The main recommendation is to let the free market do its work. It is likely that gasoline prices will continue to rise over the next 20 years and as a result will encourage consumers to buy more efficient cars, drive less, use more public transportation, live closer to work, etc. Government intervention is required only to nurture the market for oil replacement. The last oil shock and the new economic realities will reduce MPG substantially over the next five years.
Do not increase gasoline tax. It will slow down the economy for years. Although it will reduce consumption in the short term, its effect will be limited because there are practically no public transportation alternatives.
It stands against the main principle that the energy policy should provide the U.S. with a competitive and strategic advantage. We need cheaper transportation fuel from other sources, not artificially expensive gasoline.
The “success” of the gasoline tax in Europe is mainly due to the well developed public transportation system (which will take us decades to develop) and the population density. The Europeans also have to drive, on average, half the number of children per family (it translates into fewer miles per family and into using smaller cars).
When the electric battery car volume increases and the bio-fuel industry can supply the growing fleet, we should consider a gasoline tax to speed up the retirement of old gasoline only cars. We could develop a scrap and replace program to speed up the retirement of old gas guzzlers.
Do not tax high cc engines. We do not need additional bureaucracy. The rising price of gas is already taking care of it. The auto industry will have to go into painful transition as high cc leased cars will be dumped at the end of the lease in favor of smaller cc models. The effect would be minimal. The richer could afford it and people who need larger engines for their work will suffer. Let the market work – MPG will drop dramatically in the next five years as result of the shift in consumer demand.
If taxes are to be considered, then feebates are probably a better alternative than a simple tax. Within a single class of vehicles, the less efficient cars are taxed and the more efficient cars receive a rebate. In theory it should be revenue neutral and will speed up the move to more efficient cars.
Moving additional volume of freight from trucks to trains. A special commission should be established to analyze the issue. Comparing to Europe, our rail potential is underutilized and we need to find a way to use it better (and as a result use less inefficient diesel trucks). The goal should be to freeze the trucks fleet at its current level and fulfill the projected growth in freight traffic with trains.
The commission should also discuss the electrifying of our railroads. In that context, it should consider the use of super fast passenger trains in major transportation corridors (like Boston-NY-Washington DC). We are decades behind the rest of the world in the implementation of electric and super fast passenger trains.
The current Corporate Average Fuel Economy (CAFE) regulation may not achieve its targets and could have undesirable side effects:
- The auto companies will produce more diesel cars. This is exactly what happened in Europe. The equivalent to our CAFE standards (+ diesel subsidies) forced the auto manufacturers to build more diesel cars at higher costs. Now, there is a shortage of diesel fuel and its price is as expensive as gasoline. It is the easiest way to achieve the targets:
- This will not only deepen our dependency on oil, but will also push the diesel price higher (because not all the oil can be converted to diesel).
- A diesel engine costs $1000-3000 more per car.
- We will need additional resources to produce diesel – most likely we will need to liquefy coal to meet demand.
- The improved miles per gallon will increase the number of cars on the road and the number of miles traveled. This is exactly what happened in Europe. The total savings per car was mitigated by the increased use.
- It is not the most effective use of capital. Raising the MPG standard of the internal combustion engine from 22 to 35 will cost billions (although much less than what the big 3 claim). There are simply better ways to effectively reach 500 MPG of gasoline through a combination of flex-fuel vehicles and plug-in hybrids. We should invest in quitting gasoline altogether, not in continuing our addiction. (quitting smoking is by far better than reducing the amount of cigarettes smoked)
- Given the economic situation of the auto companies, the political likelihood that they will pay the fine if they don’t meet the CAFE standards is very low. As the situation of the auto companies worsens, they will ignore CAFE (they will not have any alternative).
The current CAFE regulations should be modified to overcome the above problems. Possible modifications:
- Producing diesel cars should not be considered in the calculation.
- Energy battery policies (or plug-in hybrids) should receive double or triple credit.
- The Flexible Fuel mandate should be external to the CAFE.
- The current MPG standard should only be applied to gasoline, not to other liquid fuels. Each liquid fuel should have a different MPG target.
