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Fuel Efficiency (MPG)
#1 of 560 Has CAFE reached the end of its usefulness?
Mar 27, 2006 (7:24 am)
I noticed in a news article this morning that after much blood, sweat, and tears, the Bush administration is finally ready to complete its "reform" of the CAFE regulations, the "biggest structural change in the Corporate Average Fuel Economy program since its inception in 1975."
And yet as it turns out, they STILL are not going to regulate all the vehicles on the road, despite the example of all the modern trucks that avoid the old CAFE regulations by exceeding 8500 pounds curb weight.
Sure, they are now going to catch most of the monster SUVs, right as the SUV boom is ending. But they are going to exempt most full-size pick-ups, on the grounds that these are mostly used as work trucks despite statistical evidence to the contrary.
This is disturbing for another reason - since the new regulation is going to be based on truck dimensions rather than weight, the standard for each automaker will be different. How is that equitable, and how does it help to reduce gas consumption, when it is not hard to figure out that all one has to do to defeat the regs is to make one's truck bigger?
I guess the new Ram Mega-Cab (crew cab with an extended cab behind the rear seats and an overall length of about 100 yards) is going to do Dodge even more good than it originally thought!
I say scrap CAFE and begin an incentives/penalties system to encourage better fuel economy in the overall fleet.
Begin taxing gasoline, nothing like the levels of Europe, but maybe $0.10/gallon to start, ramping up to $0.50/gallon by 2012, as an initial plan.
On the flip side, promote alt fuels and high-mileage cars with a tax incentive similar to the one available for many hybrids today. But let it apply to the top 5% of models in each size class in terms of fuel economy, and let it include gas cars too if they qualify - don't limit it to hybrids.
This last, of course, depends on the new EPA testing standards that are supposed to appear shortly - obviously right now, hybrid EPA ratings are unrealistic even as a standard of reference for comparison with gas models.
Tax-and-incentivize is a much better system than the idiotic CAFE, which automakers have been getting around for 20 years, and which they will continue to get around no matter how it is "reformed". I believe that there IS a need for the government to encourage high fuel economy, both from the environmental and security standpoints, so it definitely has a role there. But CAFE is not the way to accomplish that end.
#2 of 560 Re: Has CAFE reached the end of its usefulness? [nippononly]
Mar 27, 2006 (8:49 am)
Naah, just tax vehicles based on weight. Under 3,000 pounds- $0. 3-4k lbs- $1000; 4-5k- $2000, 5-6k- $3000, etc. Under 2500 lbs- $1000 tax credit, under 2,000 lbs- $2000 credit, etc.
#3 of 560 Re: Has CAFE reached the end of its usefulness? [nippononly]
Mar 27, 2006 (9:07 am)
nippon - good post. I agree with everything you said. Let's move to a consumption-based penalty/incentive model instead of a fixed system that the manufacturers can just work around. Make it so that the consumer has a monetary incentive to buy higher-mileage vehicles, and they will follow.
I might want to protect the commercial truckers from this to some degree, however, when it comes to a gas tax. Maybe just tax gasoline and not diesel.
#4 of 560 Re: Has CAFE reached the end of its usefulness? [mirth]
Mar 27, 2006 (9:14 am)
Railroads are far more efficient than trucks, so do not exempt commercial truckers.
#5 of 560 Re: Has CAFE reached the end of its usefulness? [mirth]
Mar 27, 2006 (9:15 am)
I hear what you're saying about commercial truckers and other commercial users like farmers for instance. However, if we tax only the gas and not the diesel, we have just created yet another loophole as bad as the ones in CAFE.
Instead, I say give them the money back in their IRS tax filings. Give them a huge gas tax credit, provided they verify they are performing a business (like commercial trucking especially) that requires the use of fuel.
#6 of 560 Putting the problem into context...
Mar 27, 2006 (2:33 pm)
For one, I would give up the idea that increased fuel taxes are a viable alternative to CAFE. It won't happen, not because it doesn't make economic sense (a fuel tax would be the best way to incentivize reduced fuel consumption), but because it would be political suicide for any politician in the US, whether Dem or Republican, to support such a thing. Not only would the electorate rebel, but the automotive lobby would strenuously oppose it, and would surely bankroll an ad campaign that would help to kill off any such proposal, along with whoever had the courage/foolishness to support it.
