Transcript PowerPoint Presentation - Should more fuel efficient

Should more fuel efficient
vehicles be required by
law?
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By Nicholas Luebker
The Fuel Problem
• The U.S. is heavily reliant upon
politically unstable foreign oil sources.
– 56% of the U.S.’s fuel comes from foreign
sources http://www.csmonitor.com/2005/0519/p14s01-sten.htm
• Low fuel efficiencies make us more
vulnerable to oil price spikes
– Hurricane Katrina, over $3 a gallon
• Automobiles 2nd biggest factor after
industry to contributing to global
warming by producing green house
gases such as: CO, CO2, NO2, CH4
(methane)
Old Fuel Economy Requirements
»
Require an “average” fuel economy
» The average mpg for a company’s entire fleet of vehicles had to
be 22 mpg.
» Allowed companies to make lots of little, light weight cars cars
and keep selling the lucrative gas guzzling SUVs.
» *Vehicles over 8500 lbs not even tested
» Includes: Avalanche, Silverado, Dodge Ram, F-250 & 350,
Hummer 1 & 2
» http://www.fueleconomy.gov/feg/which_tested.shtml
Aspire vs. Explorer
Average Mpg
Aspire ~37
4WD Explorer ~ 15
For every 1 Aspire sold, could sell 2.1
Explorers and still achieve an avg 22 mpg
Explorer also has double the CO2
emissions.
i
n
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Why hasn’t the government required higher
efficiencies for all vehicles?
 For years, under standard vehicle designs, weight reductions were the main way to increase
fuel economy.
 Every 100 lbs removed from a vehicle improves efficiency by 1-2%
 However, studies found that lighter cars were not nearly as safe.
 In 1997, mathematician Charles Kahane estimated that even 100 lbs reductions in
vehicles would increase the average fatalities per year by ~300 people because they
were less safe.
 Makes sense in basic physics model
 Ironically, the government’s “average mpg” requirement increased the discrepancy between
very small and light vehicles with high mpg (Aspire) and heavy SUVs but…
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Safety Concern Not Entirely Valid
 Safety has much more to do with engineering than weight.
 Stiffer design
 More crumple room
 Shorter engine
 2002 Honda Civic (mpg 39) designed to be light and safe, 1st
to received 5 star crash test rating in all 4 categories.
 2002 Mini cooper, avg mpg ~28
 2002 F-150, avg mpg ~15
 Crashing into same barrier at 40 mph.
http://www.bridger.us/2002/12/1
6/CrashTestingMINICooperVsFo
rdF150
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
Will making vehicles more fuel efficient cost
Cheap Ideas:
consumers?
 Use lighter materials
 Aluminum or high strength steel ~$1000
 Reduce Drag
 Slippery car design, replace side mirrors with small video cameras
~$180
 Redesign engines
 Added ability to shut off extra engine cylinders at cruising speeds
~$480
 Hybrid design
 Use an electric motor to start car from idle ~$660
 Add more gears
 5 speeds are more efficient than automatics, 6 speeds would be
even better.
 Using a combination of these ideas can increase mileage by 30%
 A 15 mpg SUV could get now get 20 mpg
 *Savings of only $750 per year at $3 a gallon,but
 Business Week 9/26/2005 Issue 3952, p40-41
 Saves ~ $5,000 over ten years, 17% of the original price.
Will higher prices of fuel cause
people to buy more fuel efficient
cars?
 Ford Explorer and Expedition sales were down 25-30%
earlier this year, but is it due entirely to high gas
prices?
Unlikely to think about when buying a new car
 Average cost of an SUV ~ $30,000
 Savings per year on fuel if bought a hybrid (Honda Insight)
 Considering average miles per year ~ 15,000
 At 3 dollars a gallon, would save only $2,250 per year,
less than 10% of the price
 “If you can afford a $30,000 vehicle, you can afford the
gas” (Petroleum Economist. London 2005. pg 1.)
 Space, comfort, and horse power have value too, more
tangible benefits than saving the environment.
Note: Yet over the 10 year life span of a car, total expenditure
(purchase price plus fuel)
 Insight costs ~$30,000
 Explorer costs ~$60,000



