The United States operates special courts to deal with taxes and bankruptcies. The issues are considered too complex and specialized for regular courts to adjudicate. So if the judiciary accommodates its own intellectual shortcomings, why can’t Congress do the same? The branch of the government with the lowest approval ratings (a whopping 25 percent according to this week’s Newsweek poll) spent this week contemplating an issue it does not, cannot fully comprehend: CAFE standards.
The U.S. Senate is allegedly the “smarter” chamber of Congress. Last Thursday, by a 65-27 vote, this august body passed a piece of automotive-related legislation fit only for a press release: “We love the environment!” In so doing, they raised the CAFE requirement from 22.7 miles per gallon to a seemingly stratospheric 35 miles per gallon.
This sounds good, if like most members of Congress, your knowledge of automobiles is restricted to driving them into bodies of water (Ted Kennedy D-MA) or barricades (Patrick Kennedy D-RI), being indicted for stealing them (Darrell Issa, R-CA) or careening into utility poles (John Sweeney, R-NY). For anyone who knows anything about cars, the CAFE legislation is at best meaningless; at worst, it’s God awful.
The new legislation represents the first raise of the CAFE standards since 1989. That would make it 18 years, if it went into effect today. But it doesn’t. Under the bill’s supposedly strict provisions, the 35 mpg standard kicks-in in 2020.
Of course, the thirteen year delay gives the automakers, car manufacturers, lobbyists, legislators and presidents thirteen years to put the issue on the back-burner, to find a new hot issue in need of “reform,” over which our elected representatives can posture, preen and prevaricate. The story may not even make news in 2014, when a clever page slips the postponement into a defense contract adopted at 3AM.
But the legislation’s failure isn’t related to the headline mpg provisions. As always, the devil’s in the details.
As this website has mentioned before, the agency in charge of the law’s implementation has changed the official formula used to establish a manufacturer’s light truck (pickups, SUVs) fleet averages. Instead of the current calculations (a simple fleet average), the mpg requirement will soon be based on an average spread across a number of vehicles, based on each model’s “footprint” (wheelbase x track width/144 = square footage), combined in whatever way the manufacturer sees fit, provided the combined average reaches the required overall number.
Like I said, it's a tax code on wheels. But basically, manufacturers can now create their own formula to arrive at the mandated overall average. Even more basically, if The Big 2.8 builds more big fuel-efficient pickup trucks and SUVs, they don’t have to sell a bunch of smaller fuel efficient pickup trucks and SUVs. Vehicles they’re not particularly good at making. Vehicles they can’t sell.
What’s wrong with that? Cheating. More specifically, the legislation maintains the E85 loophole that credits vehicles that can run on the ethanol blend with higher mpg— even though the vast majority of these SUV’s can’t access an E85 pump and get FEWER mpg when they do so.
And now the kicker: according The National Highway Traffic and Safety Administration (NHTSA) website, “The agency is seeking information in anticipation of obtaining statutory authority to reform the passenger car CAFE program and to set standards under that [footprint] structure for MY 2010 – 2017 passenger cars.”
What’s the bet they’ll get that authority? What’s the bet the manufacturers will E85 their way to compliance, and find other ways to play the system? Meanwhile, the new legislation contains another Detroit-friendly provision: the elimination of the “two fleet” rule.
Under current regulations, manufacturers’ fleets are separated into two distinct groups: imported and domestic vehicles. So Chevrolet can’t use frugal Korean-made Aveos to “average out” less-fuel efficient American and Canadian-made Corvettes and Impalas. If the legislation becomes law, they can.
This is a huge change: a mitzvah for Detroit and a calamity for the United Auto Workers (UAW). Simply put, you can kiss American small car production goodbye. Given The Big 2.8’s UAW labor costs, there is no way on God’s green Earth Ford, GM or Chryslerberus will continue building low-margin small cars on U.S. soil. They will import them from Korea, China, India or any other low-cost country they can find.
Needless to say, this is madness. At the risk of agreeing with GM Car Czar Maximum Bob Lutz, the CAFE law is designed to force Americans into fuel efficient cars they’ve proven time and time again they don’t want (50k Prii month? Big whoop.) While that idea may prove no impediment to many legislators, the more important truth is that it simply doesn’t work.
If you accept the goal, the only fair and effective way to get Americans to choose more fuel efficient automobiles, and thusly “incentivize” manufacturers to build them, is to raise the price of fuel.
