By on December 14, 2007

08_cayenne_07.jpgAfter stripping-out an alt energy directive to America's power providers, removing new taxes on oil companies and upping the ethanol mandate to 36b gallons by 2022, the Senate passed the Energy Bill. Huzzah! While the bumper sticker remains the same– 35mpg by 2020!– all the loopholes, subsidies and devious rule changes remain as well. As The Detroit News reports, we're still talking about $25b in federal loan guarantees to The Big 2.8 for "re-tooling"– in addition to a provision funneling 50 percent of fuel economy fines back to (domestic?) automakers. We're still looking at a switch to footprint (vs. fleet-wide) Corporate Average Fuel Economy (CAFE) calculations and separate numbers for cars vs. light trucks– which help protect the automakers' SUV heavy "blended families." [NB: the sticker mpgs you see are NOT the figures used for CAFE.] We're still going to see E85 "credits" for vehicles that raise their [theoretical] mileage figures. But most ridiculous of all, the Senate failed to establish whether the National Highway Traffic Administration (NHTSA) or the Environmental Protection Agency (EPA) controls federal fuel economy standards, placing any and all such regulations in legal jeopardy. Oh wait, that wouldn't be the most ridiculous rider of the day. If Porsche got its exemption from CAFE regulations, THAT would be the icing on this saccharine cake. President Bush is set to sign this mishegoss next week.

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24 Comments on “Bailout Watch 2: Energy Bill (a.k.a. The Great Detroit Bailout) is Good to Go...”


  • avatar

    Government subsidies couldn’t save the British car industry and ultimately will not save Detroit.
    This will simply allow the state of denial to continue a little longer, before the final collapse.

  • avatar
    GS650G

    The nearest E85 station is 160 miles away. yeah that makes me want one with that feature. Meanwhile ethanol costs more, runs worse and gets lousy mileage.

  • avatar
    mikey610

    Um, actually the Freep says the whole loan guarantee thing was cut out of the final bill – “Democratic Michigan Sen. Debbie Stabenow was one of the eight votes against the final bill, criticizing it for eliminating several incentives aimed at helping the auto industry meet the new standards, such as a $25-billion loan guarantee program for updating plants.”

  • avatar
    starlightmica

    Regarding the footprint provision: I forsee stretched Prius limos with wheels pushed out to the corners.

  • avatar
    Eric_Stepans

    Given that Ford and GM have market caps of about $13 billion each, it might make (slightly) more sense for Uncle Sam to buy the companies rather than provide $25 billion in loan guarantees.

    At least then the Pentagon might have the industrial capacity it needs to provide our overseas troops with the armored vehicles they need.

  • avatar
    carlisimo

    People want it to be based on footprint? I’m upset enough that it’s going to separate cars and light trucks, I’d rather they were under the same umbrella so that more cars get made. What’s the pro-footprint argument?

  • avatar
    EJ

    This energy bill is quite a landmark, despite some compromises: 40% higher fuel economy plus strong support for ‘smart’ cellulosic biofuel.
    That really puts us on the road using less oil.

    Too bad the renewable electricity provision was stripped. Of course in the future we would like to drive battery powered cars that get power from renewable electricity.
    Taxing polluting oil production to help establish renewable electricity makes perfect sense to me.
    Ah well, maybe when Hillary becomes president, we’ll get to this…

  • avatar
    SunnyvaleCA

    EJ, your assessment of the bill (“puts us on the road [to] using less oil”) isn’t the same as my take on it. I think it will encourage light-trucks that are even larger in size than the current ones while continuing to discourage cars. Just as the current CAFE rules encourage light-trucks over cars (and thus make the fleet less efficient), the new CAFE will do the same but even more.

  • avatar
    crc

    I thought this new Congress was going to change how things were done. This all sounds pretty status quo to me.

