Tuesday, May 26, 2009

Why Do We Have CAFE Standards?

Last week President Obama had a major press conference to announce a proposed new national fuel economy standard for vehicles. This new standard will average out to around 35 miles per gallon. This new standard implements some policies from the Bush administration years ahead of their original target date and creates a national corporate average fuel economy, or CAFE, standard.

CAFE standards started in the late 70’s and were specifically targeted at passenger cars. At the time they were created to lessen our use of foreign oil. They have failed miserably with this goal. According to the Heritage Foundation, the US has increased its foreign oil consumption from 32 percent to 52 percent of oil used since the standards were adopted. The new time lines announced last week will affect the 2016 model year cars. These standards will require that all of a particular class of vehicles sold by any manufacture average out to meet the target miles per gallon. The footprint of the vehicle is the best way to think of the different classes. If Ford sales 1,000 cars in a certain footprint, those 1000 vehicles must average out to have the target fuel efficiency. If Ford sales a lot of cars with lower efficiency, then the other cars must have a much higher efficiency in order for the 1000 vehicles to average out to the required mandate.

There are trade offs to higher fuel economy. According to the Obama administration, the new national standards may add around $1300 to the purchase price of your vehicle. This is only an estimate, and some groups claim the real price is higher. There is also only so much fuel economy you can get from an engine. The rest has to made up by making the car lighter. The National Highway Traffic Safety Administration has expressed concerns that the lighter, more fuel efficient vehicles result in more fatalities every year. CAFE standards have resulted in an estimated 1,300 to 3,900 deaths per year, depending on the year and the source. Some environmentalists would argue that these deaths are acceptable if we lower the amount of pollutants discharged each year to help solve global warming. The truth is that CAFE standards won’t solve global warming. The next time you drive to work and see a convoy of tractor trailer trucks, or pass a construction site, remember those vehicles are exempted from CAFE standards due to their size. The CAFE mandate also argues against itself. The theory is that more fuel efficient vehicles reduce our need for oil and gas. In reality, fuel efficient vehicles make driving cheaper. Cheaper driving means more vacations, more car trips, and more gas used.

Personally I don’t think the government should be telling auto makers what fuel efficiency their vehicles must achieve. The government doesn't mandate XM radio (yet), why fuel efficiency? President Obama has never run a business, and I don’t believe there are any automotive engineers in Congress. The government should try to address other problems. Perhaps after the economy is fixed, the nuclear problems of Iran and North Korea are resolved, and terrorist stop trying to kill us I will change my mind. Until then, I think the government needs to keep its eyes on the ball, and stop worrying about whether my car gets 20, 30, or 40 miles per gallon.


the anonymous guy said...

Andy, don't forget:

Bring back leaded gasoline, PCBs, DDT, CFCs, melamine, and dioxin, too!

Why *does* anybody regulate pollution anyway?

And I love the beauty of your logic, Andy: you claim that more fuel efficient cars end up burning *more* gas, and so it follows that we burn *less* gas when we drive *less* fuel efficient vehicles. So everybody should now drive 18 wheelers, right? They get around 4 mpg. Imagine how much gas and money each family would save if we all drove those around town! You're a genius!

Andy D said...

Ah, poor anonymous, you have fallen into that trap of oversimplification. It's ok, I have hope for you yet.

Obviously if a car gets 4 mpg, people will be very hesitant to drive it. But if a car gets 35, 45, or 75 miles per gallon, it makes it much more cheaper to drive. Cheaper to drive means more likely to be driven. Vehicles only burn gas when they are driven, it doesn't matter what their economy is. If you drive a car more, you burn more gas.

As far as pollutants, I have said a number of times that pollutants should be regulated. CO2 isn't a pollutant. You are exhaling it right now as you read this comment. There are other pollutants that come out of a tail pipe, but congress isn't trying to regulate all vehicles, just passenger cars. Pollutants come out of 18 wheelers and back hoes don't they?

the anonymous guy said...

Andy, don't be a liar. If a car is "cheaper" to drive b/c you're burning less gas, then you can't also claim that the car is burning "more" gas. Burning *more* gas would make it more expensive to drive, not cheaper.

And, as far as CO2 not being a pollutant b/c it's comes out of human bodies... I've got response #1 and #2 for you.

Andy D said...

Maybe if I use smaller words....

If a car gets 35 mpg you spend less money driving 100 miles than if the car gets 20 mpg. If you can driver further (or more often) without filling up the tank, you are likely to do that. You might make trips you wouldn't normally make in a 35 mpg car.

Think of the situation when gas was $4/ gallon. People cut out small frequent trips, and re-evaluated anything other than the required trips. When gas dropped to $2 / gallon, that mentality went away. Same thing with a more fuel efficient engine.

But these are side points. My main point is, why does the government have any business telling me what the gas mileage on my car has to be? The CAFE standards haven't work to reduce our foreign oil dependence. Some argue they have caused fatalities. With the auto companies in such disarray, is this really a good idea?

Brandon said...


Respectfully, I think there are a few flaws in your reasoning. Firstly, yes, the price of new vehicles will undoubtedly go up at least $1300, but the fuel savings over the duration of time the car is owned by the original owner will more than make up for that.