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Whether any of us likes it or not, the last statement in the article is going to be fact.
So what that gas is now $3.06 a gallon locally instead of $3.66? I’m talking “trends” not short term ups & downs.
And yes, I’ve done a lot of studying of E10 and E85, and can assure you it is the biggest boondoggle since the New Deal. Ethanol is not a good motor-fuel, production from corn is nearly the most idiotic means possible, and food prices are going to trend upward faster and faster as a result of this idiocy – causing higher inflation.
Truly, we are a nation of people “led” by a bunch of morons, and what’s worse, we’re the ignoramises who elected them!
Potentially good alternative fuel possibilities – such as butanol (from sugar beets), or light crude oil from garbage, offal and sewage (see http://www.changingworldtech.com if you don’t believe me) are ignored, in the meanwhile.
I’m with Glenn 126 in my wholehearted agreement with the last statement. At the end of the day, the market reacts to gas prices, and people have a short memory. How many times have SUV sales dropped only to jump up again when the average gas prices drop a couple of cents?
E85 is a disaster, running cars on a country’s principle food staple is foolishness, but it plays well in the Midwest. No politician is dumb enough to oppose it because they’ll lose votes. Barf.
The problem is the market won’t go for smaller more fuel efficient cars because big cars fulfill many of our perceived needs and fuel efficiency gains are seldom worth the cost and quality-of-experience differential you get with a hybrid or little gas-sipper. GM says Americans don’t want fuel-efficient cars, and he’s right, but that shouldn’t really matter because the Middle East has us in a headlock and we’re belching pollution and melting glaciers. I appreciate the message sent by CAFE increases, but I acknowledge the point of this article that they’ll be largely meaningless. Tax gas more – it’ll fund our roads and drive domestic innovation.
I’ve seen this reported in a number of places, and I have to admit that I still don’t understand how CAFE works.
Let’s say that a car maker has three models: one that gets 10MPG, one 15MPG and one 20MPG. Let’s assume that these are all domestically produced sedans.
Under current regulations are these just all averaged together for CAFE purposes? So you get a CAFE average of 15 MPG, right?
Now, how does the new CAFE work? There’s still some kind of averaging going on, right? But not a fleet-wide average? So what goes into the average?
If the Federal Govt is honestly concerned about the environment (they aren’t), there are far better options than messing with CAFE. Why not designate areas of major cities as a ‘green-zone’ with ZERO private automobile traffic, and instead using efficient and environmentally friendly public transportation? Because the thought of riding a bus or underground subway with common-folk in D.C. make senators and congressional elected officials feel like they just finished a meal of four day old sushi. Plus, it’s easier to shift the cost of environmentalism to private businesses rather than actually adding value to the lives of the citizens it serves. However, if they were to make certain high-traffic urban areas places where personal cars are not allowed, it would lower oil consumption, decrease pollution, and still allow the average American the freedom to choose the type of vehicle they want. Why stunt the ability of people who choose to live in rural areas that need large 4×4 vehicles for their job site, farm, or weather conditions to purchase what they want and still afford the fuel to operate it (Try driving around after it snows in upper Michigan, Wisconsin, or Minnesota in a Prius)?
I agree with most of this, but the excuse that GM fails to make a profit on small cars because no one wants them is questionable. Toyota and Honda seem to be able to pull off a profitable mix of vehicle sizes, so why should American auto companies be held to different standards?
The reality is that GM can’t sell small cars because its offerings are garbage, or dont compare favorably to its competitors. I’ve never seen any proof that Americans dont want small cars, but they definitely dont want the Aveo.
Drew:
In your example, the fleet average is 15mpg. How simple is that?
Under the new rules, a vehicle with a given footprint must meet the mpg target for that footprint, which is set according to a formula which averages out at a specified target. So…
A medium-sized or full-sized vehicle doesn’t have to be as fuel-efficient as a small vehicle. A small vehicle doesn’t (specifically) compensate for a larger one.
Under one interpretation of this change, a manufacture wouldn’t even have to make small cars, as long as the medium or bigger vehicles meet their footprint-related targets.
How straightforward is that?
From what I do understand of this most recent bill, I think that it is terrible, but its terribleness is mitigated by the fact that it is also useless.
