While the federal government's proposed new Corporate Average Fuel Efficiency (CAFE) standards might help U.S. automakers, especially General Motors and its Lordstown complex, consumers and environmentalists should not expect the predicted results, nor should anybody feel as though the standards are even necessary.
The U.S. EPA and the National Highway Traffic Safety Administration created the new rules on light duty passenger cars and light trucks for model years 2017 through 2025. The new standards are for all those vehicles combined to average 54.5 mpg.
Today, the vehicles average 33 mpg.
The emissions standards were to be announced Friday, but because of Republican opposition they have been briefly delayed. Republicans claim the standards would unfairly hurt foreign automakers against their American rivals.
That's because a separate category for light trucks, exemptions for SUVs to be included as light trucks, and loopholes that allow vehicles such as the Chrysler PT Cruiser to be called trucks, means that popular SUVs that favor American automakers will not have to undergo substantial fuel efficiency improvements.
Considering how dependent the Mahoning Valley economy is on the 4,500 GM employees in Lordstown and other auto industry jobs, that's not such a bad thing.
The genesis behind CAFE standards dates back to the 1973 Arab OPEC oil embargo. Two years later, Congress passed the Energy Policy and Conservation Act which created the first CAFE standards. They required manufacturers to build increasingly more fuel efficient light duty vehicles.
Separate light duty auto and light truck fleet CAFE standards were passed in 1979. The government periodically revises the standards. Here is the potential misinformation regarding the next revision:
Some analysts say that the proclaimed fleet-wide average CAFE standard of 54.5 mpg is flawed. Subcompact cars, hybrid electric vehicles and plug-in hybrid electric vehicles would have the greatest improvements in efficiency. However, the cost would jack up the price of the electric models by approximately $10,000 each and require battery pack replacement for $5,000 to $10,000 each during their life spans. That will steer buyers away from the electric models to vehicles that won't have such large efficiency improvements. The analysts predict that the new CAFE standard will only reach about 46.5 mpg.
Since the expected standard was determined in simulated, laboratory settings, some analysts have reported that the actual fuel efficiency will reach only 40.4 mpg when actual city and highway road use is calculated.
The government data determined that consumers would save $8,200 over the life of a vehicle. However, it used 20 years as the life of a vehicle, 1-1/2 to 2 times the actual average life of a vehicle.
When the government projects cutting in half the U.S. importation of foreign oil, it looks at the CAFE standards in a vacuum. It does not consider population growth, increases in the number of vehicles and that people may drive more as fuel efficiency and the economy improve.
As for the federal government forcing CAFE standards in the first place, the free market should determine the products. In this case, nearly every auto manufacturer in the world eagerly embraced the government's proposed standards because the market was already dictating this level of fuel efficiency. No government edict was necessary.
If the government really wanted to get serious about fuel efficiency, reducing the nation's dependence on foreign oil and cutting greenhouse emissions, it would focus on incentives that promote natural gas-powered vehicles. Then again, if the government steers clear, the market likely will take us in that direction anyway.