Standards

It seems that the Obama administration will be introducing some tough (ish) new mileage standards for cars and light trucks — 42 mpg for cars and 26.2 mpg for light trucks by 2016. Kevin Drum is happy:

This is really important stuff.  Cap-and-trade is the centerpiece of the Waxman-Markey energy bill, and it’s a critical part of any global warming plan.  (Krugman’s column today strikes the right tone on Waxman-Markey, by the way.)  As important as it is, though, I think of it as sort of like a headwind, something that helps get all the ships moving in the right direction.  But that’s not enough.  There are plenty of other currents and eddies and storm systems that, individually, aren’t as important as pricing carbon, but put together are actually far more important.  Mileage standards for cars are one of them: pricing carbon will help motivate people to drive less and buy more efficient cars, but federal mileage standards will do it a lot faster and a lot more efficiently.  Waxman-Markey is no substitute.

Now, I support this move. It provides an incredibly strong incentive to automakers to work seriously on efficiency. Which is a good thing. At the same time, I have to say that among the potential policies out there for addressing fuel use and emissions, this is one of my least favorite.

Drum is wrong — this move will do nothing to reduce driving. On the contrary, if we assume that oil prices will rise again with economic recovery, an exogenous increase in vehicle efficiencies will lead to more driving than would have otherwise taken place. This will also do nothing to motivate people to buy more efficient cars, at least up until 2016, when folks buying new cars will be “motivated” to go efficient since all vehicles will need to meet the new standards.

To me, there are three big failures to this policy. One is that if we want people to buy more efficient new and used cars now and drive less, then we need them to believe that driving (and gas) will be getting more expensive very soon, and mileage standards are counterproductive on this count. Two is that if we want people to cut vehicle emissions quickly and efficiently, then we need to give them good alternatives, which will cost money, which this policy does not generate. And three, if we think that rising oil prices could pose an economic danger to the country, then we want people to begin preparing for them now, and this policy does nothing to encourage such preparations.

What I’d like, as most of you know, is a series of substantial increases in the gas tax, to begin taking effect in 2011. This would have the same effect on vehicle fleets, more or less, as mileage standards. It would also encourage people to drive less, and it would reduce emissions among drivers who choose to purchase used vehicles, and it would provide revenues to build cleaner transportation infrastructure, and it would encourage consumers to continue substituting away from petroleum, reducing the economic impact of any future oil spike.

So to me, this is better than nothing, but I’d much rather see someone in Washington do some political heavy lifting on a policy to make drivers pay more for gas.

Comments

  1. Doug says:

    I agree. CAFE is a weird program and strengthening it seems better than nothing, but close to nothing. I’ve always suspected CAFE is one of those programs that would never get created except as a vehicle for politicians to pretend the problem is not the voters’ fault and the solution not the voters’ cost. As you say, a gas tax would be both simpler and more direct so in all likelihood, more effective.

  2. “One is that if we want people to…drive less…”

    I thought the goal was to reduce carbon emissions. What does it matter if you do that completely by driving less, or by driving in more fuel-efficient cars, or some combination of the two?

    The other thing is that if we really want people to drive less, we’ve got to do the things that you, Matt, and others have been talking about for awhile now: provide more and better public transportation, and reduce artificial constraints on building in downtowns and near subway and light rail stops. People can reduce their driving only so much in the absence of viable alternatives.

  3. Anne says:

    Uh, excuse me, but what are we who live in rural areas supposed to do? Hitch up the horse and buggy? There are no buses, there are no trains, and there certainly aren’t any subways! But, my guess is that urban dwellers with big salaries will make the call with no regard for real world consequences.

  4. MS says:

    Totally agree that a gradually increasing gasoline tax (starting ASAP) PLUS a carbon tax would be a far superior solution in terms of efficiency and effectiveness.

    Unfortunately, too many Americans want all the gain and none of the pain.

    As for the complaint about the effect on rural residents, I can assure you that rural residents have been massively subsidized by urban residents for a very long time and in many ways.

    Just one example (there are many, many more):
    The cost to provide local phone service in parts of the Panhandle in Texas is about $1,000.00 per month per line, but the price for many decades has been about $4.00 per month per line.
    The cost to provide local phone service in the densest parts of Houston is under $5.00 per month per line, but those folks have been paying over $10.00 per month per line.

    In short, for many decades, lots and lots of city people (in Texas, at least) pay more than twice the cost of phone service so that a small number of rural folks get a city-folks-funded discount of over 99%.

    (If one wonders about the universal service fund dollars involved, those are also overwhelmingly paid by urban residents and then effectively received by rural residents.)

    Similar statistics (though perhaps not as startling) exist for electric utility service, internet access service, and many other “real world” services. Similar statistics apply for other costs/prices, too. Texas rural folks pay a tiny fraction of the property taxes paid by Texas urban folks, who regularly get to pay very large sums for the operation of rural school districts.

