New fed fuel efficiency standards solve everything

posted at 12:00 pm on July 16, 2011 by Jazz Shaw

Last month we took a look at some of the possible side effects of the administration’s proposed, higher fuel efficiency standards in light of the law of unintended consequences. Jumping the gun to guidelines calling for better than fifty miles per gallon vehicles before the science caught up to these desires was already looking pretty dubious. Now, Kelley Blue Book (one of the older names in all things automobile related) has weighed in on the subject and are equally unimpressed.

The typical recounting of the scenario largely goes like this: Federal sources estimate that increasing fuel efficiency to 56 mpg by 2025 will be accomplished at an average cost of $2,100 to $2,600 per vehicle, but the savings resulting from higher fuel economy would save vehicle owners $5,500 to $7,000 over the vehicle’s lifetime. Sounds just fine, doesn’t it? There will be higher initial costs, but they will be a good investment, because car buyers will save money in the end.

But if one looks past the rose-colored predictions of the politicians (from both sides of the aisle, by the way), the picture gets a little cloudier. First, what the previously cited estimates fail to mention is that the typical new-car owner won’t own the car over its entire lifetime, so one has to wonder how interested new-car buyers will be in paying significantly more for their vehicle – and an average of $2,500 is significantly more – for little obvious benefit to their own pocketbooks. (The cynical answer to that is if they want to buy a new car, they won’t have any choice). Given the scenario that has been painted to prepare the way for the approval of the new regulations, owners would break even sometime between two and-a-half and three-and-a-half years of ownership, when many cars are still in their original owners’ hands. But the breakeven point and the accuracy of the entire scenario depend on correctly predicting future fuel prices, which is an iffy prospect at best.

(emphasis mine)

Their conclusions about the Obama administration’s predictions regarding 56 m.p.g. standards are rather harsh, and actually include the phrase, “built on a house of cards.” Other sources we have contacted have been less kind. You can try to force the auto industry to deliver higher mileage cars, but you can’t tell them to take a loss on the sale, so if the needed changes drive the price through the roof, guess who gets handed the bill?

People without jobs are looking to hold on to their cars for longer, and if they must replace them, they’re going to want the best deal possible. The number of unknowns which the White House is trying to juggle shoves this argument into the realm of fantasy. In addition to having to predict the cost of gas, what sort of loan arrangement will the buyer be able to obtain in an uncertain, floundering economy? What will the interest rates be to pay back a larger loan on a more expensive vehicle? All of these factors subtract from any projected savings and simply result in saddling the consumer with a higher price tag.

Before the White House decides to jump this particular shark, they may want to get a few more people involved in the discussion. Maybe somebody for example… oh, I don’t know… who actually designs and builds car engines? Food for thought.

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Everyone will want older cars.

Good thing they had that genius program initiative to pay people to destroy perfectly good used cars last year.

forest on July 16, 2011 at 12:03 PM

The price for having a car will necessarily skyrocket…

trigon on July 16, 2011 at 12:06 PM

I bought a horse. Problem solved.

faraway on July 16, 2011 at 12:07 PM

Part of our dictator’s strategy was to eliminate the supply of spare or rebuildable parts for old cars.

viking01 on July 16, 2011 at 12:08 PM

Democrats will mandate that everyone must buy a GM lemon.

Roy Rogers on July 16, 2011 at 12:08 PM

Wow, this is a clever little war on poor people. It’s all Cass Sunstein in action, nudging a little bit at a time to achieve the grand result : destroy the affordable cars, make new cars too expensive and then spend billions on railways. The result? A new proletariat who needs government transportation to carry out daily life.

Rambotito on July 16, 2011 at 12:09 PM

Hey Obama, repeal the Three Laws of Thermodynamics. Just do it.

If you say there are really Four Laws, with the Zeroth Law being ignored — you need to step away from the lab bench more. ;-)

NaCly dog on July 16, 2011 at 12:12 PM

I bought a horse. Problem solved.

The EPA will begin regulating horse emissions; both solid and liquid.

In 1900 London hauled 750 wagon loads of solid horse emissions out of the city every day. They could do nothing about the liquid horse emissions, they just stayed in the dirt and attracted flies.