The current effort should be to modify the CAFE regulations so they can be more effective and with less undesirable side effects.
It may be worth considering changing the MPG targets in return for other costly changes (e.g., new car materials that will also improve MPG and battery range)
The US subsidizes road transportation via building and maintaining an excellent network of interstate highways. Local highways, however, are crumbling because of the budget crises of the states, counties, towns and cities. Taxes on petroleum-based fuels, built up over 10 years, could be used to pay for a build up of local public transportation (fuel-efficient or even plug-in hybrid buses) and the development of high-speed rail corridors between major cities in the Northeast, Midwest and along the west coast. During that 10 year period, people and corporations could plan their vehicle purchases, refineries could gradually switch to producing more diesel fuel and the US auto industry will have time to build up its more fuel efficient and plug-in hybrid car production capacity. People who live in suburbs but work in cities and vice-versa could gradually adjust if they chose to do so without disrupting their lives. Most important of all, there would not be a sudden shock to the economy.
Conservation is the cheapest and fastest way to reduce oil use. The blizzards that have paralyzed transportation in the DC-Baltimore corridor underscore that The Telecommuter Fairness Act, H.R. 2600, would also enhance public safety and productivity. Introduced by Reps. James Himes (D-CT-4) and Frank Wolf (R-VA-10), H.R. 2600 would protect telecommuters from double taxation of their income by states where they are not residents. The Telework Coalition (http://www.TelCoal.org), the Association for Commuter Transportation, (http://www.actweb.org), the National Taxpayers Union, (http://www.ntu.org) and the Small Business & Entrepreneurship Council (http://www.sbecouncil.org) support H.R. 2600. It could be implemented rapidly at little cost and produce significant energy and dollar savings.
Fuel use and pollution would both be reduced during the last miles of freight deliveries under H.R. 3367/S. 2854,The Heavy Duty Hybrid Truck Incentives Improvement Act of 2009 introduced by Rep. Sander Levin (D-MI-12) and Senator Herbert Kohl (D-WI). H.R. 3367/S. 2854 would extend the tax credit for hybrid motor vehicles through 2014, allow a 10% credit for vehicles that achieve comparable increased city fuel economy and allow a credit for electric vehicles greater than 8,500 pounds. The Diesel Technology Forum supports H.R. 3367 and S. 2854 because it will enable development of efficient delivery trucks as the final mode in our national water/rail/road freight system.
–> excerpt submitted by the Offices of Rep. Roscoe Barlett. Op-Ed, “OPEC would benefit from ongoing failure by lawmakers to act,” published in The Hill on 2/22/2010. Read the full text here:
http://thehill.com/special-reports-archive/757-energy-a-environment-february-2010/82917-opec-would-benefit-from-ongoing-failure-by-lawmakers-to-act
Roscoe Bartlett (R-Md-6) is Co-Chairman of the Energy Efficiency and Renewable Energy Caucus as well as a member of the Energy and Environment Subcommittee of the Committee on Science and Technology.
Congress must heed Representative Bartlett’s call for enactment of H.R. 2600 – the Telecommuter Tax Fairness Act. This legislation would prohibit states from applying a rule known as the “convenience of the employer” rule and imposing a punitive tax on interstate telecommuters. As things stand now, under the convenience rule, a state can tax nonresidents who work for an employer within that state and choose to telecommute part-time, not just on the wages they earn when they work in the employer’s state, but also on the wages they earn at home. Because telecommuters’ home states can also tax the wages they earn at home, many Americans are double taxed for opting to rely on the “information superhighway,” instead of cars, buses and trains, to get to work. The risk of double taxation is a powerful deterrent to telecommuting. It is, therefore, a significant obstacle to conserving fuel, reducing our dependence on imported oil and reducing carbon emissions. The Telecommuter Tax Fairness Act would eliminate the tax penalty for telecommuting, making it much easier for Americans to use this energy-conscious, green transportation alternative. And, it would do so at no cost to the Federal government. It must be passed either as a stand-alone bill or as part of broader energy legislation.
