safety theyre willing to pay for.
Why did automakers agree to the deal? Government Motors has to be careful about defying a White House that props them up financially. Auto companies also feared ending up with something even worse: a 62 mpg standard enforced via a patchwork of state-by-state fuel economy regimes spearheaded by the California Air Resources Board (CARB).
Auto industry analyst Henry Payne notes another reason: Well agree to anything thats 15 years out, a highly-placed auto industry insider told me today about the fairy tale 54.5 mpg-by-2025 mandate for Americas auto fleet that Barack Obama and Big Auto execs finally officially announced Friday in Washington.
The rule has no grounding in reality. An engineering rule of thumb is that gas engine efficiency improves by 1.5 percent a year (a gain that, in the cheap gas U.S. market, has traditionally gone to power upgrades rather than mpg improvements). The EPAs rule will mandate that light trucks gain 3.5 percent a year and cars, 5 percent. Really.
Environmental groups claim theres no problem because automakers could comply even with a 56 mpg standard just by selling lots of hybrids. But according to the Center for Automotive Research (CAR), the market share for hybrids would have to increase from less than 3% in 2011 to 76% by 2025 almost eight times higher than the projected market share. And mass reductions of at least 15% would also be required, reducing vehicle safety in crashes.
CAR estimates that a 56 mpg standard would impose on consumers a net loss (sticker price increase minus fuel savings) of $2,858 over five years if gasoline prices average $3.50/gallon. The 62 mpg that CARB, green groups, and (very likely) Obama preferred would impose a net loss of $6,525. Without regulatory coercion limiting our options, most consumers would avoid this bargain.
Fuel economy standards compel automakers to please government planners rather than satisfy consumers. Thats a recipe for an auto industry with lower sales, reduced profits, and fewer jobs.
Team Obama and their green allies undoubtedly think it is great fun to gamble with other peoples assets and livelihoods, even if it means imposing safety risks on motorists. If we were living under a constitution of liberty, that sort of mischief would not be allowed.
What clueless, sycophantic fools support him in his mission!
Well, the article says that they’ll sign anything 15 years away...actually, they could have agreed that their cars would get 1500 miles per gallon on cat urine, because, God willing, this agreement will be ripped up in 2013.
I didn’t know Congress passed such a law. I mean, it must have, right? It says right there in Article I Section 1 that Congress has all legislative powers therein granted.
A local Detroit news station(s) report that “GM has the new Volt on the road...”...as if!
That about covers it!
Unbeliever! Destroyer of Gaia, the mother of us all!@!1!! We must have no less than 6,734,500,000 miles per gallon of unicorn urine.
But now we have some wonderful jogging trails!!
BTW what existing or conceivable vehicle that gets 54.5 MPG would anyone buy for more than short commutes? Oh that's right we need to be herded into urban areas so we can utilized the wonderful mass transit systems that exist in say; Orlando, Tampa, Toledo?
PS: I just realized how they will achieve the new CAFE standards. As the country is going downhill now......
That is supposed to be a secret. The big auto company's purchased that patent in the 30's.
Who is going to be able to buy these new cars? The USA will be looking like postcards from Cuba soon.
Americans will save about a zillion dollars just getting his sorry asa voted out of office.
In the first place, God made idiots. That was for practice. Then he made politicians. - - - Mark Twain
Ahh...that explains the feral cats sleeping on my manifold in NYC. Beta field testers. Too bad one of them tangled with the fan.
I think one of the problems Obama and the Democrats have with America is that white families are still having way too many kids.
But if you force them to drive 2-seaters, that problem goes away.
If you simply make nothing but tiny two-seaters like the former Geo 3-cylinder hatchback and similar ,the 50mpg car can be built TODAY.
Mandates are the key;to hell with what the people want!
It is what the Leader says that determines the outcome.Sieg heil Teleprompter!
Yo ho! This fine centralized planning is going to work for us about like it did for the USSR.
“Now it costs as much or more to travel by rail as it does to fly. Does any of this make sense?”
It does in Europe too, so what’s your point (or did you stumble on to the wrong website)?
This is all about driving the cost of private vehicles up and forcing the mass of people into public transportation. Private vehicles will be the province of the elite and pretty soon they’ll have their own private driving lanes, just like Moscow used to be.