By 2020 gas prices will be so high that buyers will be demanding 35MPG regardless of CAFE. Here’s why:
Here’s a graph of global oil demand:
Worldwide Oil demand
Now look at worldwide oil production as of Dec 2006:
Worldwide oil production
Notice that the rate of increase (the slope) of production is uncomfortably shallower than the slope of demand growth? Combine this with the long lifetime of cars in the US (average age = 17 years) and you can see why people who think about the future are worried a bit.
For those of us in the US, this is an interesting and sobering graph:
US oil and petroleum imports
Given the first two graphs above, how much longer do you think this third graph can go on? If you think that it can go on – at what price??
I’m not trying to scare anybody here, just trying to let people know that the times, they are a-changin. We’ll see $4/gal gas before we see $2/gal of gas, and I’d give 50/50 odds that we’ll see $4/gal before we’ll see $3/gal again – at least here in CA. Hurricane season just started…
Nice… Footprint-based legislation. Here come the ridiculously short bumper overhangs!
I’m just amazed at how much image and political expediency dominates Washington.
Drew, your graphs are no good for comparison purposes… one has a 40-year timeline and the other has a 4-year, so comparing the slopes of the graphs is irrelevant… find a couple where the timelines are similar. I imagine they’ll also say we’re still screwed, so I’m not denying your claims.
And that specified target is 35 MPG, right? If a small (fuel efficient) vehicle no longer compensates for a large one, then it seems that vehicles have to meet the 35 MPG standard on an individual basis.
Okay…so does this mean that if one specific vehicle doesn’t meet it’s footprint average, that it can’t be sold?
Under today’s rules, you can sell a car that doesn’t meet the CAFE number as long as your fleet average meets the CAFE number.
But again, since the new CAFE target is 35MPG for everything, doesn’t this mean that even if you’re selling only big vehicles, you have to meet the 35 MPG target? Or am I missing something?
This is all so stupid…
I agree with PerfectZero that the idea Amricans don’t want small cars in baloney. Someone must be buying all these Civics, Corollas, Fits, Yaris, Kias, etc. Americans just don’t want American small cars.
Apparently, we weren’t that far off the mark, – for passenger cars- if this article is accurate – http://tinyurl.com/38xy8m
If you accept the goal, the only fair and effective way to get Americans to choose more fuel efficient automobiles, and thusly “incentivize” manufacturers to build them, is to raise the price of fuel.
It won’t happen. Americans want the right to drive, when and where they want, at a fairly low price. Any politician who would propose such a thing would become a lame duck waiting to be shot.
Why not designate areas of major cities as a ‘green-zone’ with ZERO private automobile traffic, and instead using efficient and environmentally friendly public transportation?
It won’t happen. (See above.)
the excuse that GM fails to make a profit on small cars because no one wants them is questionable. Toyota and Honda seem to be able to pull off a profitable mix of vehicle sizes, so why should American auto companies be held to different standards?
The reality is that GM can’t sell small cars because its offerings are garbage, or dont compare favorably to its competitors.
This is absolutely correct. The top selling passenger cars in the US are the Accord, Camry, Civic and Corolla. The majority of the Accords and Camrys sold are 4-cylinder models.
If you exclude fleet sales, these cars outsell their Big 2.5 midsized and compact “rivals” (if we can call them that) by several times over. If making small cars was a money loser, Toyota and Honda would have collapsed into a pile of rust a long, long time ago. Obviously, they have figured out how to build a product that has alluded Detroit, Dearborn and Auburn Hills for all of these years.
Drew:
Again, footprint targets vary. And you're correct: if a vehicle doesn't meet its footprint-related mpg target, it can't be sold.
Under the new rules, the 35mpg is a theoretical fleet average. Clear as mud.
Obviously, they have figured out how to build a product that has alluded Detroit, Dearborn and Auburn Hills for all of these years.
Something to do with non-union labor and intelligent management, methinks.
“Something to do with non-union labor… ”
Except the cars mentioned tend to have higher MSRP than their American rivals.
“… and intelligent management, methinks.”
Yes.
I wouldn’t go so far as to say that they’re no good, but you do have to read them carefully. You’re right – you can’t just compare the slope without correcting for the differing scales. When you do that you’ll see, as you expected, that we’re screwed.
It’s hard to find good graphs and I don’t have time to make my own.
As the last graph points out – what the US really needs to concern itself with is oil imports. We’re competing with China and India (among others) for oil exported by other countries.
