Mark H. – The consumer welfare issue is a good point. Companies should offer what consumers ‘want’. Or at least what we’re told we want. (As someone who doesn’t want a big SUV, it’s clear that ’society’ does a lot to tell me otherwise). But giving the people only what they want, and not what they need, is not a sustainable strategy (as they have discovered). The AAI should be the leaders in car technology and should constantly look at the ‘horizon’ to see what new ‘thing’ will improve their cars. But they are not geared up for that and consequently it will take several very expensive years for them to catch up. They were going down the “bigger is better” road, while the rest of the industry was going down the “efficiency” road. As a business, they deserve to fail. They failed to identify the trends. As consumers, it’s hard for us to see trends on a global perspective. But as a world industry, it is their job.

In regards to your last comment. You, unintentionally, make part of my point perfectly. American cars during that time were pretty bad. Meanwhile, Honda produced the Civic and Accord. The AAI makes claims that certain things can’t be done, while other companies are actually doing them. Where is that American “can-do” attitude? Where is that American ingenuity we like to brag about so much? It seems the AAI spends so much time trying to shoot down efficiency standards instead of meeting the challenge of making an efficient, powerful, safe car that people want to buy. I think this is ultimately the reason the CAFE rules were increased. So as to push the AAI to meet this challenge.

First, any cost-benefit analysis is problematical, especially for a number of independent variables and economic conditions that are 6 or 7 years in the future. Moreover, many of these variables are very uncertain in the present, and open to dispute (e.g. carbon costs, pollution costs, military costs). Imagine making a private investiment proposal (which requires due diligence and robust numbers) with such a methodology?

Second, I am leery of any “study” of 1000 pages that speaks to “social benefits and costs” ignores “consumer welfare” (a term used once in the 1000 pages). When consumer preferences are distorted by mandates, even if such preferences are not important to the government planners, then it is a welfare loss. For example, Obama has touted his program as ’saving money’ for the consumer, ignoring that consumers chose (in the 1990s) to increase horsepower, comfort, utility, and amentities over fuel economy. If, in 2016, the consumer preferences are not equal to the government classes and mandates, then that is a welfare loss. Is that basic economic concept reflected in the study?

Third, TB=TC is “wrong”. If USA Corp spent 2 million, to produce 4 million in revenue then that is an efficient use of resources (a net wealth additon to GDP of 2 million). If USA corporation spends 5 million to produce 5 million in revenue it produces nothing – and suffers opportunity costs in that the economy could have spent the same 5 million (privately or publically) to produce a greater return. That is inefficient.

Moreover, when dealing with uncertainty, no investor would risk hard costs for uncertain (and difficult to measure benefits) that merely break even.

Last, experience with past studies and polices (CAFE standards of the 70s) show they are highly dubious for long range social planning. The “economy” cars produced between 76 and 82 were some of the worst made in American automobile history – underpowered, difficult to repair, high maintenance, etc. Yet, I am sure such CAFE standards also “promised” energy independence(etc).

Basically the direct fuel injection uses a fuel injector that is located in the cylinder head, usually adjacent to the spark plug. The intake track is ‘dry’ all the way into the cylinder. This allows some really interesting valve timing (and even lean burn capabilities if the fuel quality is consistent enough). By opening an intake valve sooner (while the exhaust valve is open and the piston is returning to top dead center on the exhaust stroke) you can reduce emissions.

BMW believes they receive about a 15% increase in fuel mileage based on an engine w/o DFI and of similar power ratings. By coupling the DFI with low pressure turbocharging (less than 15 psi of boost) you can further increase performance (or reduce engine size).

It’s pretty slick technology – and here’s a wiki link for those insomniacs in the group: http://en.wikipedia.org/wiki/Gasoline_direct_injection