Understanding the President’s CAFE announcement

Understanding the President’s CAFE announcement

(Editorial note: I was doing so well moving to shorter posts. I fail miserably in achieving that goal here. I went the comprehensive route instead. I promise to return to shorter posts in the future. Buckle up – this is a long ride. I hope you find it’s worth it.)

(Update: There’s an important correction in #3 below. The estimated job loss for the option I think most closely approximates the Administration’s proposal should be about 50,000 over five years, rather than about 150,000 over five years. I apologize for the error.)

There is not yet much data available on the President’s CAFE announcement. Luckily, we have a huge base of analysis that the National Highway Traffic Safety Administration (NHTSA) did in 2008 that allows us to infer a lot from what was announced. Here are the specific data points we have from the President’s announcement:

  • The average fuel economy standard will be 35.5 mpg in 2016. That’s a weighted average of all cars and light trucks sold in the U.S.
  • Assuming that the Wall Street Journal’s reporting is accurate, they would require cars to hit 39 mpg by 2016, and light trucks to hit 30 mpg by 2016.

These fuel standards are the implementation of a law proposed by President Bush in January 2007, and passed by (a Democratic majority) Congress and signed by President Bush in December, 2007. The Bush Administration developed rules to implement the law and brought them right up to the goal line, but did not finalize them before the end of the Administration.The Obama Administration has now significantly modified the Bush rules.

Technically the Administration is today announcing that they will release a new proposed rule. While the news coverage makes it sound like this is a done deal, this is the beginning of a regulatory process, not the end. Still, the starting point is extremely important.

In developing the Bush proposal, NHTSA developed six options. I will show you four of those. Conveniently, what we know about President Obama’s proposal lines up almost perfectly with one of those options. This allows us to use NHTSA analysis of this option to make some initial estimates of the effects of the President’s new proposal. As always, you can click on the graph to see a larger version.

CAFE comparison

This graph shows the fuel economy requirements, in miles per gallon (mpg), for a nationwide fleet average. In actuality there will be two standards, one for cars and one for light trucks (SUVs are light trucks). It gets even more complex than that, because the standard adjusts for vehicle footprint (the shadow made by the vehicle when the sun is directly overhead). This incorporates an element of vehicle size in the requirement as a proxy for safety. If everyone just moved to tiny little vehicles, we would get much better fuel economy, but we would also have more highway fatalities. So the NHTSA methodology balances fuel efficiency and safety. The “S” in NHTSA stands for Safety. For reasons that I fail to understand, safety sometimes gets taken for granted in the Beltway policy debate relative to fuel efficiency, environmental benefits, and economic costs.

The four lines are from NHTSA’s analysis for the rule that we (the Bush Administration) did not quite finalize:

  • Green is the baseline – what the standard would be if the Administration did nothing.
  • Yellow shows the Bush proposal. This line is the result of a methodology that tries to maximize net societal benefits (= total societal benefits minus total societal costs).
  • Blue shows a different methodology, in which the standard is raised until total societal costs equal total societal benefits, so net societal benefits equals zero. This is the highest you can go before the model says that the rule is making society (in the aggregate) worse off, taking into account all costs and benefits. This line and option are labeled TC=TB.
  • The red line is the extreme upper end of what NHTSA thinks can be done if all manufacturers use every fuel economy technology available, without regard for cost. No one suggests it is a viable policy option, but it is a useful reference.

The purple dot is what we know about the Obama proposal. We only have a 2016 figure, which is conveniently right in line with the TC=TB option analyzed by NHTSA last year. So I’m going to make an assumption that the Obama proposal roughly matches this blue line in the intervening years. When I compare the separate numbers we have from the Administration for cars and light trucks with the six NHTSA options, they line up in a similar fashion with the TC=TB option, reinforcing my view that this is a solid assumption. This means I will use the NHTSA estimates of the TC=TB blue line option as a proxy for the effects of the Obama proposal. Technically, someone can quibble that it’s not precisely identical, but until I see data to the contrary, that’s just quibbling.

This means the Administration can dismiss the entire analysis that follows by saying their proposal differs from the TC=TB option. I cannot disprove such a claim if they make it, but my response would be, “How different? Show me.” I feel quite comfortable using this option for my own analysis, and will do so until presented with an alternate set of numbers by the Administration. (I helped coordinate much of this policy process for President Bush in 2007 and 2008.)