But the oil exporting countries are using more of their own oil domestically. So, in order for them to increase exports by a certian percent, they have to increase production by an even greater amount. That can only go on for so long – physics and geology dictate it.
Here’s an excerpt from an interview with Sadad al-Husseini, a former member of the Saudi state oil company’s (Aramco) board of directors and holder of a Ph.D. from Brown in geological sciences. At one point, he led Aramco’s oil exploration department. he is as credible as you get on this subject. What he has to say is interesting:
You can read the whole article Here
Sorry for the length, but this is important for everybody that loves cars. Companies like Tesla may succeed or may fail, but at least they are trying. We need more of that.
I agree with those that say Congress is stupid and that the best way to conserve fuel is to raise the tax on it. It’s no surprise that smaller cars are sold in Europe where the tax on gasoline is higher resulting in a higher fuel cost. Unfortunately we live in a free country and that means that some use their freedom to be stupid, and it seems those elected to the Congress are especially adept at this. Not to worry though, remember when the administration tried price and wage controls to control inflation? Well inflation didn’t come under control until the Fed under Chairman Burns finally let interest rates float. Yes it was painful especially with a 21% Prime rate, but it worked and continues to work even today. No man is smart enough to regulate the market, every attempt has resulted in failure and unintended consequences. Look at the USSR, look at OPEC. In the long run the free market will determine the price that matches supply and demand and individuals tend to respond very creatively to the changes in prices resulting from reduced supplies.
I just want to point out the fact that the Yaris and Fit both fail to meet the 35 MPG mark. Imagine how small of a car Toyota would need to produce to balance out the 25 MPG of a 4 cly Camry.
Gottleib:
I agree with those that say Congress is stupid, but disagree that the best way to conserve fuel is to raise the tax on it.
Just because some people can drive a Yaris or a Fit everyday doesn’t mean there aren’t those who still need large trucks on a daily basis.
It’s not fair to punish the farmers, small business construction companies, and others who legitimatly use trucks simply because those in urban centers can do without.
Taxing fuel heavily disproportionatly affects those who do our ‘dirty work’ in the agriculture and construction industries.
To calculate CAFE, you don't average the 'fuel economy' in MPG. You average the 'fuel consumption' in gallons/mile. Then invert it to get the equivalent fuel economy.
One car getting 10 mpg is one at 0.1 gallons/mile. One car getting 20 mgp is one at 0.05 gallons/mile. Add these together and divide by two, and you get one 'average' car at 0.075 gallons/mile.
Invert this and your CAFE number is 13.3 mpg.
Drew,
Not to throw cold water on a heated discussion, but your source from Aramco may just have an axe to grind. Besides, all he is saying is that demand increases by 2-3% annually. So what? the technology for extracting oil has raised output similarly. Plus, we discover new sources of oil daily. Which means that the world’s reserves have never been higher.
That is why the prioe of oil has actually decreased over time. Yes, I know, $3 a gallon seems like a lot compared to 29 cents in 1964, but you have to keep in mind inflation. Ice cream cones cost 5 cents back then vs. $2 today.
Oil — like every other commodity — declines in value over time. It’s in the economics rule book. Anyone who truly believes otherwise should buy oil futures and profit from his wisdom.
Potentially good alternative fuel possibilities – such as butanol (from sugar beets), or light crude oil from garbage, offal and sewage (see http://www.changingworldtech.com if you don’t believe me) are ignored, in the meanwhile.
Drew,
Biobutanol is not everything it is made out to be. In general, avoid fuels made from FOOD.
Also, I’d be careful with Thermal DepolymerizationConversion Process, the name of Changing World Technologies process. While they seem to have a killer technology for converting lipids into oil (take that biodiesel!), their ability to convert carbohydrate (the bulk of the available biomass) remains to be demonstrated. They also have proven to be way off the mark with their initial cost estimates.
Is there ANYTHING out there that might work? Well BTL has potential, but it still can’t compete with oil at $60 – 70/bbl. CTL can work at $40/bbl, but it GHG is horrendous. So, cheap (relatively), renewable and sustainable. Pick any two.
The weird thing is, people do seem to want Aveos. They’ve been selling like relative hotcakes, despite their well-documented shortcomings vis-a-vis the class leaders. It just goes to show you how much GM could seriously clean up if it brought a truly competitive player to the A-class segment.
