Should more fuel efficient vehicles be required by

law?

Should more fuel efficient vehicles be required by

law?

By Nicholas LuebkerBy Nicholas Luebker

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The Fuel ProblemThe 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)

• 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 in

Average MpgAspire ~374WD Explorer ~ 15

For every 1 Aspire sold, could sell 2.1 Explorers and still achieve an avg 22 mpgExplorer also has double the CO2 emissions. QuickTime™ and a

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

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…

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Safety Concern Not Entirely Valid 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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are needed to see this picture.http://www.bridger.us/2002/12/16/CrashTestingMINICooperVsFordF150

Will making vehicles more fuel efficient cost consumers?

Will making vehicles more fuel efficient cost consumers? Cheap Ideas:

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.

Cheap Ideas: 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?

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?

What about increasing the gasoline tax to get people to buy more fuel

efficient cars? Would probably work, but with ill effectsWould probably work, but with ill effects Gasoline is a very inelastic commodityGasoline is a very inelastic commodity

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

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

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

Economy is heavily reliant on low gasoline pricesEconomy is heavily reliant on low gasoline prices Fast price increases could induce a recession.Fast price increases could induce a recession. Gradual price increases could induce inflation.Gradual price increases could induce inflation.

Unlikely that a large enough price hike would pass through legislation.Unlikely that a large enough price hike would pass through legislation. Slower to require higher vehicle fuel efficiencies, but easier to pass.Slower to require higher vehicle fuel efficiencies, but easier to pass.

Would probably work, but with ill effectsWould probably work, but with ill effects Gasoline is a very inelastic commodityGasoline is a very inelastic commodity

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

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

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

Economy is heavily reliant on low gasoline pricesEconomy is heavily reliant on low gasoline prices Fast price increases could induce a recession.Fast price increases could induce a recession. Gradual price increases could induce inflation.Gradual price increases could induce inflation.

Unlikely that a large enough price hike would pass through legislation.Unlikely that a large enough price hike would pass through legislation. Slower to require higher vehicle fuel efficiencies, but easier to pass.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.

» “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?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/emissionsindividual.html)

– Germany ~ 10 tons/year– UK ~ 9 tons/year– China ~ 2.5 tons/year

• 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/emissionsindividual.html)

– Germany ~ 10 tons/year– UK ~ 9 tons/year– China ~ 2.5 tons/year

Too Little Too Late?Too Little Too Late? Will increasing fuel efficiency Will increasing fuel efficiency

requirements impede global requirements impede global warming?warming? ~25% of U.S. fleet is ~25% of U.S. fleet is

composed of SUVscomposed of SUVs Only about 1% of U.S. Only about 1% of U.S.

fleet turned over every fleet turned over every year.year.

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

Changes aren’t required Changes aren’t required until 2011.until 2011.

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Overall RecapOverall Recap The automotive industry’s argument that improving mileage The automotive industry’s argument that improving mileage

would compromise safety is untrue.would compromise safety is untrue.

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

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

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

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

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

BibliographyBibliography

““Crash Course: How U.S. Shifted Gears to Find Small Cars Can Be Safe, 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.1Too”. Wall Street Journal. New York, N.Y.: Sep 26, 2005. pg. A.1““Get Real”. Petroleum Economist. London: June 2005. pg. 1Get Real”. Petroleum Economist. London: June 2005. pg. 1““Getting More Miles to the Gallon -Fast” Business Week 9/26/2005. Issue Getting More Miles to the Gallon -Fast” Business Week 9/26/2005. Issue 3952, p40-41.3952, p40-41.http://www.fueleconomy.gov/feg/which_tested.shtmlhttp://www.fueleconomy.gov/feg/which_tested.shtmlwww.epa.gov, click global warming linkwww.epa.gov, click global warming linkhttp://www.nhtsa.dot.gov/portal/site/nhtsa/http://www.nhtsa.dot.gov/portal/site/nhtsa/menuitem.d0b5a45b55bfbe582f57529cdba046a0/ (CAFE regulations)menuitem.d0b5a45b55bfbe582f57529cdba046a0/ (CAFE regulations)

http://www.bridger.us/2002/12/16/CrashTestingMINICooperVsFordF150http://www.bridger.us/2002/12/16/CrashTestingMINICooperVsFordF150 http://www.csmonitor.com/2005/0519/p14s01-sten.htmhttp://www.csmonitor.com/2005/0519/p14s01-sten.htm ““Another look at U.S. passenger vehicle use and the 'rebound' effect from 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) improved fuel efficiency” The Energy Journal Oct 1993, v14, n4, p99(12)