Secondly, if I understand your post correctly, you argue that these new standards will cause gas prices to drop, I don't see any way that prices will not maintain their current levels or go up from here. The almost universal instability of major oil-producing states seems to guarantee that prices will not see a sharp reduction and the addition of millions of new drivers in India and China will likely negate any such savings in gas.

Thirdly, it's a rather common assumption that small cars sacrifice safety to improve gas mileage, but a new study just released is challenging that idea. The url for the article is: http://greeninc.blogs.nytimes.com/2009/05/28/smaller-cars-earn-top-marks-in-safety-tests/.

I do agree with you that CAFE has had mixed success, largely because of our obsession in the late 90s and early 00s with ever increasingly huge pick up trucks and SUVs, but I think we're about to see a permanent shift in the market away from oversize SUVs. The internal combustion engine is notoriously inefficient, hopefully by the time 2015 rolls around, we will have plug-in hybrids in mass production, they would easily meet the new mpg regulations.

Brandon said...

I thought my last comment was running rather long, so here is my answer to your central question on why CAFE is necessary. I can think of two very good reasons.

The first is for national security. Obviously, it's not a good thing that billions of dollars a year go from American consumers to unstable states such as Venezuela, Iraq, Iran, Russia, and Nigeria. Since some Saudi princes have some disconcerting ideas on which Islamic charities they choose to donate money to, they don't need to receive any more of our money than necessary either.

The second reason is for health reasons/environmental reasons. Obviously, emissions from motor vehicles contribute to air pollution and smog levels, which affects respiratory health and levels of asthma in many cities, which costs American consumers in the form of increased health costs.

the anonymous guy said...

1) Reality check on CAFE standards.

2) You seem to be suggesting that people will burn *more* gas if their car burns *less* gas. Is that what you're suggesting? Yes or no.

Andy D said...


In truth, the increased cost is a very minor point to me. The President says it will go up by $1300. It may go up more. I think it is a bad idea to increase the cost of American vehicles by any amount when the industry is doing so poorly.

I don’t think a different mpg will affect the price of gas one way or another. My argument is that two similar families driving a 35 mpg car versus a 20 mpg car will result in different driving habits. The family with the higher mpg is more likely to drive than the lower mpg. They will obviously both use their cars, but the one with the more fuel efficient vehicle is likely to add in trips because the relative cost per mile is less.

A small car doesn’t necessarily mean an unsafe car. I saw a study similar to the one you site that gave the Mini Cooper a better safety rating than an SUV. My belief is that there is only so much power you can squeeze out of an engine. If a small car gets 20 mpg today, in order to make the 35 mpg there are only a few changes you can make. One of them is to make the car lighter. A lighter car versus a heavier car, or a guardrail, telephone poll, or tree is not going to do as good as a heavier car. Small cars aren’t unsafe just because they are small cars. Some small cars are unsafe because of the way they are made.

I agree that we should reduce our use of foreign oil. I also agree that there are pollutants that automobiles create that we should keep an eye one. My argument is that CAFE standards are a very poor way to handle either one of those. If you really want to reduce our consumption of foreign oil, and you want to monitor pollutants coming out of tail pipes, I recommend two solutions : Nuclear Power and Auto Emissions Standards.

Andy D said...

Anon Guy:

1) I think of myself as a somewhat smart guy. The chart you site makes no sense to me.

2)Yes. That is exactly what I am suggesting. A more fuel efficient vehicle has a lower cost per mile to drive. If it is cheaper to drive, people are more likely to drive it.

Here is one example, but also read my response to Brandon. If a family driving a 20 mpg car drives 10 miles a day, they may drive more in a 35 mpg car because it will cost them less to drive it.

the anonymous guy said...

the chart shows that the U.S. is dead last among these countries for CAFE standards. And the countries with high standards have auto companies that are kicking our butts.

Andy, you have succeeded in making a completely contradictory argument:

You wrote that people will burn *more* gas in a car that burns *less* gas b/c "If it is cheaper to drive, people are more likely to drive it."

But, of course, if you burn *more* gas than you did in the past, it's *not* in fact "cheaper." You are spending *more* money on gas. Doh!

Instead of getting tied in knots making absurd arguments, how about working to solve some of these problems?

Andy D said...

Actually you argued my point.

Any car on the road has a cost per mile. If two cars are driven 10 miles, and one has a higher mpg, the higher one is cheaper to drive, with everything else being equal.

My argument is that as a car is cheaper to drive, people will drive it more. In the example above, as the higher mpg car becomes cheaper to drive, people will drive it more thus using more oil. CAFE standards may make it cheaper to drive a car, but in the long run, we use more oil.

As far as solutions go, I have suggested two: nuclear power and emissions testing on auto's. Nuclear power will reduce our dependency on foreign oil, and emissions testing can monitor pollutants from cars. These do what CAFE is suppose to do without the negatives of CAFE.

the anonymous guy said...


You're saying that when the guy who drove a Hummer switches to a Prius, he'll actually see his gasoline expenses *rise.*