35 mpg by 2020? not sure i can wait that long. my mazda gets 35mpg right now & i want a more frugal car.
greenb1ood: Careful now, farmers? That group gets more incentive, subsidy and tax breaks from the Congress than any group I can think of. In fact I understood that farmers weren’t taxed on fuel that was delivered to and used on the farm for agricultural purpose.
Yea, small business will get hit with higher fuel costs, as will their employees and the rest of the workers, but it is the only non prejudicial way to balance supply and demand. Besides that pick up truck with the large capacity payload that the small business owner needs under these CAFE regs is going to have a price premium on it that will surpass what he would have to pay in higher operating cost due to a higher tax on gas. Remember when the supply gets limited the price goes up. I hate it too, but last time I looked there is no free lunch. I don’t mean as the guest of the Rotary club either.
greenb1ood: Why not designate areas of major cities as a ‘green-zone’ with ZERO private automobile traffic, and instead using efficient and environmentally friendly public transportation?
That works if the city in question has a desirable downtown area able to draw people in on the strength of its job opportunities, entertainment venues and shopping areas. The urban area in question has to be strong enough to overcome the pull of the convenience (and perceived safety) offered by suburban areas.
If so, it could work.
If not, most middle class and upper-middle class people would just stay in the suburbs and continue driving to their favorite destinations.
In other words, your idea might work in New York City, Washington, D.C., Boston, San Francisco and Chicago.
Philadelphia, Pittsburgh, Dallas, Los Angeles and Atlanta had best not try it, unless they want to kill their downtown areas.
(I’m assuming you are not talking about urban residential areas, as most urban residents I know want to own at least one car, and have it at their convenience.)
Gottleib:
…and still I’ve never heard of a rich farmer. If your statement is true that gasoline used for agriculture is subsidized, then I retract that argument, but I still feel like people with high discretionary income will absorb the increase and still drive Escalades, while those with limited funds who drive long distances or need trucks will suffer.
We hand over a big enough portion of our money to the Feds to be mis-managed and wasted, and I’d like to see them put that money to good use in finding a solution that *helps* everyone rather than demanding more money from individual taxpayers and small businesses.
Maybe I’m getting off topic here but from CAFE standards to public education, to deciding when and where to depoly our armed forces, the U.S. Govt has wasted incredible amounts of tax dollars over the last 20 years and giving them more rather than demanding accountability seems counterproductive to say the least.
Why do I have this nagging feeling that Voters are the same people who respond to local car dealership ads…….
greenb1ood: If you’ve never heard of a rich farmer, I’ll introduce you to my cousin…not to mention several other local farmers.
He may or may not have an axe to grind. If you have any evidence that he does, I would love to see it.
Well, three percent of current consumption is 2.5 million barrels per day. That’s a huge amount, even if it is small percentage wise. That’s 35% in ten years.
It has? Do you have any evidence of this? Look at this graph:
Worldwide oil production
Here’s Saudi Arabia alone:
Saudi Arabia oil production
Where’s this 3% growth in the last few years? Note how the number of drilling rigs has increased while production is essentially flat. Keep in mind that oil prices have been at record highs, so producers have a strong incentive to pump all the oil that they can.
Reserves don’t matter if they’re not being pumped. Also, not all reserves are economically viable at today’s prices.
Finally, most OPEC nations don’t allow independent verification of their reserves. They tell you what they have and are basically saying “trust us”, when they have incentive to artificially pump up the numbers. Take a look at how Saudi Arabia’s reserves changed when the state took over the oil industry:
Saudi Reported Oil Reserves
Not exactly confidence inspiring, is it. Remember a few years ago when Shell admitted that it overstated reserves by about 30%? reserve numbers need to be taken with a grain of salt.
This is also wrong.
CNN: Gas hit record high, even adjusted for inflation
Keep in mind that the previous peak was during an OPEC embargo. The fact that we’ve eclipsed that peak with no such embargo should tell you something.
I’m not trying to be harsh – but it looks like you are coming up with excuses because you don’t want to believe the facts. I’d rather that the facts be different as well, but they are what they are.
The bottom line is that we need to be prepared for when the cheap oil party is over. Maybe I’m wrong and it won’t end, but I’d rahter make unnecessary preparations than not make necessary ones.
geeber:
I grew up outside Detroit, so I can appreciate the limited applications of the ‘green-zone’ theory.