Here are ten things you might want to know about President Obama’s new fuel economy proposal. I will reference some tables and analysis from the NHTSA analysis done for the near-final Bush rule. This is a long list, so this summary will let you skip around as you like:

  1. It’s aggressive.
  2. Rather than maximizing net societal benefits, this proposal raises the standard until (total societal benefits = total societal costs), meaning the net benefits to society are roughly zero. This is not an invalid framework for making a policy decision, but it is unusual. It represents a different value choice.
  3. NHTSA estimated that a similar option would cost almost 150,000 50,000 U.S. auto manufacturing jobs over five years.
  4. NHTSA guesses that under a similar option, manufacturers will make huge increases in dual clutches or automated manual transmissions, a big increase in hybrids, and medium-sized increases in diesel engines, downsizing engines, and turbocharging.
  5. It will have a trivial effect on global climate change.
  6. The national standard = the California standard (roughly).
  7. The auto manufacturers got rolled by the Governator.
  8. Granting the California waiver means California has leverage for next time.
  9. In Washington, EPA is now in the driver’s seat, not NHTSA.
  10. Today’s action will accelerate EPA’s regulation of greenhouse gas emissions from stationary sources. While Congress is futzing around on a climate change bill, EPA is getting ready to bring their “PSD” monster to your community soon.

1. It’s aggressive.

You can see this from the graph above. Within the Bush Administration we considered a range of options that would raise average fuel economy by between 1% per year and 4% per year. Our near-final rule would have raised this combined car/truck average about 4.7% per year from 2010 through 2015. My math shows that the Obama proposal would raise this same measure about 5.8% per year through 2016. That’s really aggressive. (In this post all years are Model Years for vehicles.)

Note: The press is reporting that Team Obama says they’re doing about +5% per year. They’re measuring starting in 2011.I use 2010 so I can compare Bush and Obama.

2. Rather than maximizing net societal benefits, this proposal raises the standard until (total societal benefits = total societal costs), meaning the net benefits to society are roughly zero. This is not an invalid framework for making a policy decision, but it is unusual. It represents a different value choice.

The NHTSA analyses look at a range of benefits to society, including economic and national security benefits from using less oil, health and environmental benefits from less pollution, and environmental benefits from fewer greeenhouse gas emissions (this is new). They also consider the costs, primarily from requiring more fuel-saving technologies to be included by manufacturers. NHTSA assumes these increased costs are passed on to consumers. More expensive cars mean that fewer cars are sold, which means that fewer auto workers are needed. NHTSA calculates economic costs to car buyers and to society as a whole, and job losses among U.S. auto workers.

A standard rule-making methodology is to look at all the costs to society, and all the benefits, and make them comparable (by converting them into dollar equivalents). You then ask, What policy will maximize the net benefit to society as a whole, taking into account all costs and benefits? This is the approach NHTSA used in building the yellow line.

The blue line represents a different approach. (See the TC=TB line on Table VII-6 on page 613 of the NHTSA analysis.) You take the same analysis of costs and benefits, but instead ask, How much can we increase fuel economy before the costs to society as a whole outweigh the benefits to society as a whole? This results (in theory) in no net benefit (and no net cost) to society, but allows you to maximize the fuel economy subject to this constraint.

The Obama Administration’s numbers are in line with this latter approach. It’s not wrong. The Obama approach is quite different. It represents a different value choice, in which a higher priority is placed on the benefits of increased fuel economy, and lower priorities are placed on increased costs to car buyers and job loss in the auto industry.

3. NHTSA estimated that a similar option would cost almost 150,000 50,000 U.S. auto manufacturing jobs over five years.

Update: I was sloppy and missed the note on page 585 which said that table VII-1 shows cumulative job losses. Thus, the total over five years is 48,847 (which I’ll write as “almost 50,000″), and not the 148,340 I earlier calculated. I apologize for the error, and thank James Kwak for catching my mistake.

See Table VII-1 on page 586 of the NHTSA analysis. NHTSA estimated that the TC=TB option, which I’m using as a proxy for the Obama plan, would result in the following job losses among U.S. auto workers:

MY 2011

MY 2012

MY 2013

MY 2014

MY 2015

5-yr total

8,232

24,610

30,545

36,106

48,847

148,340

Compared to the Bush draft final rule, this is 118,000 37,000 more jobs lost.

Since I know this table is inflammatory, I will anticipate some of the responses:

  • This is an estimate for the job loss from the TC=TB option analyzed by NHTSA in 2007. This is the closest proxy for the Obama rule, and I’m convinced it’s a good proxy until someone demonstrates otherwise. But technically, it’s not a job loss estimate for the Obama proposal.
  • This estimate was done in a different economic environment (late 2008), and before the U.S. government owned 1.5 major U.S. auto manufacturers. My guess, however, is that these changed conditions should push the estimated job loss up from the above estimate, rather than down.
  • There’s a false precision in the above table. It’s just what NHTSA’s model spits out. I draw this conclusion: The Obama plan will increase costs enough to further suppress demand for new cars and trucks. This will cause significant job loss, and probably in the 150K 40K range over 5-ish years, with a fairly wide error band. I don’t put any weight on the precise annual estimates.