Dear Colleagues,
A friend of mine pointed out to me that increased MPG has a diminishing return on oil consumption. So I set to see how mandated CAFÉ MPG increase really translates to increased fuel efficiency. The result is totally counter intuitive. Turns out that very high MPG cars could actually contribute to increased oil consumption!
Here is how it works:
Compare these two fleets:
1. 1 Chevy Volt rated at 150 MPGe and 9 pickup trucks rated at 15 MPG. The combined average MPG of such fleet is 28.5 MPG.
2. 10 Chevy Cobalt, each rated 25 MPG for a combined average of 25 MPG.
Now you would think that if each vehicle in each fleet drove 10,000 miles a year, the first fleet will burn less oil, after all it is rated at a higher MPG.
Lets check this:
1. 1 Chevy Volt driving 10,000 miles will consume 66.7 gallons of gasoline. Each of the pickup will consume 666.7 gallons of gasoline for a fleet total of 6,066.7 gallons.
2. Each Chevy Cobalt will consume 400 gallons for a fleet total of 4000 gallons per year.
This is a whopping 50% more gasoline consumption for a fleet averaging 28.5 MPG over a fleet that is averaging 25 MPG – now that’s a brain twister.
I guess what this is showing is that the matrix that really counts for reduced oil consumption is how many gallons per mile not how many miles per gallon.
Eyal
* The MPG that I used is for demonstration only, I did not check the actual MPG of the models mentioned.
Dear Eyal,
There is an old story of a man with one foot in a bucket of boiling water and one foot in a bucket of ice water. On average he was comfortable. So the villain here may be the A in CAFÉ. I was always under the impression the car manufacturers played this game of averages by having some good mileage vehicles for sale mixed in with their SUVs to pass federal CAFÉ standards. It seems that there has to be minimum mpg as well as CAFÉ standards if situations like this are to be avoided.
Herschel
Dear Eyal,
Herschel is correct. Statistics can be used to prove anything, as well as to create interesting brainteasers. A single GM Volt, for instance, is not the cause of higher fuel consumption in combination with 9 gas guzzlers. It is the 9 gas guzzlers that skew the results. The problem in your example is that the “average” is not the correct average — a point that EPA, NHTSA, Congress and the automakers are well aware of in calculating CAFE.
Using the formula given below, the “CAFE” of the 10 vehicle fleet comprised of 9 trucks and 1 GM Volt is actually 16.4835, or 16.5 mpg — NOT “28.5.”
Ultimately, however, Ayal, you are correct in stating that: “…what this is showing is that the matrix that really counts for reduced oil consumption is how many gallons per mile not how many miles per gallon.”
Regards,
Dave Goldstein President, EVA/DC
PS — The latest EPA combined fuel economy estimate for the Volt is “93″ — not 150. The formula for calculating the fuel economy of a Plug-in Hybrid (or “extended range EV” as GM prefers to call their design) is even more complex than the CAFE formula available here:
http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy#Calculation
Thank you very much David. The harmonic average makes a lot of sense. I should have dug the formula up rather than assume an arithmetic average. It is good to see that some things actually do work as planned.
Eyal
You are most welcome, Eyal — and thanks for your support, encouragement and, occasionally, incitement. I confess that I was so intrigued by your question, that I stayed up half the night to compose a justifiable response.
By the way, I am quite impressed with the Chevy Volt, which has been selected as the Car of the Year by Motor Trend magazine. It is no Tesla, to be sure, but it is a fine car to drive, incredibly quiet and powerful in traffic, with 35-40 all electric miles before the small gas motor quietly kicks in. No range anxiety, (350 miles or 560 km available ) and if you drive this car 30-35 miles (50 km) to work and plug in to a normal outlet at the office, you could effectively drive this car on no gasoline at all.
At the office or parking garage, you would probably pay a premium for the roughly 6 kWh consumed on the way to work — est. $0.25/kWh, whereas here in DC, electricity normally costs $0.14/kWh. And if you take advantage of a special nighttime EV rate at home of $0.025/kWh, that would work out overall to about $2.00 a day, or roughly $.0285 per mile!