And I agree that widespread use in some cities would only worsen the downtown economic situation. But the key would be to carefully select these zones in the highest traffic areas to start. For example, even in Detroit the city blocks off a large number of streets for every Tigers and Lions game in order to properly funnel traffic downtown. What if there were no passable roads in a three mile radius around these destinations, but there was free public transportation running from high rise parking structures?
My bet is that people would still come support the teams they love, and they would complain for a while but eventually it would just become status quo.
The problem is that no one in the position to enact such ideas has the cajones to suggest it.
greenb1ood wrote:
(Try driving around after it snows in upper Michigan, Wisconsin, or Minnesota in a Prius)?
Guess what? I LIVE in northwestern Michigan and – guess what else? I’ve had a Prius for 2 years, and get along fine in my CAR instead of SUV. I do put Bridgestone Blizzaks (on a 2nd set of alloy wheels) in the winter, but then I do that on our 2nd car, a Hyundai Sonata, as well.
Go to Canada some time, where gas costs twice what it does in the USA, and you’ll see far fewer SUVs on the road compared to the USA.
Besides which, I have seen more high-center-of-gravity stupid-utility-vehicles ass over teakettle, upside wrong in the ditch over the years, than cars – every winter, year after year.
All wheel drive only “goes” better than front wheel drive – it does not steer or stop any better. If you cannot drive a car in winter, you should not be on the road in the winter. That’s what snow plows are for – clearing the road so it is driveable.
CAFE standards aren’t all bad. Here are a couple of things that haven’t been mentioned so far.
Corporate Average Fuel Economy (CAFE) standards were enacted in 1975 in response to the oil crisis and OPEC embargo. Between 1970 and 1985, combined fuel economy rose from 14 m.p.g. to 25 m.p.g. This was accompanied by a reduction of CO2 emissions to a 30-year low in 1987. BUT, light trucks were held to a lower standard than passenger cars, and they were allowed to consume a third more gasoline than cars. This loophole, which also made way for the SUV, survived many legislative attempts to raise CAFE standards for all vehicles in the 1980s and ’90s. As SUVs and light trucks have grown their lower fuel efficiency pulled the national averages down.
As for trucks for real work (i.e. contractors), go to Europe or the rest of the world and look at what the working people use there.
Not humungous Ford F150’s with monster V8’s, but snub-nose van-based pickup trucks with turbo-diesels.
Obviously a diesel hydraulic hybrid pickup with a moderate sized hood, aluminum alloy frame and body and turbo-diesel would cost twice what an F-150 would, but would a) get 35 mpg b) probably last 3X as long as an F150 and c) still do the same work load enabling the economy to continue on (as in, building houses; hauling furniture; etc)
It’s not impossible, it’s just improbable (that we Americans actually move towards vehicles more geared to “need” than “perceived wants”).
So, please, no “whining” when (not if) gas gets as high here, as it is for my sister-in-law in Scotland (at one point when we were paying $3.65 a gallon she was paying about $10 per US gallon equivalent in Pounds Sterling).
‘this august body passed a piece of automotive-related legislation fit only for a press release: “We love the environment!”’ I think this statement summarizes why this bill is pure genius. Gets all the good press they need while simultaneously making their corporate donors happy, and all the while effecting absolutely nothing.
And that is as it should be. Let the free market decide when to cut back on gas. If the price goes high enough people will find alternate solutions. In fact I would be willing to bet that oil prices will be significanly lower (inflation adjusted) in 50 years than they are right now, due to lack of demand and also that the environmental crisis du jour will make no mention of global warming.
Glenn 126:
You must be a man among boys in the winter driving dept…in all seriousness I’m impressed that a 2nd set of tires is all you need to traverse a Prius through West Michigan in the winter.
I’m not advocating SUV’s nor trucks as the answer to winter driving, nor did I suggest that some SUV / truck motorists aren’t stupid and push the vehicle they have too far in bad conditions.
But I would argue that a heavier vehicle, with 4WD, driven at proper speeds is easier to control in bad conditions. I’ve had a 1/2 ton truck, a 4WD SUV, and several RW & FW drive cars (currently a Volvo S40) and the high center of gravity only comes into play when you push it too hard. Otherwise, it makes winter much easier on the Lake Michigan coast.