Unintended side effects…

The Rock on July 16, 2011 at 12:15 PM

If your car doesn’t get 56 MPG your a racist. Straight up.
/

VegasRick on July 16, 2011 at 12:17 PM

I have one car that is 22 years old, and another that is 14 years old. Both run well. Both get decent mileage. Both are well-maintained. Not in the market for a new one. The local used car market is hard to describe. People are asking and getting a lot more for a good used car over five years old than they could just a couple years ago. Some are paying a lot more for a good ten-year old car with fairly decent mileage than shelling out scarce bucks for one of those new ones.

Government can mandate all the fuel standards they can dream up, but the bottom line is that in a free market people decide what they are willing to pay and what they are willing to purchase.

Now, then, if government decides to mandate what sort of vehicles we must purchase and when we must purchase them, and we can only choose from a government approved listing of vehicles than can be sold…wait a sec…isn’t this what the liberals/statists want? Total control of a centralized economy?

Well, never mind, then, let’s all hold off a car purchase until Obama decides what sort of car we can and should buy.

Problem solved.

coldwarrior on July 16, 2011 at 12:20 PM

But…but..but Jazz! The people in Obama’s administration KNOW EVERYTHING!

Just ask them.

GarandFan on July 16, 2011 at 12:24 PM

Because reaching these inflated fuel economy standards will almost undoubtedly require partial and full electrification strategies – conventional hybrids, plug-in hybrids, and full electrics — we as a nation will become dependent upon suppliers of rare earths used in battery and electric-vehicle manufacturing.

These of course would be African Nations with less stable governments than there are in the Mid-East. Is there any question now where Obama’s sympathies lie.

Tommy_G on July 16, 2011 at 12:25 PM

Federal sources estimate that increasing fuel efficiency to 56 mpg by 2025 will be accomplished at an average cost of $2,100 to $2,600 per vehicle…

That’s typical government BS. We are up against the law of diminishing returns. All of the economically-possible improvements in engine technology have already been made. Vehicles have been lightened as much as possible without the use of exotic materials. The added cost of the average-56.2 cars will be far, far more than $2600, and the car will be smaller than anything on the road today.

The Obama Car

slickwillie2001 on July 16, 2011 at 12:28 PM

80% of the people want to pay more for a car.

pain train on July 16, 2011 at 12:29 PM

What if the manufacturers just say “No! It is not physically possible with the current technology and we can sink billions into research and development and still not meet the standards.” What will the government do? I can’t imagine shutting down an industry that is “too big to fail” just because they are so clueless. I want the auto industry to call the bluff.

DAT60A3 on July 16, 2011 at 12:30 PM

Wow, this is a clever little war on poor people. It’s all Cass Sunstein in action, nudging a little bit at a time to achieve the grand result : destroy the affordable cars, make new cars too expensive and then spend billions on railways. The result? A new proletariat who needs government transportation to carry out daily life.

Rambotito on July 16, 2011 at 12:09 PM

This Comment of the Day/™ award is brought to you by Cloward and Piven.

Steve Eggleston on July 16, 2011 at 12:30 PM

The Obama Car

slickwillie2001 on July 16, 2011 at 12:28 PM

Seems the Yugo was way ahead of its time.

coldwarrior on July 16, 2011 at 12:31 PM

Typical government plan… spend billions on GM only to scrap them.

golfmann on July 16, 2011 at 12:32 PM

Wow, this is a clever little war on poor people. It’s all Cass Sunstein in action, nudging a little bit at a time to achieve the grand result : destroy the affordable cars, make new cars too expensive and then spend billions on railways. The result? A new proletariat who needs government transportation to carry out daily life.

Rambotito on July 16, 2011 at 12:09 PM

Another of the prog tactics is the ethanol crime. At 10% we are assured that “most any vehicle built since 1989 can use 10% ethanol.” Doesn’t sound all that comforting does it? Not a word about anything built before that, that’s just brushed off. Don’t worry about all that gunk that the ethanol will wash out of your fuel system and end up in your injectors.

One of the reasons the progs want to push for higher than 10% is to push millions more vehicles into obsolescence.

slickwillie2001 on July 16, 2011 at 12:34 PM

These of course would be African Nations with less stable governments than there are in the Mid-East. Is there any question now where Obama’s sympathies lie.

Tommy_G on July 16, 2011 at 12:25 PM

Or Red China.

Steve Eggleston on July 16, 2011 at 12:34 PM

The Chevy Volt gets 56 miles per gallon, but it costs $25,000 more to build than the comparable Chevy Malibu. How do the bureaucrats figure that future car builders are going to be able to do this same trick a 1/10th the cost?