4. NHTSA guesses that under a similar option, manufacturers will make huge increases in dual clutches or automated manual transmissions, a big increase in hybrids, and medium-sized increases in diesel engines, downsizing engines, and dialing back turbocharging.

NHTSA does a detailed analysis of the costs of new technologies to improve fuel efficiencies, and they talk to the manufacturers and examine their product plans. They then guess what technology changes the manufacturers might make to comply with a higher fuel efficiency standard. Here are their estimates for increased penetration in MY 2015 for various technologies under the TC=TB / Obama proxy option. This is from Table VII-7:

Baseline

TC = TB

(Obama proxy)

Increased penetration

Dual clutch or Automated manual transmission

8%

60%

+52%

Hybrid electric vehicles

0%

24%

+24%

Turbocharging & engine downsizing

11%

24%

+13%

Diesel engines

0%

12%

+12%

Stoichometric gasoline direct injection

30%

39%

+9%

It would be great it if a commenter could educate us a little on these technologies.

5. The proposal will have a trivial effect on global climate change.

I always chuckle when elected officials boast about the number of tons of carbon that a policy proposal will not inject into the atmosphere. The White House is doing so today, emphasizing “a reduction of approximately 900 million metric tons in greenhouse gas emissions.” That sounds like a a lot, but who the heck knows?

We are fortunate that NHTSA analyzed the climate effects of all six options in terms more amenable to our comprehension.Here are their estimates for baseline, the Bush option, and the TC=TB (Obama proxy) option. This data is from Table VII-12 in the NHTSA analysis:

CO2 concentration (ppm)

Global mean surface temperature increase (deg C)

Sea-level rise (cm)

2030

2060

2100

2030

2060

2100

2030

2060

2100

Baseline

455.5

573.7

717.2

0.874

1.944

2.959

7.99

19.30

37.10

Bush

455.4

573.2

716.2

0.873

1.942

2.955

7.99

19.28

37.06

TC=TB(Obama proxy)

455.4

573.0

715.6

0.873

1.941

2.952

7.99

19.27

37.04

OK, this still doesn’t mean a lot to me. Let’s take some more data from the same NHTSA table, and see the change from the baseline of not raising fuel economy standards at all. Now we can see the direct climate benefits of these proposals:

CO2 concentration (ppm)

Global mean surface temperature increase (deg C)

Sea-level rise (cm)

2030

2060

2100

2030

2060

2100

2030

2060

2100

Bush

.1

-.5

-1.0

-.001

-.002

-.004

0

-.02

-.04

TC=TB (Obama proxy)

.1

-.7

-1.6

-.001

-.003

-.007

0

-.03

-.06

Ah ha! This is useful information. As you can see, the effects are trivially small:

  • Both options would reduce the global mean surface temperature by one-thousandth of one degree Celsius by 2030. The Obama option would reduce the global temperature by seven thousandths of a degree Celsius by the end of this century.
  • The effects on sea level are too small to measure by 2030. By 2100, the Obama proposal (technically, the TC=TB proxy) would reduce the sea-level rise by six hundredths of a centimeter. That’s 0.6 millimeters.

Hmm. That’s not too much, especially when you consider this is the policy that will affect the #2 source of greenhouse gas emissions in our economy. (#1 is power production.)

In anticipation of some pounding by the climate change crowd:

  • These are NHTSA’s calculations using the MAGICC model, not mine. I’m just reporting their results.
  • If you have different estimates, I’m happy to consider posting them for comparison. I am less open to arguments about why the MAGICC model is wrong, or why NHTSA’s inputs into that model are wrong. I don’t know the model well enough to debate the points.

Again, the point is not the precise estimates. It’s the order of magnitude. Please don’t tell me this model is flawed. If you disagree with these calculations or this model, give me some numbers you think are better, and that lead to a different conclusion.

Imagine if the President had instead said today, “This new fuel economy and greenhouse gas emissions rule will slow the increase in future global temperature seven thousandths of a degree Celsius by the end of this century, and it means the sea will rise six tenths of a millimeter less than it otherwise would over the same timeframe.” It loses some of its punch, no?

Similarly, when the Supreme Court pushed in Massachusetts v. EPA toward regulating greenhouse gases from new cars and trucks to protect the public health and welfare from “endangerment,” I wonder if they understood that an aggressive proposal would reduce the future sea level increase by 0.6 mm?

6. The national standard = the California standard (roughly).

Technically, the Administration will be setting two standards: one for fuel economy, and another for CO2 emissions from tailpipes. In theory, the two will (basically) match up, hand-waving past a lot of second-order things like flexible fuel vehicle credits and new vehicle air conditioning standards.