I for one would like the option of that type of vehicle rather than be taxed out of owning one by the boys (and girls) on capitol hill.
greenb1ood:
June 25th, 2007 at 1:09 pm
If the Federal Govt is honestly concerned about the environment (they aren’t), there are far better options than messing with CAFE. Why not designate areas of major cities as a ‘green-zone’ with ZERO private automobile traffic, and instead using efficient and environmentally friendly public transportation? Because the thought of riding a bus or underground subway with common-folk in D.C. make senators and congressional elected officials feel like they just finished a meal of four day old sushi.
Besides never happening, if it did, believe me, the government brueaucrats, I mean me public servants, would be able to still drive those downtown streets using special window stickers to gain access. We woudl end up with something similar to Russia where the improtant members of government had their own lanes on the road that could only be traveled by their cars.
As far as the ethanol exemption, anybody who thinks that ethanol production is the answer needs to pull their head out of the corn field. It’s been established by actual scientific economic evaluations of ethanol production using corn (or the new darling, switch grass) that at best you get a very small percentage more energy back from the ethanol produced than the amount required to produce the ethanol, and this is at the expense of depleted food stocks, reduced fertility of the soil, and use of horrendous amounts of otherwise potable water. By the way, farmers sort of get a “price break” on fuel used ON the farm. They don’t have to pay the taxes that are ostensibly for maintenance of the roads since the farm vehicles don’t use the roads.
I’m in a large minority here in saying that we should just let the market take care of it. Based on the increasing demand that the oil producing nations are already having trouble meeting, the price of gas in a free market will drive people to more efficient vehicles without the help of our brilliant benevolent leaders.
I agree wholeheartedly with the idea that we need a good stiff gas tax. However, according to the June 23 New Scientist (I think th eURL is newscientist.com), although 85% of Americans agree that global heating is the biggest environmental threat, Americans far prefer mandates (that tell companies what they can and can’t emit) to taxes or cap and trade, and they don’t like anything that raises the cost of driving. I think what’s needed is an education program on the benefit of taxes. I can remember, when I was in college, I thought compmanies should be told what to do rather than given financial incentives, but the more I learned the more I realized financial incentives were the way to go.
In the article, one Ray Kopp of Resources for the Future predicts gas prices will rise to betw $4 and $15/gallon by 2020. At the higher end, I’m not sure we’ll need any regulations, but it would be nice to have the $ going into the US treasury instead of to opec.
Damn. I usually come to this website to enjoy myself, but this article, as important as it is, is damned depressing.
Please, excuse my cynicism, but why would anyone trust the government to get ANYTHING right? Our elected leaders’ first job is to get re-elected. Period. Their motives are always suspect. In that rare moment they do happen to get something right, it’s more likely an unintended consequence of something they got wrong in the first place. CAFE (and most other legislative nonsense) must die, indeed!
Re: Rich Farmers.
Recently read an article in either CNN or Business week discussing the ethanol thing and the price of corn. Bottom line is that this year with corn futures at $3.75 or so and all costs considered, a farmer that plants 1,000 acres of corn will make an income of $250,000 on those 1,000 acres.
So take it for what it’s worth. Not begrudging the farmers a thing – the last 10 years have been really rough (Next time you buy your kid a $4 box of cereal, think about how many boxes of cereal you can make from a bushel of corn – considering that corn was $1.75/bushel 2 years ago).
So while the ethanol thing is total pork barrel BS, currently it’s a gold rush out here. It’s like 1849 all over again. I don’t farm but I own farm land. No complaints here since I benefit.
And yes farmers get fuel (diesel and gas) delivered without the road tax applied (42 cents/gallon?) They still pay sales or value added taxes like any other business. Hmmmm – wonder why all those farmers love their diesel pickups considering they have a thousand gallons of off-road untaxed diesel at their disposal…..
I think its important to note that the free market is deciding right now. All you have to do is look at suv sales numbers. Its pretty obvious that people want fuel efficient cars no matter what the shape, and since the government is elected to represent us, I dont see why the urge to create CAFE standards are such a mystery.
PerfectZero: Its pretty obvious that people want fuel efficient cars no matter what the shape, and since the government is elected to represent us, I dont see why the urge to create CAFE standards are such a mystery.
And since the people want these fuel efficient vehicles, the companies that provide them will make money, so there is no need for government to regulate them into being. The promise of profits will be the incentive.
Companies that don’t provide them will suffer, but that is how the free market works.
Unless, of course, the government that ignores free market trends that make CAFE standards redundant also ignores free market trends that punish companies for failing to provide what lots of customers want, and tries to bail out said companies.
THAT would never happen, now would it?