Assuming that your “other” gasoline car — a 2011 Chevy Cruze Eco (formerly Cobalt) gets 35 combined city/highway mpg, (25 is the norm for US sedans) and gas prices hit the predicted $5.00 gal, that would be 2 gallons, $10/day, or roughly $0.1425/mile. To match the Volt, you would have to get 350 mpg!
I bring this up because a price disparity like that ($2/day vs. $10/day!) is likely to drive many customers into Chevy Volt and Nissan Leaf showrooms and it is not inconceivable that we might reach 50,000 PHEVs and EVs in our region in a matter of years, saving as much as 100,000 gal/weekday, or roughly 25 million gal/yr in the DC metro area.
So bring on those 15 mpg pickup trucks! We can handle it. :O)
By the way, there is no reason why a large pickup truck, turned into a Plug-in Hybrid, could not achieve 45 mpg. Professor Andy Frank at UC Davis and his engineering students proved this with a huge Chevy Suburban more than a dozen years ago, winning a DOE Future Truck competition.
My sole disappointment in all of these calculations is that none of these PHEVs are yet equipped to combine E85, Biodiesel or any other alt fuel when operating in ICE mode. But this, too, is coming — sooner rather than later, I think. With E85 in the tank, those large pickup trucks — and SUVs — could thereby achieve the equivalent of 300 mpg on the petroleum content.
Regards,
Dave
With the use of electric vehicles, how are we going to pay the tax that builds and maintains roads, which currently comes from gasoline and diesel fuel sales?
Mario,
That is one of the reasons it is important (albeit not politically simple) to shift to a more direct user fee system, e.g. tolling. (Another is that spending on roads along with other transportation infrastructure is contributing to the deficit as highway trust fund moneys (gas tax revenues) are often misallocated resulting in a need for a large transfer from general funds (at the federal level meaning income tax moneys.)
Further reading:
p. 10 of “Taking the Wheel” for a few tolling options: http://www.mobilitychoice.org/takingthewheel.pdf
Randal O’Toole’s “Gridlock” http://www.amazon.com/exec/obidos/ASIN/1935308238/iags-20
Gabriel Roth’s edited volume “Street Smart” http://www.amazon.com/exec/obidos/ASIN/141280518X/iags-20
Anne
This is a specious argument. The economy is going to slow down because of increased gas prices from the oil industry, and the government gets none of the money, just the oil companies. We’re sitting here watching it happen all over again. Had we been gradually increasing the taxes on gas the past several years, and telling the people this is what we were going to do, they could have planned for it by moving to more efficient vehicles. As it is, we’re at the whim of whatever happens with peak oil and middle east instability.
A revenue neutral tax incentivizing efficient vehicles and penalizing inefficient vehicles can be sold politically, not easily, but it can be done.
My favorite is the tax and dividend scenario that levies a tax on carbon-based energy and returns 100% of the money to all adult Americans. The more efficient you are, the more money you make.
In April 2010 the Obama Administration finalized a rule that will set the corporate average fuel economy (CAFE) standard at 35.5 mpg by 2016.
In June 2011, the Administration further proposed that all passenger vehicles and light duty trucks meet a CAFE standard of 56.2 mpg by 2025. This new proposal was met with resistance from automakers and Congressmen from Michigan, who in a letter criticized the 56.2 mpg proposal as “overly aggressive” and “not reasonably feasible.”
On July 29th the White House announced an agreement with 13 major automakers, which account for ’90% of all vehicles sold in the United States’, to achieve a CAFE standard of 54.5 mpg by 2025. According to the White House, the standards “will save American families $1.7 trillion dollars in fuel costs, and by 2025 result in an average fuel savings of over $8,000 per vehicle… [save] a total of 12 billion barrels of oil, and by 2025 reduce oil consumption by 2.2 million barrels a day”.
“This agreement on fuel standards represents the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil,” said President Obama.
As reported by POLITICO, the has drawn the ire of some environmentalists, who argue that the flexibility of compliance options are ‘loopholes that will diminish the plan’s environmental integrity.’ German automaker Volkswagen has come out against the new standards, as well, arguing that they unduly favor truck manufacturers.
What do you think of the newly proposed CAFE standards? Are there any issues with the process by which they were developed? Do the benefits of aggressive CAFE standards outweigh their costs?