    It would be nice if rural residents would occasionally offer some gratitude for all the handouts they get from city dwellers.

  5. You say you want funding to build “cleaner transportation infrastructure.” What infrastructure do you have in mind. I fear you are thinking of U.S. public transit, which according to the DoE, uses approximately equivalent energy per passenger-mile as the average car does. I hope you’re not thinking of light rail combined with feeder diesel bus, as that tends to do worse than cars.

    (Not worse than Suvs and minivans, though.)

    The new fuel efficient cars that would get made under the standard would handily beat the buses and many of the trains. Electric cars would do even better. Small electric cars (we don’t see many ultrasmall cars in the USA though the rest of the world loves them) handily beat the transit systems.

  6. Peter Smith says:

    yep. Jevons Paradox. you gotta increase the gas tax to offset any increase in gas efficiency, else we lose.

  7. aaron says:

    You write that like reducing driving is a good thing.

  8. aaron says:

    Please exuse me while I vent.

    I think the effective increase in liquid energy supply will be beneficial to our economy in the medium term (for CAFE changes prior to the Obama’s) and won’t affect our long term shift toward more efficient and cleaner alternatives.

    However, I think a much cheaper and effective way to increase our efficiency and potential productivity would be an informational campaign to combat efforts to slow traffic and the popular misinformation on efficient driving habits.

    We’d save much more fuel by improving the efficiency of our existing fleet than we will by attrition. And do it faster too.

    Our population is getting old, slow, and lazy. What people need to remember is that slow does not equal efficient. (Fast can also be inefficient; when it’s sloppy and reckless.)

    Faster acceleration is not significantly less efficient than slow acceleration. In fact, it’s generally more efficient, even before considering that it prevents, and speeds the clearing of, congestion and bottlenecks. (research Brake Specific Fuel Consumption)

    A car engine typically produces power most efficiently at about 3200RPM. It most efficiently delivers power to the road at about 2100RPM. But, more importantly, increasing the power delivered doesn’t decrease efficiency much until higher RPM, closer to 4000RPM. Gas consumption is actually lower at higher load and engine speed than at the low engine load and slow engine speed of gradual acceleration.

    Engines deliver power best at two spots. At low RPM and very light loads, such as for maintaining speed, and at higher RPM delivering larger loads, such as for more rapid acceleration.

    And higher cruising speeds are actually more efficient up until aerodynamic factors dominate at about 55MPH . (see EPA Fuel Economy guide and MetroMPG.com post Speed kills: testing MPH vs. MPG in top gear )

    Some observations that should put things into perspective: Driving increased pretty steadily until leveling off in about 2005. It peaked in Oct 2007, before prices spiked in spring 08. Despite the flat trend in driving, our fuel consumption continued to increase. You read that right. Fuel economy declined starting around 2005, despite our improving fleet fuel economy rating and no big increase in the amount cars on the roads (prior to then, fuel economy improved despite the great popularity of trucks and SUVs). Fuel economy didn’t rebound until the gas price spike in 08 drove poor, stupid and slow drivers off the roads (Sorry about the pun. I didn’t mean for it. Though I must admit, I like puns.)

    So long as people believe slow is efficient, high gas prices will decrease our fuel efficiency and was our time. (Except when lack of an economy leave our roads empty and free flowing.)

    What I’m suggesting is not aggressive driving. Aggressive driving is defined as rapid acceleration and braking. What I’m suggesting is that people should drive with ambition, with purpose and attention. By looking a head, drivers can make adjustments to speed using the accelerator pedal rather than the brake. With electronically controlled fuel injection, when cars are moving they can keep the engine turning with little or no fuel. It’s actually the braking that wastes fuel, not the rate of acceleration.

    It not our desire for more power that has kept fuel economy from improving. It’s buying more power, but failing to make use of it.

    People need to act with purpose. It’s when we’re constrained from acting meanifully that ambition turns into agression or we turn to dangerous distractions like phone calls, texting, and day-dreaming.

    Fat, slow, poor, and stupid is no way to go through life, it’s now way to run an economy, and it’s no way to prevent global warming. It’s certainly no way to lessen the cost of global warming’s negative externalities.

    Thank you.

  9. bobby b says:

    “But handing out emission permits does, in effect, transfer wealth from taxpayers to industry . . . ” (Krugman’s article mentioned above).

    Not when it replaces a system where industry writes (and prices) its own permits, such as we have now. Deltas count more right now than absolutes, which is just another way of saying, don’t let the perfect . . . well, you know.

    ” . . . lots and lots of city people (in Texas, at least) pay more than twice the cost of phone service so that a small number of rural folks get a city-folks-funded discount of over 99%.”

    In my experience, this properly values rural vs. urban speech.