Free market in action: although subcompacts are selling well this year, so are the full-sized SUV’s. Retail sales so far for the little people movers in the US: Mazda5 + Kia Rondo are <7,500.
http://www.fleet-central.com/af/stats2007/cars_web.pdf
starlightmica: The Expedition and GM SUVs are either all-new this year, or heavily revamped.
What are their sales compared to sales in 2004 (last full model year before Katrina)?
Also, what are sales of mid-sized SUVs (Explorer, Trailblazer, 4Runner, Durango, Cherokee)? From what I’ve seen, they are WAY down.
Perhaps the SUV market is evolving – those with money (who don’t care about gas prices) are buying big, while those who are worried are moving down to the Escape/CR-V/RAV-4 class.
I recall reading that the CR-V recently became the best-selling SUV, a distinction held for years by the Explorer.
Hey Justin, great article. I really enjoyed reading it and you did a great job presenting the serious issues with this new piece of legislature.
I noticed that alot people were interested in more information regarding how the CAFE program works and why it is even in place.
A couple years ago I had to write a comment for my school’s Law Review and I wrote it regarding CAFE standards. If anyone is interested in a relatively concise history and look at the current CAFE program still in effect, I posted a copy of my Comment at http://autoelitist.blogspot.com/
(I apologize for the formatting, I didn’t have time to make it look better).
BTW you can save some time by skipping section III since it just deals with the constitutionality of the program and isn’t really relative to the discussion.
Cheers!
geeber:
The Mazda5 and Rondo are examples of smaller, yet relatively fuel efficient (M5: 24.5mpg my last fillup) vehicles capable of holding 6/7. This class of vehicle sells quite well overseas, available with a variety of powertrains including diesels, but is a total dud so far in the US. Including fleet sales of the former, combined annualized sales look to be in the 30k range.
Every other vehicle you mention will do far better from a sales standpoint this year than this un-dynamic [sales] duo. Americans just love their big cars/trucks/vans, and I’m no exception as the other vehicle I drive is a Sienna.
In the meantime, how to get the USofA into smaller, more efficient vehicles, without screwing someone (the car-dependent low/fixed income folks, the Detroit 2.801 and their employees, corn-buying consumers, etc)? Beats the heck out of me. When you build a country around cheap oil and none is to be found, someone’s going to pay.
starlightmica,
But Mazda and Kia aren’t the strongest brands out there. They really don’t have the production capacity and dealer network to hit the ground running with a new class of vehicle.
Also note that the midsize SUVs I mentioned are going DOWN in sales, so the long-term outlook isn’t good for them.
greenb1ood:
It’s not fair to punish the farmers, small business construction companies, and others who legitimatly use trucks simply because those in urban centers can do without.
They will pass the increase back on to the consumers (ie. you and me). This will cause inflation, which is another reason the govt won’t do it.
Lumbergh21:
I’m in a large minority here in saying that we should just let the market take care of it.
Trouble is it’s not a closed system with only the supplier and consumer involved. Fuel consumption has knock on effects for road infrastructure, pollution and balance of payments to unsavory regimes, all of which we empower the government to look after on our behalf. Viewing the cost of fuel as just the price we pay at the pump is both short sighted and tunnel vision.
The domestic automakers brought this upon themselves. They confirmed over and over again they will not design and manufacture safer and more fuel efficient cars without a legislative stick over their heads. Voluntarily doing the right thing is not in their corporate DNA.
There is a story that harks back to the original CAFE standards. The domestic and foreign automaker honchos gathered in Washington. The domestic CEOs burst from the room after the announcement and called their lawyers, the Germans and Japanese called their engineers!
Try driving around after it snows in upper Michigan, Wisconsin, or Minnesota in a Prius
How about driving in the Colorado mountains every year (for the last 8 years) with a front wheel drive Civic shod with Blizzaks? I pass SUVs and monster trucks all the time in the snow, especially ones in the ditch. I also see many front and rear wheel drive cars (not trucks) in mountain towns with the same setup. I also find it much easier to drive than 4WD SUVs (I’ve driven many of these in the snow) and especially giant trucks like Suburbans because you can feel exactly what is happening beneath you, as opposed to the isolation-tank feedback of a 2-plus-ton behemoth ready to break loose around a hairpin corner at who knows when. And when the snow gets too deep, I just don’t drive. I’d hate to get hit by one of the many speeding hulks out on the roads anyway.