The problem with CAFE is that it never accomplished its intended goal -- to force the Big 2.5 to build a high quality small car. Instead of working hard to comply with the word and spirit of CAFE, the Detroit automakers have done everything possible to take the teeth out of it in order to make it a non-issue. And rather than step up to the plate by building a great small car that could compete on its own merits against Toyota, etc., it sought instead to build pretty bad small cars, and to dump them by selling them into fleets.
As a result, not only does Detroit make minimal money on small car sales, but those cars help to feed Detroit's reputation for poor quality, which in turns hurts their market share. So it has been a double whammy that didn't have to happen, but was bound to happen when Big 2.5 management is intent on shooting itself in the foot. Talk about taking a potential opportunity, and turning it into yet another failing.
At this point, I would simply increase the CAFE requirements. The electorate won't care, so the only ones left to protest it would be the lobbyists who could be end run in this case by most politicians outside of Michigan. Meanwhile, as truck and SUV sales decline, Detroit may have no choice but to build decent small cars if they wish to comply with strengthened rules, so perhaps some improved products might come from the effort. I have my doubts about this working, because the management of these firms seems so inept and shortsighted, and I'm not exactly a huge fan of CAFE, but I can't think of a better alternative that would actually pass political muster.
#7 of 560 believe it or not
Mar 27, 2006 (4:18 pm)
it was recently in the news here in California that they have actually put a bill on the agenda this year, sponsored by CARB, that would levy gas taxes for the purposes of reducing greenhouse gas emissions (ie burning less gas!). Now this is California only, of course, and there has been no news since so I don't know the fate of that bill - there probably isn't one yet, as it's early in the year.
But if it passes here, I will be very interested to see if the other states that follow California emissions standards mimic the tax, and if so, if it ever makes it to a national action.
Anyway, tax and incentivize is perhaps not the only way to fix this problem. But clearly the latest CAFE "reform" is one more in a long line of sad little jokes, so it isn't going to accomplish anything. Perhaps there are other alternatives to it besides a gas tax?
#8 of 560 Gas taxes
Mar 27, 2006 (4:30 pm)
I recall reading a few years ago that GM supported higher gas taxes, and I seem to recall William Clay Ford, Jr., also coming out in favor of this method of encouraging conservation.
They felt that if gas prices were higher, their companies would be assured a ready audience for more fuel-efficient vehicles. CAFE places all of the risk on the manufacturers...they can design a vehicle for maximum efficiency, but with that focus comes certain compromises, and low gas prices do not encourage buyers to pay for those compromises. Higher gas prices encourage buyers to give more weight to fuel efficiency (look at what last year's run-up in gas prices did to mid-size SUV sales).
Most Americans still equate size with status and price. I remember looking at an Opel Astra in Germany in 2004 (about the size of a Cobalt). Converted to dollars, it would have sold for about $26,000 in the U.S. Granted, it was beautifully styled and finished, but not too many Americans (at least, not the 250,000+ GM needs to make it a profitable product) would pony up that much for a Cobalt-sized car, especially one with a Chevy badge.
Mar 28, 2006 (7:36 am)
taxes make up half the price of gas, and I don't think anything that drastic should happen here.
But all the folks who say wearily "just try to find the suicidal politician that would dare propose gas taxes" might be thinking 1995 a bit too much. This isn't the roaring 90s any more. This is the fearful '00s. A lot of people really buy into the notion that importing oil from terrorism hotbeds is a bad idea. You push that with your gas tax.
There is a growing awareness that global warming isn't just talk or the fodder for movies, and that cars and trucks are a BIG contributor, for which less fuel consumption would be a perfect solution.
And then there is the HUGE backlog of overdue highway maintenance in this country. You could remind people when you instituted a gas tax that all the extra revenues would be going to highway repair.
Plus, if you present it to the automakers this way, using the arguments grbeck mentioned about no longer forcing them into a devil's choice with the ridiculous CAFE, they are likely not to oppose it in their typical knee-jerk fashion.
This is only impossible if we say it is and don't try.
Mar 29, 2006 (5:00 am)
I hold CAFE rules responsible for the minvans and SUVs. Families could no longer get the big station wagons they thought the needed to haul the family on vacation once a year, so they bought trucks, which were not included in the CAFE rules.
In the engineering world, we call that an unintended consequence. Overall, CAFEmay have done more harm than good.