Common Tragedies

Thoughts on Environmental Economics

Unsurprising unpleasantries

Posted by Daniel Hall on April 25, 2008

I don’t want to throw too much cold water on my co-blogger’s enthusiasm for the NHTSA’s newly proposed CAFE schedule. But two things need correcting. The first is clerical; the other is substantive.

First, be very careful anytime you read quotes about percent changes in fuel efficiency. Due to America’s weird fascination with reporting fuel efficiency in miles per gallon, and also because of her citizens’ nigh universal numerical illiteracy, reported percentages are nearly always wrong. An obvious example comes courtesy of the Green Car Congress post Rich linked previously:

The 35 mpg target for 2020 represents a 31% increase above the 2007 new fleet average of 26.7 mpg.

Green Car Congress a great source for environmental and energy news and it is written by some very smart people. But this is just plain wrong.

The problem is that fuel efficiency should actually be measured in how much gas it takes to go a mile rather than in how many miles you can drive on a given amount of gas. To illustrate, your crappy old car that gets 26.7 mpg will require 3.75 gallons of gas to go 100 miles. Your shiny new 35 mpg car can go those 100 miles on 2.86 gallons of gas. This is better — but it is only 24% less fuel than your old car required, not 31% less.

The second — and much more important — point comes courtesy of Geoffrey Styles. He reminds us that the improvements in efficiency being proposed should not be compared to current regulation, but rather the world as it actually is (and will be):

Turning to CAFE, the proposed timetable for implementing the 35 mpg standard that was signed into law last December would raise the overall fuel economy of the new car fleet, including SUVs, to 27.8 mpg by the 2011 model year and to 31.6 mpg by 2015. … That sounds quite aggressive, until you realize that … based on the sales mix reflected in NHSTA’s January 2008 CAFE report, the combined 2007 new car fleet delivered an average of 27.2 mpg. With SUV sales having fallen back below 50% from their 2004 high of 53%, it’s a reasonable bet that the shifting sales mix alone would allow the fleet to achieve the 2011 goal without any changes in vehicle performance. In that context, the 2015 milestone goal of 31.6 mpg overall looks more like a 2% per year average improvement over the next seven model years, rather than the 4.5% cited by Secretary Peters.

Hmm, sounds like we are already basically at the 2011 standards right here in ol’ 2008. Wonder what could be causing that?

Of course whether you think it’s a bad thing that the new CAFE standards may not actually be much of a stretch relative to a counterfactual world without them depends largely on what you think of regulation in the first place.

But we should keep this in mind before we go too far praising either Congress or the NHTSA for their “courage”. If oil prices go where some people are predicting, we’ll probably look back and wonder why we ever thought about driving those 35 mpg gas guzzlers — or should I say 2.86 gallons-per-100-miles guzzlers — in the first place.

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One Response to “Unsurprising unpleasantries”

  1. Rich Sweeney said

    My only point was the pace of the policy not the level. NHTSA can only set the former and most observers, including the RFF transportation contingent I’m currently working with, thought that this would be backloaded, not frontloaded. Of course if the NHTSA thought that we were going to reach that standard anyways, as Daniel implies, then this might be a nice painless way to score some political points. Seems unlikely though, given the multi-billion dollar price tag that popped out of the Volpe model. This price is negatively correlated with time of implementation too, indicating that the NHTSA should get some recognition.

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