During the Bush Administration there was a tussle between California and the federal government. California wanted a waiver to be able to set their own standards for CO2 emissions from cars and light trucks. Another 13 or so States wanted to follow a new California standard. The proposed California standard was significantly more aggressive than anything discussed in Washington.

We argued that having multiple emissions standards would be inefficient. Auto manufacturers would then have either to make cars to meet two different standards, or just dial up the fuel efficiency on all vehicles, so that the California standard would become the de facto national standard.

The President resolved this today by (basically) setting one national standard for fuel economy, and a roughly parallel standard for CO2 tailpipe emissions, that approximate the higher California standard. California is happy that they got their higher numbers. The auto manufacturers avoid the inefficiencies of multiple standards, while having to eat (actually, pass on to customers) the higher costs of making even more fuel efficient vehicles.

7. The auto manufacturers got rolled by the Governator.

The heads of several auto manufacturing firms stood with the President today and smiled. They lost this fight. They pushed incredibly hard during the 2007 legislative battle, and during the subsequent regulatory process, for a fuel economy standard that rose about 2% per year. They dug in hard against a growth rate greater than 3% per year, and told us that 4% per year would destroy them. Our near-final rule averaged about 4.7% per year. The Obama rule averages about 5.8% per year. Either way, this is way, way more than the auto manufacturers wanted.

They had no leverage, of course, and an outcome similar to this was predictable after the November election. So they’re putting the best face they can on it. Interestingly, the press statement from Ford CEO Alan Mulally does not say that he endorses the specific numbers proposed by the President, but instead (emphasis is mine):

Today’s announcement signals the achievement of a crucial milestone – an agreement in principle on a national program for increased fuel economy and reduced greenhouse gases.

This national program will allow us to move forward toward final regulations that all stakeholders can support. We salute the cooperative efforts of the Obama Administration, the state of California, environmental groups and others that played a constructive role in this process.

The framework of the national program will give us greater clarity, certainty and flexibility to achieve the nation’s goals. We will continue to work with the federal agencies to finalize the standards that we are committed to meeting.

Tip for reporters: Ask Ford (and the other manufacturers) if they support the specific numbers proposed by the President today. The statement above is trying to leave Ford wiggle room to argue for smaller numbers in the rulemaking process. If the auto manufacturers wiggle, then you have a repeat of the situation from last week’s health care announcement.

And of course, 1-2 of the U.S. auto manufacturers are now controlled by the U.S. government.

8. Granting the California waiver means California has leverage for next time.

As I understand it, the Administration is technically granting California its EPA waiver, and California has agreed not to invoke it for this process (MY 2011 – MY 2016). Assuming the waiver doesn’t get un-revoked (can it be?) by a future Administration, this means that next time around California will begin the process with the authority to set its own tailpipe emissions standard.

This means that, when we do this again in about five years, California holds all the cards. To quote the Governor in another context (wait for it), “Ill be back.” California will have leverage to set its own standard, which means they can again dictate the national standard. The Obama Administration has moved the primary decision-making locus for future vehicle fuel efficiency rules from Washington DC to Sacramento.

9. In Washington, EPA is now in the driver’s seat, not NHTSA.

The Administration has said there will be two rules. NHTSA will set a fuel economy rule, and EPA will set a tailpipe emissions rule. We know that EPA will always be more aggressive than NHTSA. This means that, to the extent Washington remains involved in future standards (see #8 above), the primary decision-maker becomes EPA rather than NHTSA, since auto manufacturers will have to comply with the more aggressive of the two. NHTSA does not become irrelevant, but the bureaucratic strength is definitely shifting.

This bureaucratic power shift suggests a higher priority will be placed in the future on environmental benefits, and a lower priority on economic costs and safety effects, as we see with today’s proposal.

10. Todays action will accelerate EPA’s regulation of greenhouse gas emissions from stationary sources.While Congress is futzing around on a climate change bill, EPA is getting ready to bring their “PSD” monster to your community soon.

EPA is in the midst of taking comments on an “endangerment finding” that is a huge deal in the climate change policy world. If the EPA Administrator finds that greenhouse gas emissions from new cars and trucks “endanger public health and welfare,” then it starts a regulatory process. It appears the President is prejudging the result of this regulatory comment process:  “the Department of Transportation and EPA will adopt the same rule.”

As a former colleague has taught me, a proposal to regulate greenhouse gases (under section 202 of the Clean Air Act) would greatly accelerate when greenhouse gases become “subject to regulation” under the Clean Air Act. This would trigger ramifications that reach far beyond cars and trucks. As early as this fall, greenhouse gases could become “regulated pollutants” under the Clean Air Act. Once something becomes a “regulated pollutant,” a whole bunch of other parts of the Clean Air Act kick in, and EPA is off to the races in regulating greenhouse gases from a much (much) wider range of sources, including power plants, hospitals, schools, manufacturers, and big stores.

