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Friday, September 30, 2005

CAFE Is A Farce

The CAFE rules (Corporate Average Fuel Economy) are a farce. I like to post on this subject, so this isn't the first and won't be the last.

CAFE attempts to control fuel consumption by regulating the fleet average fuel economy of a carmaker. CAFE says "all the cars you sell this year have to average out to X". Notice that it does not regulate the fuel economy of individual cars. And it does nothing to regulate consumer behavior--only car makers.

So what are the effects of CAFE? Automakers are forced to make small, cheap, fuel efficient cars whether anyone wants to buy them or not. These have to be cheap because that is the only way that they can be sold in volume. It is a cliche, and it is true, that the American automakers can not make a profit on small cars. To offset the incentives required to sell the small cars that Americans don't want, automakers increase profit margins on SUVs and other larger products. Basically, the large cars and light trucks are subsidizing the small ones.

Automakers can play some tricks to duck under CAFE. For example, the Chrysler PT Cruiser, which is based on the Dodge Neon platform, is classified as a "truck", and therefore lowers DaimlerChrysler's truck fuel economy number. Another trick is the Flex Fuel program, which gives automakers CAFE credits, whether people actually use ethanol or not.

The stated purpose of CAFE is to reduce gasoline consumption. There are much better ways to do this, which would be direct and effective. And honest.

First, gas taxes could be raised. Consumers will choose more fuel efficient vehicles out of economic necessity. To protect farmers (which may be America's most favored class of businessmen) and other commercial users, a business fuel tax deduction could be implemented.

Many people hate this solution, but because it will regulate consumer behavior. But at the same time, most people say they want CAFE to increase, and that the carmakers aren't doing enough to produce fuel efficient vehicles. Meanwhile, consumers demand more power, midsize sedans push 250HP, and even minivans now sprint 0-60mph in under 8s. Hybrids? Sure, but they have to perform as well as IC only cars, and we don't want to spend $4,000 extra for them.

Another way to increase fuel economy would be to write the rules to regulate it more directly, on a per-vehicle basis, rather than as a fleet average. For example, a rule could state that passenger cars with interior volume between 100 and 120 ft^3 and weighing between 3000lbs and 4000lbs must have an EPA average fuel economy of 29MPG, or a gas guzzler tax of $1000 would be levied. The rules could be subdivided for every vehicle class and weight range. The NHTSA recently moved in this direction, but not entirely.

6 comments:

blogdollar1 said...
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ericgp said...

I wrote about handling this issue as well on my blog just a couple of weeks ago.

Getting the American consumer to buy with a more concerned/intelligent mindset is like trying to herd cats, however legislating such actions is a catch 22 because then you get people saying that you're limiting their choice which is construed with being "un-american". And as such, the solution i proposed makes the most sense, tax the car based upon engine displacement as is done in Greece, Maylasia and other nations of the world. The cars are still available, no one is saying that you can't buy it, but if you feel you "need" to havea 5.7 litre engined vehicle, you're going to have to pay the piper his due to offset the ills that vehicle is responsible for, including its strain on petrol prices.

E

Anonymous said...

What's more ridiculous about PT Cruiser and CAFE is that the Cruiser is categorized as a "truck" for CAFE but as a "car" for NHTSA/DOT requirements. Farce indeed.

automotive breath said...

It appears that the automakers assume that the people don't realize what is being done. GM builds an amazingly efficient engine for the Corvette, powerful yet fuel efficient. Using the same foundation they build an amazingly inefficient engine for the 6.0L Truck. I realize the Corvette has advantages like aerodynamics and power to weight ratio but the difference is unjustified. Especially when you consider that any above average gear head can take the production Truck engine and with little time and money turn it into a powerful efficient wonder. I have a good friend that owns two Trucks, one a 2005 6.0L GM the other a late eighties Chevy. Lately with the gas prices on the rise the 2005 stays parked and the carbureted antique technology goes to work. Why you ask? Because the modified dinosaur is more efficient and cost less to drive! Are we not supposed to notice?

automotive breath said...
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Geotpf said...

I don't like taxing by displacement-displacement does not neccessarily follow with MPG. Maybe taxing by MPG instead would be logical. Increasing the fuel tax is the simpliest solution, but would be political suicide, so it's not going to happen.