  • avatar
    mikey610

    Mandating the selling more fuel efficient vehicles does NOT necessarily translate to reduced consumption. The utility of more ‘mobility’ for the same amount of gas money is often more important to people than the potential savings from driving the same amount for less. This essentially will (potentially) make sprawl more affordable, as people can afford longer commutes……

    Consumption-based taxes would likely work much better, but if Big Oil can’t afford to even give up tax breaks as evidenced by the horse-trading for this Energy Bill, I don’t have much hope that they would sit still and let a $0.50 gas tax through.

  • avatar
    carguy

    This is a flawed implementation of a flawed strategy (CAFE) to improve gas milage. Attempting in increase in MPG by trying to control supply is already a stupid idea to begin with but if you then also add a generous helping of loop holes, subsidies and expemptions, then it becomes the very reason of why we need congressional term limits.

  • avatar
    EJ

    There are all kinds of gems hidden in this energy bill.
    For instance: a plug-in hybrid needs to have only 4kWh of energy storage to be eligible for a nice subsidy (Chevy Volt will have 16 kWh).
    Toyota, get those plug-ins going!

  • avatar
    EJ

    SunnyvaleCA : it will encourage light-trucks that are even larger in size

    What’s the problem?
    The overall average will need to be 35 MPG. If too many trucks are sold, the government will by law have to do something to counteract that.

  • avatar
    SunnyvaleCA

    EJ, the problem is that the light-trucks that have large footprint qualify for a lower MPG requirement. So, instead of building a small light-truck (a.k.a.: small station wagon jacked up off the ground) and being forced into 35 MPG requirement, the vehicles will be stretched wider and longer so that they are allowed the more generous mid-20’s MPG.

    I’m with carguy and mikey610 and probably a whole lot of others on this one. It’s just bad legislation any way you slice it. Mikey610 points out that even if people did have 35 MPG cars (instead of 20 MPG ones) there is no guarantee of energy savings. Check out the Jevons Paradox in the Wikipedia: http://en.wikipedia.org/wiki/Jevons_paradox

  • avatar
    Redbarchetta

    I agree with carguy and mikey610 this is just another case of bad legislation by yet another bad congress. This will make the problem worse and improve nothing while propping up these losers in detriot with even more of our money they didn’t earn competitively. With so many loopholes how could anything constructive come from this.

  • avatar
    EJ

    SunnyvaleCA,

    You’ve got it all wrong.

    There will be a fleet-wide average of 35 MPG, including all cars, SUVs and pickup trucks.
    There’s no loophole.

    Pickup trucks will be allowed to have lower mileage (how much is to be determined), but that must be compensated for by cars that get higher mileage.
    One manufacturer can have lower mileage, but there must be compensation from another manufacturer.

    Seems difficult to organize, but that’s the new law.

  • avatar
    NICKNICK

    EJ–
    I’m guessing you don’t know how CAFE fuel mileage is calculated. See, the thing with E85 is that it allows redunkulous cheating. Here’s a rough example:
    On regular 87 octane gasoline a Tahoe gets 18mpg on the highway.
    On E85 the Tahoe gets something like 15mpg on the highway. Here’s the catch, so *pay attention*: E85 is only 15% gasoline (other 85% is Ethanol–E85, get it?), so by CAFE rules a .15 Fuel Factor is used to reward “alternative fuels” and the Tahoe gets counted as a 40mpg vehicle. Nevermind that E85 wastes more energy in its creation than it returns in your car, drives food prices up, and worsens smog. In addition, it rapes your paycheck because *your* tax dollars go to farm subsidies to pay for the wasted corn.
    So think about that for a second: the Tahoe sucks gas like crazy, and it sucks down even more on E85. The Tahoe legally counts at a **40mpg** vehicle and will help the fleet average more than a small car like the cobalt or civic, even though in real life it gets 15mpg IF IF IF IF IF you can even find E85, which you can’t.

    There most certainly IS a loophole. Still think it’s a landmark piece of legislation? I know I do.

  • avatar
    EJ

    NICKNICK,

    In the new law the E85 credit will be phased out by 2020, starting from 2014, so that loophole goes away.