One of the scariest elements of this is called the “Prevention of Significant Deterioration” permitting system. In effect, EPA could insert itself (or your State environmental agency) into most local planning and zoning processes. I will write more about this in the future. It terrifies me.

Thanks for making it to the finish line!

126 responses

  1. Bravo to you for publishing a lot of information in a cogent and understandable fashion. I have been preaching, in a series of lectures, many of your points for the past several years.

    Just to give a different slant and a little more info on some of the issues you raise:

    1- 95% of the heat trapped in the atmosphere is done is by the water vapor which is always present in almost a constant quantity. the remaining 5% is trapped by a vaiety of gasses including methane, nitrous oxide and carbon dioxide. Of the carbon dixide present, only 10% maximum is man made. So if the entire world stopped emitting any carbon dioxide, the heat trapping capacity of the atmosphere would decrease by about two tenths of one percent!!! Your term of “trivial effect” is an overstatement, but is the best word we have in our language to describe the absurdity of limiting carbon dioxide emissions from power plants and automotive products.

    2- The “all electric car” is the big deal in the news lately. It is supposed to reduce dependence on foreign oil ) which it could do, but also cut emissions . I have done the calculations to show that a car suitable for family use. eg, with a range and speed equivalent to a car with a ten gallon gas tank, would require a battery of the highest efficiency ever shown in a lab environment weighing 2700 pounds, and the electricity to charge it once would require burning about one ton of coal in a power plant somewhere. To recharge would require a minimum of four hours.

    All of the above is high school level physics and math, but our friends in DC obviously never got beyond ninth grade arithmetic.

  2. I don’t like that there are not statistical confidence intervals associated with any of it.

    It’s also not clear that TC=TB is the closest to Obama’s target. Both Bush and TC=TB tend to advance 1 or 2 mpg per year, and the estimates end a year short, with B=32 and TC/TB=35. If both were to go up 2 mpg, Obama’s estimate would be dead even between the 2 estimates.

    The most likely trend, would be TC=TB to rise 2mpg to 37mpg. The article’s arguments are predicated on the assumption that Obama’s 35.5 number is not significantly different than this projected 37 mpg #. In other words, you might as well say Obama is the same TC=TB, because what is 1.5 mpg?

    With this reasoning, and assuming B rose +2, you could rewrite the article, drawing exactly the opposite conclusions. That is, that Obama had essentially the same target that Bush’s line would predict, seeking maximal net benefits.

    If 1.5 is a small discreptancy, it could go in either direction. As was admitted, the study is 2 years old now, and economic conditions are radically different. On the one hand the article argues that government inefficiency portends more dire results; on the other, perhaps the massive layoffs and industry contraction reduce the need for future layoffs.

  3. Pingback: A Detailed Analysis Of The Obama Auto Mileage Plan | But Then What

  4. You leave out the reduced support of the petrodictators who are supporting our enemies. We will send less money overseas for oil and help the balance of payments.

  5. 2 things:

    First: “The Obama approach is quite different. It represents a different value choice, in which a higher priority is placed on the benefits of increased fuel economy, and lower priorities are placed on increased costs to car buyers and job loss in the auto industry.”

    This is an understatement. In the first approach, social benefit is the only valuable measure. CAFE is just a means to an end. In this approach, CAFE is an end unto itself. That is a massive (and IMO disturbing) change in thinking. I hope the voters realize that this will be the case here.

    Second: Do the NHTSA calculations take into consideration the effect of changed distribution of cars? Higher fuel efficiency standards will raise the price of large cars (i.e. SUVs, etc.) significantly more than the price of small cars. The result will be that more people will drive small cars and small cars have higher fatality rates. The net result will be increased death due to accidents.

    Great post. Thanks.

  6. The thing I find remarkable is that part of the Obama’s argument for doing this is to have a single national standard instead of separate state standards. Of course the only reason there is a separate California standard is because they reversed the previosu EPA ruling on it.

    In defense of their net benefits calculation, they could argue that they are trying to push innovation which was inadequately accounted for in the NHTSA analysis, or they are placing a higher value on the environmental benefit (which is justifiable under some studies).

    But great summary of the issues as always.

  7. Keith,

    Great analysis. Personally, I prefer the deeper more complete story.

    I think I should go out and buy a car now while they are cheap due to the recession and before they go up in price for the reasons you note.

    I’m wondering who the winners in all this are…the double clutch manufacturers? I’m buying on margin!