Haiku Guy on July 16, 2011 at 12:36 PM

Somebody told The One about “the freedom of the open road” and he decided he needed to do something about it.

The larger the percentage of the population they can force into government provided mass transportation, the more of the movement of the population they can control.

Yes, that’s my hat. Yes it’s tin foil. What about it?

Stephen Macklin on July 16, 2011 at 12:37 PM

Leftist policy in action:

Self-congratulation > helping poor people

Reason #10485645 why I became a conservative.

visions on July 16, 2011 at 12:37 PM

forest on July 16, 2011 at 12:03 PM

Yep, easy to maintain and fun to cruise in… Luv my 77 Camaro at just 10-12 MPG

WhoU4 on July 16, 2011 at 12:37 PM

This driver was NOT a racist.

Not so Smart Car

TugboatPhil on July 16, 2011 at 12:41 PM

What if the manufacturers just say “No! It is not physically possible with the current technology and we can sink billions into research and development and still not meet the standards.” What will the government do? I can’t imagine shutting down an industry that is “too big to fail” just because they are so clueless. I want the auto industry to call the bluff.

DAT60A3 on July 16, 2011 at 12:30 PM

At that point, Obama and company will remind Government Motors who owns them, give Fiat the gesto dell’ombrello, and vulgarly tell Ford what is Job One.

Steve Eggleston on July 16, 2011 at 12:44 PM

My own vehicle, 93 Dodge 350 pickup with Cummins diesel, affectionately titled by the Missus as The Global Warmer. 16-20 mpg and will haul and pull a small country.

TugboatPhil on July 16, 2011 at 12:44 PM

The folks WITH cars are holding onto their cars longer.

I intend to keep ours until the heat death of the sun. The newest one is 10 years old.

And now I’m starting to think that having an old vehicle, in which you don’t face certain slaughter in case of accident, might be a pretty good investment to have.

Alana on July 16, 2011 at 12:47 PM

edit – I meant that to read, the folks WITH jobs (not cars)

You don’t have to be out of work to have seen the writing on the wall two years ago.

Alana on July 16, 2011 at 12:47 PM

There’s an easy fix to this: All the Feds need to do is offer a tax rebate for anyone buying a super fuel-efficient vehicle, and maybe a debit card for free fuel for the first year. On top of that, anyone trading in a vehicle that currently operates at some relatively low fuel-efficiency number, like say -below 25 mpg, combined- can get an additional $3k toward the purchase of this new super-efficient Obamobile with the all-NPR sound system. That trade will, of course, be destroyed.

Next problem?

BKeyser on July 16, 2011 at 1:01 PM

Think they would have responded to George Bush?

Speakup on July 16, 2011 at 1:05 PM

When considering the payback time, here’s another thing to consider, which I didn’t see mentioned:

Obtaining 56MPG will be a 40-50% increase in present MPG, which will mean a whole lot less gas will be sold.
Thus a boatload of jobs will be lost, as well as city, state, and federal tax revenues.
Does anyone think the taxing authorities will simply sit back and do nothing?

thegeneral on July 16, 2011 at 1:07 PM

Before the White House decides to jump this particular shark, they may want to get a few more people involved in the discussion. Maybe somebody for example… oh, I don’t know… who actually designs and builds car engines? Food for thought.

Smartest, evah, administration.

These fools have given Carter a GOOD place in history. He should write them thank you notes to the end of his days.

Schadenfreude on July 16, 2011 at 1:12 PM

$3.52?!!! Where the hell do you live?! I have been paying between $3.79 and $4.49 for the past year.

Jaibones on July 16, 2011 at 1:16 PM

GM makes all of its money on V-6 and V-8 cars and trucks, so Government Motors will be the first one to close, leaving Ford to own the Buy American! market and the rest of the market will go to Toyota, Honda and Nissan, with the millionaire boutique business split by Mercedes, BMW and the smalls.

Jaibones on July 16, 2011 at 1:21 PM

Please tell me a republican president can reverse this insanity.

Rebar on July 16, 2011 at 1:22 PM

In 1900 London hauled 750 wagon loads of solid horse emissions out of the city every day. They could do nothing about the liquid horse emissions, they just stayed in the dirt and attracted flies.

Unintended side effects…

The Rock on July 16, 2011 at 12:15 PM

And it wasn’t government that banned horses, or said only Shetland ponies could be within city limits and so on. Technology advanced, and market forces eventually made non horse-drawn vehicles affordable and commonplace. Imagine that.