    Also, I’ve read elsewhere, that the E85 vehicles get a 1.2 MPG credit. How does that square with counting a Chevy Tahoe as 40 MPG?

  • avatar
    NICKNICK

    # EJ :
    December 14th, 2007 at 6:21 pm

    –Also, I’ve read elsewhere, that the E85 vehicles get a 1.2 MPG credit. How does that square with counting a Chevy Tahoe as 40 MPG?–

    “An AFV that uses E85 gets its fuel economy boosted by dividing by 0.15 (or multiplying by 6.67). So an AFV that gets real world 20 mpg is calculated at 133 mpg. But the Government recognizes that E85 would only be used about 50% of the time (actually it is less than 1% of the time), so they average gasoline fuel economy with alternative motor fuel, fuel economy to get an average. Engines burning E85 do emit about 20% less CO2 per mile but have the same emission air pollution rating. E85 is also higher octane which allows it to be used where premium fuel would be required. See http://www.fueleconomy.gov/feg/byfueltype.htm for 2007 models and fuel economy.
    Here is an example. GM sold about 636,000 Chevrolet Silverado pickup trucks in 2006. The standard Silverado is rated at 17 mpg city and 21 mpg highway with standard gas. With E85 the numbers are about 25% worse since ethanol does not contain as much energy as gasoline per gallon. However, when the real E85 fuel economy is divided by 0.15 the alternative fuel economy for CAFE calculations is 85 mpg/105 mpg. In the final calculation for half and half use, the composite fuel economy comes out as 31 mpg versus 18.6 mpg for a straight gasoline truck.”

    http://ecovelectric.blogspot.com/2007/04/ethanol-sham-alternative-fuel-vehicles.html

    Board On Energy and Environmental Systems (2002). “Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards (2002)”. The National Academies. Retrieved on March 9, 2007.

    and just for fun: http://fastlane.gmblogs.com/archives/2007/06/update_a_grand.html

  • avatar
    jkross22

    NICKNICK, Way to have your facts in order! Impressive.

    With all of the smiling sycophants in Washington, is there not 1 engineer that can point out the stupidity of CAFE… where are the news networks?? Matt Lauer, where are you?? Maybe you’re too fixated on the Jennifer Love Hewitt ass-gate.

    I want to believe it will work, but the facts don’t support that. Even worse, the $25b being doled out is nothing but sickening. Want to help encourage efficient car buying habits? How about taking the $25b and offering incentives to any car buyer who buys a vehicle with 30+ mpg?

  • avatar
    EJ

    Regarding the E85 loophole.

    Here’s where the 1.2 MPG comes from: the maximum E85 credit for a manufacturer’s total fleet is 1.2 MPG.

    So, if GM made nothing but E85 Tahoes, their benefit would still only be 1.2 MPG.

    See section 32906 of the new energy bill.

    Again, this will last only till 2014 and gets gradually phased out by 2020 (unless it’s extended by a future act of congress).

  • avatar
    EJ

    By the way, the $3000 tax credit for plug-ins is one of the financial matters that was stripped from the bill by a group of 40 out of 100 senators (39 Republicans and 1 Democrat).

    Congress, please get your act together and revive this!

  • avatar
    Dinu

    I don’t know what to say… DISGUSTING! Absolutely no change from the new (Democrat) Congress, no real mandate to improve fuel consumption, same old, same old… And 35MPG by 2020? Why not earlier?

    But the issue that bugs me the most is not 35 by 2020, but the idiocy of E85 and all that surrounds it. Is there not one person in power in the US that cares about this bill enough to actually research it before signing it?

  • avatar

    I guess I am lucky maybe that I have a alt supply station within 30 kms of me, but why would I bother to use it as it costs 30 percent more per litre than does Gasoline, also in our Cold climate there are many issues with the alt supply, it also causes metal lines to age much faster than normal! Someone sold law makers a bill of “Rats” imho

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