  8. Concerning the technologies you mention, I’m no automotive engineer (merely a DIY mechanic and car enthusiast), but here are some brief educational points:

    1. The dual clutch (automated manual) transmission is, essentially, a complicated computer-controlled manual transmission that would do away with the inherent power losses in traditional transmissions, particularly automatics. Existing automatic transmissions use transmission fluid to couple the engine to the gears — a viscous coupling — and it’s inherently lossy. That’s why people who like smaller engines prefer manual transmissions. Manual transmissions suffer from some power loss associated with decoupling the engine from the drivetrain during a shift (as does an automatic). Loss of power means wasted energy. Thus, the dual clutch transmission is seeking to reduce that loss. Of everything on the list, this is probably the one the industry is already moving toward, even without government intervention.

    2. Hybrid electric vehicles. We know what these are. I didn’t read the NHTSA analysis, but I still wonder what the long-term economic and environmental costs are of the battery technologies (and their scarce metals), plus the fact that these things make copper the new gold. And did I mention complexity (and the related maintenance cost)?

    3. Turbocharging and engine downsizing. Turbochargers simply use exhaust gases to drive a compressor to force more air into the piston engine’s cylinders. More air means greater power, which means you can extract capable power from a smaller engine. There’s a little lag in the power output, and engine performance overall changes from the normally aspirated (i.e., no turbo or super charger) behavior we’re used to. I’ve never like turbos on engines other than diesels, though, just because of the maintenance costs. The bearings in the turbocharger are subject to incredible heat (from the exhaust stream), and they simply wear out from it all. Then you get to pay for it…and it isn’t cheap. Plus, you’re also putting more stress on the engine itself by extracting more power from it. Again, this is a cost. (And I note that properly designed diesel engines are pretty robust, which is why turbos don’t bother me much there.)

    4. Diesel engines are a great idea. The Diesel cycle is inherently more efficient than the Otto cycle behind the vast majority of gas engines on the market. (Diesel engines ignite the fuel/air mixture by compressing it rather than with a spark from a spark plug.) However, the U.S. taxes diesel fuel at higher rates than gas (I guess to tap into that trucking market stream), which negates a lot of the advantages of higher fuel economy when the higher cost of the vehicle is taken into account. Diesel fuel also has its own pollution problems. (I often joke that diesel “fuel” is something of an insult to fuel.) The government is going to have to choose between lowering GHG or collecting more taxes on this one. Anecdotally, I rented an Opel Vectra (a GM product) a decade ago. It was equipped with a diesel engine (turbocharged), and absolutely rocked.

    5. The direct gas injection just requires more expensive components in the fuel delivery system, along with the computers to control it.

    Frankly, I think the most innovation we’ll see is in the area of diesel engines and engine downsizing. The former because they’re ALREADY more efficient, and VW shows the way with its 42 mpg diesel Jetta. As for engine downsizing, as much as I hate to say it, the horsepower wars have taken a lot of the gains in efficiency and used them not to increase fuel economy (by applying them to smaller engines) but to increase power output (by leaving the rest of the engine alone). My 1996 Camry had a 2.2l 4 cylinder engine that put out 120 hp. My 2000 Honda Accord had a similar sized 4-cylinder putting out 140 hp. My 2005 Mazda 6’s 2.3l 4-cylinder delivers about 160 hp. I REALLY like the Mazda’s power, and it gets the same, if not a bit better, gas mileage than the old Camry it replaced did. Imagine the gas mileage, though, if they’d have shot for 120 hp (which was enough to move the Camry around without difficulty, if not particularly inspiring) instead? And this discussion says nothing of the available 6-cylinder engines in these same cars. You’re going to see a lot more talk about “drivability” and less about power. Bummer. :(

    The final issue, though, is the unstated “performance gain”: weight reduction. As many others have said, this is the easy way to get fuel economy gains, but at the notable expense of safety. (Basic physics: Car A weighs 2000 pounds, Car B weighs 4000 pounds. In a head on collision at the same speed for each car, the smaller Car A absorbs TWICE the forces. Obama is powerless against Sir Isaac Newton.) I suspect there’ll be more outcry to reduce the size of the big vehicles on the road (the mega SUVs along with 18-wheelers) once it’s clear that driving a Yaris/Fit/Versa is something of a no-win situation against a vehicle weighing 3 times as much or more. In my youth, I never paid attention to stuff like that. Now, I don’t like driving a car that weighs under 3000 pounds or so, simply because they get demolished against something even the size of a large SUV. Forget an 18-wheeler.)

    So…there’s my take. I’m just an armchair guy. Those of you who know a lot more than I do, jump right in and fix my numbers and assertions.

  9. Keith,

    I plan to read through your post, and I appreciate the content you’ve been providing, but if I may…just a quibble re: “a Democrat majority”. I’m not a partisan on either side, but I cringe whenever I hear Democrat used as an adjective. It’s just so terribly awkward language (like saying a Jew man instead of a Jewish man) that it conveys an ugly pettiness that perhaps you don’t intend.

