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Proposed bill would increase fuel economy by 4 percent each year; GM calls it unrealistic. (http://www.detnews.com/apps/pbcs.dll/article?AID=/20060720/AUTO01/607200377/1148)

David Shepardson - Detroit News - July 20, 2006

http://www.cleanmpg.com/photos/data/501/Chevrolet_Silverado.jpg
2007 Chevy Silverado EPA 16/21 || 2017 EPA 22/29 city/highway

WASHINGTON - A bipartisan group of U.S. senators on Wednesday unveiled a bill that would increase fuel economy standards for the nation's passenger cars and light trucks by 4 percent each year - about one mile per gallon annually - starting after model year 2009.

Looking to end the months-long impasse over increasing fuel economy standards and offer a more flexible approach, the eight senators, led by Sen. Barack Obama, D-Ill., introduced the Fuel Economy Reform Act of 2006.

"Unlike other bills that set numerical mandates, this one would allow the National Highway Transportation Safety Administration to "revise the annual increase if (the NHTSA) concludes that the target cannot be reached with current technology or without compromising safety," it states.

"It is clear that the Achilles' heel of the most powerful country on earth is the oil we import and cannot live without," Obama said.

Cars and light trucks account for 40 percent of U.S. oil consumption.

Bush sought authority in April to raise the average fuel economy of the vehicles, but Congress has yet to allow it. Currently, fuel efficiency standards have not been raised for passenger cars since 1985.

Privately, international and domestic automakers think fuel economy legislation has little chance of passing this year, since Congress has other political battles to fight.

General Motors Corp. spokesman Greg Martin said the new bill isn't realistic, since automakers have a multi-year planning cycle.

"We should have some good sound experts and scientists say what's technically feasible," Martin said. "Fuel economy ultimately depends on what people buy. We're working hard on that front, from flexible-fuel vehicles to hybrids to ultimately fuel cells."

The Alliance of Automotive Manufacturers, which represents the Big 3 and Toyota among others, said it supports "the general goal of trying to enhance energy security and also basing fuel economy on what's feasible," said Gloria Bergquist, vice president at the alliance.

Fuel economy has to take into account safety, cost and jobs as well, she said.

It is too bad the US doesn't just raise taxes on gas, like almost every other industrialized nation, if they did the fuel economy numbers would take care of themselves. I know this is a regressive tax, but it could be staged in gradually so people and auto companies would have some time to change their habits. It sure would make people think a little more about how to get better FE. For those who really need to drive a truck (people in construction trades, etc) they could get an income tax break for one vehicle. But only wealthy people will be likely to drive SUVs just because they're cool or safe if the gas tax is high enough. Keep in mind I am not advocating higher taxes in general, income tax or business taxes or some mix of the two could be lowered by the same total dollar amount as the increased revenue from higher gas taxes or the money could be invested in better mass transit systems or used to pay off some of the national debt, or invest in research on more sustainable energy. In reality the US will never do this, prices will no doubt rise as the world approaches peak oil output so behavior will be changing shortly, if $3 gas doesn't do it maybe $5 or $10 gas will start to change people's behavior.

Dennis

CAFE is a progressive tax, and thus much more "affordable" because only the people who can afford to buy new guzzlers are really paying for the tax. No one can say raising CAFE won't work because the fact is that it's never been tried in the last 20 years.

I agree that CAFE is like a progressive tax, the problem for many (maybe half or more in the US) is that CAFE is a regulation rather than a tax. With a regulation you set artificial targets which might be inefficient from a market perspective. If you raise the price of gasoline through higher taxes, you let people make choices based on their own preferences which is what most people prefer who live in a market economy. If one is concerned about the effect on people who need to drive a gas guzzler (because they're a carpenter for example) a tax deduction for those individuals can be given to offset the higher gas taxes. For lower and middle income families, income taxes could also be reduced through a tax deduction based on miles driven to work. Clearly this hits the rural population harder, but there are countries like Canada who also have large rural populations that find a way to make higher gas taxes work. I am personally ok with higher CAFE standards, I just think higher gas taxes are a better way to go. I also think if we don't do anything that peak oil will take care of the problem in short order because prices will rise relatively rapidly in the near future (my guess is 3-5 years) and the CAFE will rise by itself with no regulations because most people will choose fuel efficient vehicles when gas is $5 per gallon.

Dennis

CAFE is a tax. Look it up. You can sell nothing but 10mpg cars if you want (see Ferrari, Lamborghini, etc) and you just pay a tax on the difference between what your fleet average MPG is and the target MPG. It's a tax, not a required regulation.

Usually regulations work exactly like CAFE, if you don't meet a requirement then you pay a fine (aka civil penalty), you can call it a tax if you like. My point is that rather than artificially setting some MPG target for vehicles in general, raising the price of gasoline with higher federal gas taxes will raise the average MPG of vehicles driven because people will choose more fuel efficient cars, drive less, and maybe learn some high FE driving techniques. If oil prices start to climb because oil supplies become tight in the near future, the tax can be eliminated if necessary.

Dennis:

I looked it up:
see the following link http://www.nhtsa.dot.gov/nhtsa/Cfc_title49/ACTchap321-331.html
or you can check wikipedia
TITLE 49, UNITED STATES CODE,

CHAPTERS 321, 323, 325, 327, 329, AND 331

§ 32912. Civil penalties

(b) Penalty for manufacturer violations of fuel economy standards.--Except as provided in subsection (c) of this section, a manufacturer that violates a standard prescribed for a model year under section 32902 of this title is liable to the Government for a civil penalty of $5 multiplied by each .1 of a mile a gallon by which the applicable average fuel economy standard under that section exceeds the average fuel economy--
(1) calculated under section 32904(a)(1)(A) or (B) of this title for automobiles to which the standard applies manufactured by the manufacturer during the model year;
(2) multiplied by the number of those automobiles; and
(3) reduced by the credits available to the manufacturer under section 32903 of this title for the model year.

Why did the words "too little too late" just jump into my head? :(