Dr. ZhivBlago on July 16, 2011 at 1:31 PM

As opposed the the country with the largest fossil fuel reserves just drilling for oil?

Being a libturd is so gutless.

tarpon on July 16, 2011 at 1:46 PM

There are a few other hidden costs here besides the mpg savings versus fuel cost per life of the vehicle. Cars.com posted their story this week of the wrecked Chevy Volt that cost $14,000 to repair. The average cost would probably come down if there were more electric cars on the road, but still wouldn’t be as low as for a gas/diesel powered vehicle, which means the insurance companies are going to be asking for higher premiums to repair those vehicles.

They may also be asking for higher premiums for the gas/diesel high-mileage vehicles if we see a repeat of what happened after the 1973 OPEC embargo and federal mandates on fuel economy, when the fastest way to goose the mileage numbers was to take the weight out of the vehicles. High-mileage vehicles that have worse crash ratings also are going to end up with higher insurance premiums and repair costs, which will stretch out the break-even date even longer on the higher initial purchase price of the vehicles.

jon1979 on July 16, 2011 at 1:48 PM

Why not mandate 100 mpg? 200? Hell, why not just go all in, and say “Cars manufactured after 2050 must not need to be refueled”.

I think Steve Tyler and friends said it best.

BobMbx on July 16, 2011 at 2:11 PM

This seems like a good premise of any near-future sci-fi series, where people in 2050 will all be driving cars manufactured in the 90′s and 00′s, and the big auto manufacturers have been replaced by big auto repair shops because the government mandated the development and sale of new cars into oblivion.

JSchuler on July 16, 2011 at 2:18 PM

We need to get the government out of this regulatory frenzy, and out of these areas of our economy altogether. They never get anything right, and their dictates are so sweeping that the negative unforseen consequences are debilitating.

GaltBlvnAtty on July 16, 2011 at 2:22 PM

You folks know where this leads don’t you? Ultimately people will not choose ‘the correct vehicles’ for their application, so government will have to help them make the right decision, as Chu puts it re light bulbs.

You will have to put in an application to the government to purchase a vehicle, stating the number of carbon sources in your nuclear grouping, distance to work, etc. The government will then decide which vehicle you may purchase, if any.

slickwillie2001 on July 16, 2011 at 2:35 PM

Solve this problem by holding to the debt ceiling so that little will be left after maintaining our debt, SSA, Medicare, Medicaid, DoD and the other Constitutionally mandated cats and dogs.

As soon as the regulation enforcement stops by the people who enforce them getting laid off, then the concept of CAFE standards becomes moot. And most other regulations, come to that. No USDA for ethanol subsidies and no one to enforce ethanol be put into gasoline… that would be sweet, no?

Ahhh… never let a good ‘crisis’ go to waste! Let this one continue on from here on out. In short order we will find ourselves not missing these agencies nor their regulations.

ajacksonian on July 16, 2011 at 2:36 PM

ajacksonian on July 16, 2011 at 2:36 PM

There will be pain now or more pain later. I am for getting enduring it now.

GaltBlvnAtty on July 16, 2011 at 2:51 PM

“getting enduring” should be “enduring”. Sorry.

GaltBlvnAtty on July 16, 2011 at 2:51 PM

C’mon, rip off the bandaid, eat your peas, and buy a Chevy Volt!

PatMac on July 16, 2011 at 3:00 PM

56 mpg by 2025 will be accomplished at an average cost of $2,100 to $2,600 per vehicle, but the savings resulting from higher fuel economy would save vehicle owners $5,500 to $7,000 over the vehicle’s lifetime.

Like rugs, they lie..They Lie!

Never have fuel savings paid for itself and they never will.

The law of unintended consequences points back at history, its the people who can afford it, who will save.

Speakup on July 16, 2011 at 3:04 PM

Yes, that’s my hat. Yes it’s tin foil. What about it?

Stephen Macklin on July 16, 2011 at 12:37 PM

.

You’re not crazy… you’re correct.

Chaz706 on July 16, 2011 at 3:14 PM

The solution is obvious — do a massive cash for clunkers, so that the only cars on the market are either brand new ones or cars more than 10 years old.

unclesmrgol on July 16, 2011 at 3:42 PM

This type of crap is already happening in the trucking industry. My father sells heavy trucks, usually selling entire fleets at a time. Right now, no one wants to buy new. The reason is that the government has passed new emission standards for trucks which will go up again in 2014 (I believe). The cost of these new standards adds about $10,000 to a new truck. It also decreases fuel mileage. So until they are forced to, most will purchase used.