    I found it ironic that Michael Steele, in his grandiose announcement today about the future of the Republican Party, in which he stated emphatically that “there is a very important distinction I want to make here. We are going to take this president on with class. We are going to take this president on with dignity”, referred to “Democrat leaders”, the “Democrat President” (twice), the “Democrat Party” and “Democrat fraud”.

    Such gratuitously insulting, crude, petty — not to mention linguistically grating — language plays well with hyperpartisans of the right, but it’s pretty lame, makes one sound either very petty or very inarticulate, and detracts from whatever the speaker is saying.

    You put forth substantive, well-structured information and arguments. No sense detracting from it with that kind of silliness.

    Just my two cents.

  10. Great analysis. As always, it will be interesting to look back at how close your analysis was based on the final proposal once it gets released. (Assuming it does.)

    One part of this debate that I have not seen addressed is the resulting decrease in gas taxes that will be collected with the higher fuel economy. (In other words, since we don’t need to re-fuel as often, less gas tax is collected.) With a highway system that is already stressed for cash, I would like to see how we continue to fund the highway system as part of this debate since the two are so highly interrelated.

    This leads me to two questions:
    1. Do the models take this part of the equation into account?
    2. How do we make up for the decrease in tax revenue due to the higher standards? Do we increase the gas tax? Build more toll roads? Pay a tax per mile? Pull money from the general fund?

  11. re: Tim at 9:11

    There are already voluntary pilot programs underway in a couple of places in the US to track vehicle milage for tax purposes. Don’t remember if it was GPS or “black box” odometer based. The announced intent was to eventually shift to a milage based tax to address exactly the issue you mention.

    Of course, if all vehicle miles are taxed at the same rate, this reduces the incentive to buy a high MPG vehicles :)

    One could speculate that eventual GPS based milage taxes could be “fined tuned” to have increased rates based on time of day, location, etc. – e.g. higher taxes/mile in “congested” areas, for “too long” commutes, for milage above your weekly milage ration, etc.

  12. Regarding Mr Brooks distaste for the use of ‘democrat’ as an adjective as opposed to ‘democratic’. If republicans are in the ‘republican party’, why aren’t democrats in the ‘democrat party’?

    I can’t fathom why the word ‘democrat’ used by many conservatives is somehow a negative epithet. I’ve never heard a democrat shy from calling himself a democrat, so who’s being overly sensitive? And I’ve never heard a republican (except for the few apostates, Jim Jeffords, Arlen Specter, and Colin Powell) afraid to call himself a republican.

    Could it be there really is a belief among ‘democrats’ that by calling the party the ‘democratic party’ they are subtly implying the republican party is somehow not ‘democratic’. Perhaps it’s time for a reminder that, per none wiser than Ben Franklin, in response to a question after the Constitution was passed: ‘we have a republic, madame, if you can keep it.’ And as the pledge of allegiance goes ‘and the republic for which it stands’.

  13. Diesels are more efficient than gasoline engines because they can run higher compression ratios. Heat engines convert heat into mechanical work. The fuel air mixture is ignited at top dead center, liberating mucho heat, raising the pressure of the confined gases. The piston is pushed down and heat is converted to work. The conversion continues as long as the piston can go down. Sooner or later, the piston hits bottom and can go down no farther. When that happens the exhaust valve opens and the combustion gases, still white hot and loaded with energy, are wasted into the exhaust pipe.
    The ratio of cylinder volume at top dead center and at bottom dead center is the compression ratio. The higher the compression ratio, the more the piston can travel downwards and the more heat the engine can convert into work. Diesels have compression ratios around 15:1 to 20:1. Whereas gasoline engines run 8:1 to 10:1. In short diesels have double the compression ratio of gasoline engines, and enjoy greater efficiency, i.e. more of the heat is turned into work.
    Compression ratio in gasoline engines is limited by engine knock. The engine compression stroke is compressing a combustible mixture of gasoline and air. At compression ratios above 10:1 the mixture is likely to ignite before the piston reaches the top, or, when fired by the spark plug, explode rather than burning smoothly. It makes a distinctive ping ping ping noise easily heard by the driver. Higher octane gasoline reduces pinging but at higher cost.
    Diesels compress pure air, so the do not suffer from ping. No fuel, so no chance of premature ignition. So the compression ratio can be much higher. In a diesel the fuel is injected into the cylinder when the piston is at top dead center and the compressed air in the cylinder is hot enough to ignite the fuel. That’s why diesel don’t have spark plugs.
    The EPA has driven diesel cars off the US market thru tight emissions limits. Recently they have required refineries to reduce the sulfur content in diesel fuel to 300 parts per million. It is hoped that diesel cars will be able to pass the emission limits running on this “Ultra Low Sulfur Diesel” (ULSD)fuel. The conversion to ULSD fuel in underway and is expected to be complete sometime next year (2010)
    Switching from gasoline to diesel gives about a 25% boost in fuel economy, all things held equal such as car weight and engine power. If the current 25 mpg automotive fleet were all converted to diesel, it would raise the average fuel economy to 31.25 mpg. That’s still not Obama’s 35.5 mpg, but its better than half way there.

