New Vehicle Fuel-Efficiency Standards Costly to Consumers

It looked like the federal government, the United Auto Workers (UAW), most automobile manufacturers and environmental organizations achieved a kumbaya moment in late July when President Obama announced new fuel efficiency standards for cars and light trucks. But while it appears there’s solid accord on the standards that would approximately double average fuel efficiency to an average of 54.5 miles per gallon by 2025, serious concerns remain.

Many Americans rightfully support the nation’s reduction of dependence on foreign oil and cutting greenhouse gas emissions. Yet we also believe there will be some significant problems attached to that quest of which American consumers should be aware.

The July 29th announcement was backed up by some impressive assertions about what the new CAFE (corporate average fuel economy) standards would deliver:

• Savings of nearly 12 billion barrels of oil over the life of the program (2017-2025)
• Fuel cost savings of $1.7 trillion
• Reduction of up to a third of oil imports by 2025
• Reduced carbon dioxide pollution of more than six billion metric tons

Almost lost in the fanfare, however, was the information that the higher CAFE standards would also mean large price increases in new cars. The estimates range from $3,500 to $7,000 per vehicle, in today’s dollars, which would negate much of the gas-pump savings consumers would reap.

While manufacturers endorsed the new standards and have been working to produce more fuel-efficient models, no manufacturer today has a combustion engine powered vehicle in production that comes close to getting 54 mpg, which is the average to be achieved across a manufacturer’s entire product line. Some models may get less than 54 mpg, so they would have to be balanced by models getting more. Better technology and materials will have to be developed by manufacturers to achieve the fuel standards. It will be an expensive process.

According to the National Research Council even achieving 35 mpg (the 2016 fuel standard) will require incorporating a lot of electric and hybrid vehicles into the mix. This will necessitate a big breakthrough in battery technology. There are subsidiary concerns about whether America’s current electrical generating capacity could power a lot more electric vehicles. Another concern is how to deal with disposing of spent batteries. Both of these lead to additional concerns about increased air pollution (electricity generation) and environmental damage (battery disposal).

Inevitably, to get better fuel efficiency, manufacturers will be forced to lighten vehicles, using more plastics, composite materials and lightweight metals. A couple of factors should be noted. First, the cost of commodities – such as aluminum – is rising on world markets due largely to rising demand, especially from Asia. Second, using these materials makes vehicles lighter, but also makes them less safe. According to Investor’s Business Daily, the weight of today’s Lincoln Continental is about the same as a 1974 Ford Maverick. These lighter vehicles account for an additional 2,600 traffic fatalities each year.

Besides these concerns is the simple question of what Americans want. While higher gasoline prices have contributed to greater demand for smaller and more fuel-efficient models, every time energy prices ease, consumers go back to larger and more comfortable vehicles. It’s likely that manufacturers will artificially lower prices on their most fuel-efficient vehicles (subcompact and compact cars) and make up their increased costs by raising prices on less fuel-efficient vehicles (light-duty trucks including pickup trucks, SUVs and minivans).

This is particularly important in Colorado because while most of the nation buys more cars than trucks in about a 50-50 percent ratio, Coloradans buy closer to a 60-40 ratio, trucks v cars. That means we Coloradans, on average, will be paying more for our vehicles than the average American.

All these factors, both pluses and minuses, will make for some interesting times over the next few years as the higher fuel economy requirements ramp up. For now, the only thing that’s clear is that as American consumers make vehicle choices it’s important to consider all possible ramifications, both good and bad.

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About timwjackson

Working every day for a better Colorado.
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