Of course there are unintended consequences. To reduce “carbon emissions”, trucks will now put out fewer emissions, but will also get lower mileage, thus increasing carbon emissions. Transportation costs rise because of higher truck prices and an increase in fuel costs. Who is this passed along to? YOU! This is much larger than increasing the price of consumer goods. This also impacts government vehicles like fire trucks and school buses. So, fire departments and schools will pay larger portions of their budgets on transportation costs meaning that you’ll get less service for the same amount of money or you’ll need to pony up more for taxes.

Whenever your local fire station gets a new truck–go down and have a look. The new emissions equipment looks like they have hung VW bug underneath.

ReaganWasRight on July 16, 2011 at 4:05 PM

The Obama car

slickwillie2001

Oh – I thought you meant this:

http://i417.photobucket.com/albums/pp251/runstowin/ObamaClownCar-.gif

Siddhartha Vicious on July 16, 2011 at 5:28 PM

Damn, this governing thing is easy.

-Raise minimun wage to $40/hr.
-Require companies to give all workers 30 days vacation/year.
-Food stamps for everyone.

and of course… no need for raising the mpg standards because…

-the government will pay for your gasoline and mortgage.

mankai on July 16, 2011 at 5:42 PM

It was the CAFE standards that created the SUV, by killing off the more efficient station wagon.

————————————————————————————————-

The easiest way to improve efficiency today would be to add a waste heat recycling system.

Slowburn on July 16, 2011 at 6:03 PM

Why not 100 miles per gallon?

Wouldn’t that be TWICE as good?

logis on July 16, 2011 at 6:58 PM

We are going to have less safe little (blank)boxes that no one really wants. As a post I read earlier this week noted the car allowed us freedom. Freedom from the Feds as well as big city liberal machines. That ability to escape their grasp pisses them off more then you or I can ever understand.

Try shopping for a family of 5 for a week in a little car when the nearest town is 45 minutes away.

BTW:
It’s 2011 for God’s sake, who puts a link in a blog post without noting that it is a pdf?

LifeTrek on July 16, 2011 at 7:36 PM

From the E.P.A.

Supposedly for our protection.

The annual death rates. People killed on highways will increase by the thousands for every 1,000 pounds we decrease the weight of a car.

seven on July 16, 2011 at 7:52 PM

The joy of liberal “thinking”. Consequences? Reality? WE SAY WHAT IS REAL!!!
s/

Hard Right on July 16, 2011 at 10:22 PM

$3.52?!!! Where the hell do you live?! I have been paying between $3.79 and $4.49 for the past year.

Jaibones on July 16, 2011 at 1:16 PM

$3.39….for 89 octane. Heh. $3.29 if you want the 87 squirrel pee.

Hard Right on July 16, 2011 at 10:26 PM

Cross your fingers and hope that we can make cars out of steel foam?
http://www.youtube.com/watch?v=wfFcs25KmMc

Count to 10 on July 17, 2011 at 7:55 AM

$3.52?!!! Where the hell do you live?! I have been paying between $3.79 and $4.49 for the past year.

Jaibones on July 16, 2011 at 1:16 PM

$3.39….for 89 octane. Heh. $3.29 if you want the 87 squirrel pee.

Hard Right on July 16, 2011 at 10:26 PM

It’s about $3.60 in the far suburbs of DC, but as much as $3.90 in the near burbs.

Count to 10 on July 17, 2011 at 7:59 AM

These draconian standards will, if enacted:

1. Dry up credit for the purchase of both new and used cars.

2. Cause everyone to lie about gas mileage.

3. Encourage the enviro-wackos to demand even more extreme and insane measures to make automobiles more useless, more dangerous, and vastly more expensive.

landlines on July 17, 2011 at 11:40 AM

The Feds should just cut to the chase and dictate what size/kind of car everyone should buy… after all, we all know they want to. CAFE is just a roundabout way of doing the same thing, only instead of telling you what kind of car you can buy, they tell the manufacturers what kind of car they can make. Either way diminishes the individual’s choice.

TSUGambler on July 17, 2011 at 3:57 PM

Well how will companies work around this? include a 4oz. fuel tank (but keep a large tank housing). Include a battery good enough for two miles, claim 64mpg, and have a thriving black market for after-market fuel tanks.

Fizzmaister on July 17, 2011 at 8:27 PM