    • I believe that NHTSA considers that a “national security benefit of using less oil.” Please see the first paragraph of (2) above.

  14. Keith,
    A couple of things.
    First, I believe the turbocharging option is not a “dialing back (of) turbocharging”, but a combination of downsizing the engine and compensating with turbocharging. A previous commenter has pointed out some of the implications of this.
    Second, you nicely summarize how the cost-benefit analysis presented takes into account numerous factors, namely societal and consumer cost and benefits, including safety. However, it is worth your mentioning that the implied benefit of consumer choice is not captured in the model. That is, it is reasonable to assume that when a consumer buys a car that is less safe, less fuel efficient, and more expensive (e.g., a sportscar), they are demonstrating that the car provides some other benefit to them (e.g., fun, comfort, or status). In a supposedly free society it would be nice to remember that people can make choices regarding what is best for themselves, and not have the government make them for them.
    In addition, by discouraging cars that better reflect consumer choice (fun or comfortable), the government will have at least a marginal impact on the number of cars sold and/or the price they are able to sell at. I assume this is where the job loss comes in?

  15. Just a quick point regarding safety and vehicle mass –Malcolm Gladwell wrote an excellent piece regarding Safety vs. vehicle mass. If we accept as given that vehicle A and vehicle B are going to hit one another then the previously mentioned physics discussions apply. However smaller vehicles are better able to avoid a collision in the first place because they are more nimble( Try this test – drive a small car at high speed toward a traffic cone, then swerve to miss it in the last 10 feet . Then do the same with an SUV. The difference will be immediately obvious). Gladwell points to some impressive statistics that bear this out – the # of fatalities per accident is HIGHER for LARGE SUVs than for smaller cars. Since we know this cannot be because of physics, it must have to do with the handling characteristics of the vehicles.

  16. I’m not sure that this cost-benefit analysis is quite as sophisticated as you are inferring/intimating. On pg 58 of the linked PDF, it is stated that $0.30 was chosen as the value of the “externalities associated with the combined impacts of fuel consumption on greenhouse gas emissions and on world oil market conditions”. Also, someone commented above about the global political implications of less oil; the table on pg 31 shows that this was assigned a value of zero.

    No explanation is given for how they arrived at this estimate. The footnote is for NAS pp 4 and 85-86. I have no idea where this report is, but unless they are just citing a whole bunch of papers which have looked at this in detail, 2 pages is really not enough. Good enough for government work!

    • I think they (NHTSA) do take this into account. Their analysis is fairly sophisticated. You can see for yourself — I’ve linked to the analysis. (Warning: 5 MB PDF file.)

      Thanks for reading and contributing.

  17. Pingback: There go 150,000 jobs! | The Anchoress

  18. Much of the savings of greater efficiency may be eaten up by increased fuel taxes. The government (both state and federal) wants to keep the revenue from gasoline taxes increasing or at least the same. However, the fuel taxes are so much per gallon. Therefore, if the number of gallons purchased does down by a lot,they must make up the lost tax revenue someway. Either they increase the tax per gallon or they put a “surcharge” on the purchase of a fuel efficient car. I have also heard discussed a plan to replace the gas tax with a tax per mile driven.

  19. The energy content of the fuel is very important in fuel economy because taxes and regulations are based only on the volume of fuel. 1 Gal of gasoline =.89 diesel and 1.54 ethanol. For the same engine power and thermal efficiency, a diesel engine will get 75% better mpg than a spark ignition engine on ethanol. Measuring tail pipe emissions (BOTH C02 and H20) is independent of hydrocarbon fuel type.

  20. I, too, am at a loss to understand why Brooks objects to the term Democrat Party. Democrats belong to the Democrat Party; Libertarians belong to the Libertarian Party; Greens belong to the Green Party; Republicans belong to the Republican Party. Whigs -> Whig Party; Socialists -> Socialist Party; Communists -> Communist Party.

    On the other hand, what do you call someone who belongs to the Marijuana Party?

    http://en.wikipedia.org/wiki/United_States_Marijuana_Party

    • Brooks,

      Just a quibble with your quibble. He was perfectly correct in using the term Democrat rather than Democratic. It indicates a majority composed of democrats, rather than a majority determined through a democratic process, which is what ‘democratic majority’ implies. A ‘democratic majority’ could consist of either republicans or democrats, and as such it is unclear.

      Using a noun to limit or describe another is perfectly acceptable. If you had a majority of females, you would not say feminine majority, but you would use the noun, female, to limit the term majority.

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