Median income in 2004 ~$44,000 (www.census.gov), multiplied by 10
years, $30K only amounts to about ~14.6% of total earnings.
 It is more likely that the decrease in sales is from
greater competition in the SUV market.
What about increasing the gasoline tax to get
people to buy more fuel efficient cars?
 Would probably work, but with ill effects
 Gasoline is a very inelastic commodity
 Between -.11 in short run -.3 in long run.
*numbers vary* (The Energy Journal Oct 1993,
v14, n4, p99)
 i.e a 1% increase in price only decreases
the amount of gasoline consumed by .11%
 Vehicles are durable goods (i.e. they last a long
time), not everyone can buy a new car
immediately after prices go up and will suffer.
 Economy is heavily reliant on low gasoline prices
 Fast price increases could induce a recession.
 Gradual price increases could induce inflation.
 Unlikely that a large enough price hike would pass
through legislation.
 Slower to require higher vehicle fuel efficiencies,
but easier to pass.
New Government Standards
» National Highway Traffic Safety Association’s Corporate
Average Fuel Economy (CAFE) separates vehicles into
categories based on size (area between the wheels).
» 6 different categories based on area.
» Greater the area, the less stringent the standard
» Decided to move away from weight categories because they felt
companies would just make vehicles heavier.
» Expected to be approved in April
» Will take into effect on new vehicles of the 2010-2011
years.
»
“U.S. Secretary Mineta Unveils Plan Requiring Better Gas
Mileage from SUVs, Pickups and Mini-vans” August 23, 2005. http://www.nhtsa.gov
How Do We Stack Up?
• The U.S. is in last place of modern
countries in fuel efficiency standards.
– China’s fuel mileage goals are 22% tougher
than the U.S.
• CO2 per capita
– U.S ~ 20 tons/year, was 6.6 back in 1995
( http://yosemite.epa.gov/oar/globalwarming.nsf/content/emissionsindivid
ual.html)
– Germany ~ 10 tons/year
– UK ~ 9 tons/year
– China ~ 2.5 tons/year
Too Little Too Late?

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Will increasing fuel efficiency
requirements impede global
warming?
 ~25% of U.S. fleet is
composed of SUVs
 Only about 1% of U.S.
fleet turned over every
year.
 Change to more fuel
efficient vehicles will take
time, vehicles last longer
than ever before. ~10
year life.
 Changes aren’t required
until 2011.
Overall Recap
 The automotive industry’s argument that improving mileage
would compromise safety is untrue.
 It is a myth that it would cost consumers significantly more to
increase fuel efficiency.
 It is unlikely that market forces will cause the average fuel
efficiency to go up on their own.
 If the government tries to manipulate the market through
gasoline taxes, there could be ill economic effects.
 The U.S. currently has one of the worst CO2 emitted per capita
in the world.
 Because there is such a large fleet, it will take some time to
reach.
Bibliography
“Crash Course: How U.S. Shifted Gears to Find Small Cars Can Be Safe,
Too”. Wall Street Journal. New York, N.Y.: Sep 26, 2005. pg. A.1
“Get Real”. Petroleum Economist. London: June 2005. pg. 1
“Getting More Miles to the Gallon -Fast” Business Week 9/26/2005. Issue
3952, p40-41.
http://www.fueleconomy.gov/feg/which_tested.shtml
www.epa.gov, click global warming link
http://www.nhtsa.dot.gov/portal/site/nhtsa/menuitem.d0b5a45b55bfbe582f5
7529cdba046a0/ (CAFE regulations)
 http://www.bridger.us/2002/12/16/CrashTestingMINICooperVsFordF150
 http://www.csmonitor.com/2005/0519/p14s01-sten.htm
 “Another look at U.S. passenger vehicle use and the 'rebound' effect from
improved fuel efficiency” The Energy Journal Oct 1993, v14, n4, p99(12)