Should more fuel efficient vehicles be required by law?

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By Nicholas Luebker

The Fuel Problem

• The U.S. is heavily reliant upon politically unstable foreign oil sources. – 56% of the U.S.’s fuel comes from foreign sources http://www.csmonitor.com/2005/0519/p14s01-sten.htm

• Low fuel efficiencies make us more vulnerable to oil price spikes – Hurricane Katrina, over $3 a gallon • Automobiles 2nd biggest factor after industry to contributing to global warming by producing green house gases such as: CO, CO2, NO2, CH4 (methane)

Old Fuel Economy Requirements

» Require an “average” fuel economy » The average mpg for a company’s entire fleet of vehicles had to be 22 mpg.

» Allowed companies to make lots of little, light weight cars cars and keep selling the lucrative gas guzzling SUVs.

» *Vehicles over 8500 lbs not even tested » Includes: Avalanche, Silverado, Dodge Ram, F-250 & 350, Hummer 1 & 2 » http://www.fueleconomy.gov/feg/which_tested.shtml

Aspire vs. Explorer i n Average Mpg Aspire ~37 4WD Explorer ~ 15 For every 1 Aspire sold, could sell 2.1 Explorers and still achieve an avg 22 mpg Explorer also has double the CO2 emissions.

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Why hasn’t the government required higher efficiencies for all vehicles?

For years, under standard vehicle designs, weight reductions were the main way to increase fuel economy.

 Every 100 lbs removed from a vehicle improves efficiency by 1-2% However, studies found that lighter cars were not nearly as safe.

 In 1997, mathematician Charles Kahane estimated that even 100 lbs reductions in vehicles would increase the average fatalities per year by ~300 people because they were less safe.

 Makes sense in basic physics model Ironically, the government’s “average mpg” requirement increased the discrepancy between very small and light vehicles with high mpg (Aspire) and heavy SUVs but… QuickTime™ and a TIFF (Uncompressed) decompressor are needed to see this picture.

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Safety Concern Not Entirely Valid

Safety has much more to do with engineering than weight.

  Stiffer design More crumple room  Shorter engine 2002 Honda Civic (mpg 39) designed to be light and safe, 1st to received 5 star crash test rating in all 4 categories.

  2002 Mini cooper, avg mpg ~28 2002 F-150, avg mpg ~15  Crashing into same barrier at 40 mph.

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 http://www.bridger.us/2002/12/1 6/CrashTestingMINICooperVsFo rdF150

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Will making vehicles more fuel efficient cost

Cheap Ideas:

consumers?

 Use lighter materials  Aluminum or high strength steel ~$1000  Reduce Drag  Slippery car design, replace side mirrors with small video cameras ~$180  Redesign engines  Added ability to shut off extra engine cylinders at cruising speeds ~$480  Hybrid design  Use an electric motor to start car from idle ~$660  Add more gears  5 speeds are more efficient than automatics, 6 speeds would be even better.

Using a combination of these ideas can increase mileage by 30%   A 15 mpg SUV could get now get 20 mpg  *Savings of only $750 per year at $3 a gallon,but  Business Week 9/26/2005 Issue 3952, p40-41 Saves ~ $5,000 over ten years, 17% of the original price.

Will higher prices of fuel cause people to buy more fuel efficient cars?

   Ford Explorer and Expedition sales were down 25-30% earlier this year, but is it due entirely to high gas prices?

 Unlikely to think about when buying a new car  Average cost of an SUV ~ $30,000   Savings per year on fuel if bought a hybrid (Honda Insight)  Considering average miles per year ~ 15,000  At 3 dollars a gallon, would save only $2,250 per year, less than 10% of the price  “If you can afford a $30,000 vehicle, you can afford the gas” (Petroleum Economist. London 2005. pg 1.) Space, comfort, and horse power have value too, more tangible benefits than saving the environment.

Note: Yet over the 10 year life span of a car, total expenditure (purchase price plus fuel)  Insight costs ~$30,000  Explorer costs ~$60,000  Median income in 2004 ~$44,000 (www.census.gov) , multiplied by 10 years, $30K only amounts to about ~14.6% of total earnings.

It is more likely that the decrease in sales is from greater competition in the SUV market.

   What about increasing the gasoline tax to get people to buy more fuel efficient cars?

Would probably work, but with ill effects

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Gasoline is a very inelastic commodity

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Between -.11 in short run -.3 in long run. *numbers vary* (The Energy Journal Oct 1993, v14, n4, p99)

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i.e a 1% increase in price only decreases the amount of gasoline consumed by .11%

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Vehicles are durable goods (i.e. they last a long time), not everyone can buy a new car immediately after prices go up and will suffer.

Economy is heavily reliant on low gasoline prices

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Fast price increases could induce a recession.

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Gradual price increases could induce inflation.

Unlikely that a large enough price hike would pass through legislation.

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Slower to require higher vehicle fuel efficiencies, but easier to pass.

New Government Standards

» National Highway Traffic Safety Association’s Corporate Average Fuel Economy (CAFE) separates vehicles into categories based on size (area between the wheels).

» 6 different categories based on area.

» Greater the area, the less stringent the standard » Decided to move away from weight categories because they felt companies would just make vehicles heavier.

» Expected to be approved in April » Will take into effect on new vehicles of the 2010-2011 years.

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“U.S. Secretary Mineta Unveils Plan Requiring Better Gas Mileage from SUVs, Pickups and Mini-vans” August 23, 2005. http://www.nhtsa.gov

How Do We Stack Up?

• The U.S. is in last place of modern countries in fuel efficiency standards.

– China’s fuel mileage goals are 22% tougher than the U.S.

• CO2 per capita – U.S ~ 20 tons/year, was 6.6 back in 1995 ( http://yosemite.epa.gov/oar/globalwarming.nsf/content/emissionsindivid ual.html) – Germany ~ 10 tons/year – UK ~ 9 tons/year – China ~ 2.5 tons/year

Too Little Too Late?

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 Will increasing fuel efficiency requirements impede global warming?

    ~25% of U.S. fleet is composed of SUVs Only about 1% of U.S. fleet turned over every year.

Change to more fuel efficient vehicles will take time, vehicles last longer than ever before. ~10 year life.

Changes aren’t required until 2011.

Overall Recap

 The automotive industry’s argument that improving mileage would compromise safety is untrue.

 It is a myth that it would cost consumers significantly more to increase fuel efficiency.

 It is unlikely that market forces will cause the average fuel efficiency to go up on their own.

 If the government tries to manipulate the market through gasoline taxes, there could be ill economic effects.

 The U.S. currently has one of the worst CO2 emitted per capita in the world.

 Because there is such a large fleet, it will take some time to reach.

Bibliography

   “Crash Course: How U.S. Shifted Gears to Find Small Cars Can Be Safe, Too”. Wall Street Journal. New York, N.Y.: Sep 26, 2005. pg. A.1

“Get Real”. Petroleum Economist. London: June 2005. pg. 1 “Getting More Miles to the Gallon -Fast” Business Week 9/26/2005. Issue 3952, p40-41.

http://www.fueleconomy.gov/feg/which_tested.shtml

www.epa.gov, click global warming link http://www.nhtsa.dot.gov/portal/site/nhtsa/menuitem.d0b5a45b55bfbe582f5

7529cdba046a0/ (CAFE regulations) http://www.bridger.us/2002/12/16/CrashTestingMINICooperVsFordF150 http://www.csmonitor.com/2005/0519/p14s01-sten.htm

“Another look at U.S. passenger vehicle use and the 'rebound' effect from improved fuel efficiency” The Energy Journal Oct 1993, v14, n4, p99(12)