Government Policy Options for Improving Motor Vehicle Fuel Economy and Reducing CO2 Emissions

Increase Gasoline Taxes Significantly

Economists say that increasing gasoline taxes would be the most effective way to reduce fuel consumption by non-commercial motor vehicles which are the second largest source of greenhouse gas emissions in the U.S. (Coal-fired electric power plants are the only larger source.)

Motor vehicle fuel economy is significantly better in Europe where gasoline taxes are higher and pump prices are more than double in the U.S. Gasoline taxes in the United States could be gradually increased to European levels over five or ten years. This would give car buyers and producers time to adjust to the higher prices. Economists also recognize that fuel taxes are regressive, bearing most heavily on lower income citizens. Moreover, higher gasoline taxes appear to be a non-starter, politically. Congress shows no enthusiasm for raising the gasoline tax, and President Obama has ruled that approach out as well.

Levy a Weight Tax on Non-commercial Motor Vehicles

Another approach would be to apply the laws of elementary physics by imposing a non-commercial vehicle weight tax. This tax could be tapered in over a 5 to 10 year period with the effect of roughly equalizing the fuel cost per mile in the U.S. with that of Europe. It appears to me that a gross weight tax would be more politically possible than an increase in the gasoline tax. And it would leave car makers free to produce whatever vehicles they wished--small, medium, large, gasoline, diesel, hybrid,CNG, etc., and it would leave car buyers free to buy whatever car or truck or SUV best fitted their preference and purse. However, the overall result would mean that more small, fuel efficient vehicles would be produced, and CO2 emissions would decline. The government would not be involved in the design, engineering or production of cars. Heavier cars would not be prohibited, but they would be taxed sufficiently to compensate for the "external" costs of pollution and contribution to our country's dependence on foreign oil. [It should be noted that if a weight tax were adopted the regulation should include a weight credit for hybrid or battery powered vehicles which are fuel efficient although the batteries are quite heavy.]

Increase CAFE Standards and Eliminate Current Loopholes

The CAFE (Corporate Average Fuel Economy)regulations resulted in improved fuel economy for a period in the 1970s until the truck/SUV loophole resulted in the production and sale of many more heavy, high horse-power vehicles for private use, culminating in the Hummer and similar gas hogs. This brought a halt to improvement in fuel economy of non-commercial vehicles in the U.S. Closing the truck loophole and imposing higher CAFE standards would be one way to improve fuel economy. But it may not be the best way.

Levy a Tax on Engine Displacement and or Horsepower

Regulating or taxing engine displacement would be another possibility for achieving better fuel economy and reduced CO2 emissions. This would mean that SUVs and trucks would be more fuel efficient but would not accelerate like sports cars. Higher displacement cars would not have to be made illegal, but they would be required to pay for the cost of higher greenhouse gas emissions and lower fuel economy which perpetuates our country's dependence on foreign oil.

Increase the Use of Diesel Engines, Especially in SUVs and Trucks

In an op-ed in the January 11, 2010, Detroit News, Steven Dawson pointed out that increased use of diesel engines could provide a significant increase in fuel economy in U.S. vehicles as it has been doing in Europe. He pointed out that last month at the Los Angeles auto show the Audi A3TDI was named "Green Car of the Year," and that the Detroit News selected the same diesel powered car as its "Car of the Year."

According to Dawson, "Compared with a conventional fuel-injected engine, a modern diesel provides 30 to 40 percent improved fuel economy. The savings go up to 60 percent during towing or driving at higher speeds. In addition diesels emit 10 to 20 percent fewer greenhouse gases...."

Dawson goes on to point out that the U.S. car mix is roughly 1/3 small, 1/3 midsize and 1/3 large including pickups and SUVs. If we assume that, on average, small cars get 40mpg, mid-size get 30 mpg and large vehicles get 20 mpg, math tells us that large vehicles consume about 47 percent of the fuel, compared with 30 percent for mid-size and 23 percent for small cars....

"Even when you consider the added cost required for filters and exhaust treatment technoloby to remove particulates and nitrogen oxide pollutants, the diesel is a more cost-effective package--and offers more residual value--than gas-electric hybrids and other technologies over the life of the vehicle...."

"Given its advantages, the diesel can be--should be --the vehicle of choice of increasingly more Americans."

[Steven Dawson is president and chief executive of AinterCast, a Swedish company that has developed technologies for producing high-strength iron. E-mail comments to letters@detroitnews.com. A link to the entire op-ed is provided below.]

Perspective on the Small Car Safety Issue

Some commentators question the safety of smaller cars which are subject to greater damage in collisions than are heavier SUVs, large trucks and sedans. To this others point out that is the large vehicles that pose the danger of injury to occupants of small cars. That is a matter of one's viewpoint. [The issue is analogous to gun safety--who should be blamed for the danger of gun violence--the shooter or the shootee? To solve this disparity some advocate arming everyone for their self-protection. Others support disarmament.] The passenger safety issue is not the weight of the vehicles but rather the weight differential between the vehilcles in collisions. This means that the hazard to the occupants of small cars will be reduced as the numbers of heavy vehicles diminishes, reducing the size disparity in non-commercial vehicles. Moreover, it is possible to design small cars that provide quite good crash protection for occupants.

A fuel economy deal worthy of every new car buyers' support

May 20, 2009 Detroit Free Press

There is always an inclination to raise an eyebrow and guard your wallet when government announces that something is "good for everybody."

But the sweeping deal announced Tuesday on auto emission and mileage standards does indeed appear to be good for just about everybody -- assuming the vehicles it spawns are appealing to consumers.

In brief, the plan would eliminate state-level regulation of motor vehicles and mandate that, by 2016, exhaust emissions be cut by about a third and mileage increased to 39 m.p.g. for cars and 30 m.p.g. for light trucks. The requirements will add an estimated $1,300 to the cost of vehicles, but the government says that will be offset by savings in gasoline.

Indicating the industry's support, no fewer than 10 auto manufacturers plus the UAW were represented at the White House as President Barack Obama announced the deal. The advantages for the industry are twofold: uniformity and certainty. There will be no regulations peculiar to a state or region, and the industry now has a fixed set of relatively long-term goals with enough lead time to meet them.

The upside for the nation is cleaner air, which could lead to lower health care costs, and less dependence on oil. At a time when this country is using 20 million barrels of oil a day, Obama said that the plan will yield a savings of 1.8 billion barrels by 2016, or about what America imported last year from Saudi Arabia, Libya, Venezuela and Nigeria combined.

And there is also an intangible value in having this annual political donnybrook settled in a comprehensive way.

The downside? Detroit automakers have yet to build a high-mileage vehicle that Americans embrace in huge numbers. And with these standards looming, wary U.S. consumers may be inclined to hang on to the ride they've got rather than buy something that may be smaller, less powerful and more expensive. With federal hooks now deep into the domestic industry, Obama may have to become car salesman-in-chief to get U.S. consumers to share his vision.

Auto Makers Won't Cut Corners on Obama Fuel Standards Detroit Free Press 5-19-09

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• Auto Makers On Board with Obama Fuel Economy Standards

  But automakers vow future models will not repeat the mistakes of the past by being smaller or less powerful to meet the new mileage standards and limits on greenhouse gases.