## US Announces New Fuel Economy Standards for Light Trucks

##### 29 March 2006

US Transportation Secretary Norman Mineta announced the expected new fuel economy standards for light trucks today. This represents the first complete reform of the Corporate Average Fuel Economy (CAFE) program for pickup trucks, sport utility vehicles and minivans since the program’s inception in 1979.

The announced standards are only slightly tougher than those the department proposed in August 2005, increasing from the earlier proposal’s estimated average light truck level of 23.9 mpg to 24.0 mpg by 2011. The final rules also include the largest SUVs—those that weigh between 8,500 and 10,000 pounds—which the earlier proposed standards did not. (Earlier post.) The car standard remains at 27.5 mpg.

Secretary Mineta said that the new rules will save two billion more gallons of fuel than the earlier August 2005 proposal by including the largest SUVs and strengthening the final miles per gallon target.

In 2003, the National Highway Traffic Safety Administration (NHTSA) had increased light truck CAFE standards from 20.7 mpg applicable from MY 1996 through MY 2004, to 22.2 mpg applicable to MY 2007. At the time, it noted that further increases would be limited without reforming the entire program. This Reformed CAFE program is what the agency is introducing today.

The structure of Reformed CAFE for each model year has two basic elements:

1. A function that sets the target fuel economy levels for each value of vehicle footprint—the product of the average track width (the distance between the centerline of the tires) and wheelbase (basically, the distance between the centers of the axles); and

2. A Reformed CAFE standard based on each manufacturer’s production-weighted harmonic average of the fuel economy targets for footprint value.

By 2011, each automaker will have its own fuel economy standard based on its own product mix. This results in a situation in which GM, for example, will face a projected light-duty truck CAFE level of 23.2 mpg in 2011, while Ford faces a projected 23.9 mpg, Toyota 23.8 mpg, BMW 25.8 mpg, and so on.

While individual manufacturers may face different requirements for their overall CAFE levels depending on the distribution of footprint values for the models making up their respective product lines, each manufacturer is subject to identical fuel economy target for light truck models with the same footprint value.

Unreformed CAFE Standards for Light Trucks
Model yearStandard
2007 (current)22.2 mpg
200822.5 mpg
200923.1 mpg
201023.5 mpg

During a transition period of MYs 2008-2010, manufacturers may comply with CAFE standards established under the reformed structure (Reformed CAFE) or with standards established in the traditional way (Unreformed CAFE).

NHTSA set Reformed CAFE standards for those model years at levels intended to ensure that the industry-wide costs of those standards are roughly equivalent to the industry-wide costs of the Unreformed CAFE standards for those model years.

Under the proposal, the estimated average CAFE level for light trucks was 23.9 mpg; under the final rule, NHTSA estimates the average light truck CAFE level will be 24.0 mpg.

Estimated Required Reformed CAFE Light Truck Fuel Economy Levels by Manufacturer
Manufacturer MY 2008
(mpg)
MY 2009
(mpg)
MY 2010
(mpg)
MY 2011
(mpg)
General Motors 21.9 22.6 22.9 23.2
Ford 22.7 23.2 23.8 23.9
DaimlerChrysler 23.2 23.7 24.1 24.3
Nissan 22.3 23.3 23.7 23.9
Mitsubishi 25.1 25.8 26.3 27.0
Subaru 25.4 26.4 26.3 27.0
Toyota 22.6 23.0 23.2 23.8
Hyundai 23.9 25.0 25.0 25.4
BMW 24.5 25.1 25.5 25.8
Porsche 23.0 23.7 24.0 24.2
VW 23.1 23.7 24.1 24.2
Isuzu 22.2 22.9 23.2 23.4
Honda 23.3 24.0 24.4 24.6
Suzuki 25.5 26.3 26.6 27.1

Resources:

• Average Fuel Economy Standards for Light Trucks, Model Years 2008–2011 Final Rule

What an embarrassment.

WTF!!!

You can have as many mandates as you want. You can't make people buy a more efficient vehicle. And in fact, such mandates can have the opposite effect. When the CAFE standards were first in effect, people went from station wagons to SUVs.

Rising fuel prices alone will be enough to buy efficient vehicles. Overall SUV sales are dropping like a rock without these standards. Sales of motor scooters are experienceing double-digit growth (I own one myself).

The market will decide, not mandates.

"You can't make people buy a more efficient vehicle."

Well, of course you can. They may not like it, but the government determines tax rates, what can drive on the roads, how things can emit pollution, etc. They could easily force everyone to drive more efficient vehicles with tools at their disposal.

"When the CAFE standards were first in effect, people went from station wagons to SUVs."

Because the government you criticize had a two-tier CAFE standard. If there were one CAFE standard, that wouldn't have happened.

"Rising fuel prices alone will be enough to buy efficient vehicles. Overall SUV sales are dropping like a rock without these standards."

Until (and if) fuel prices go back down, at which point will go back to wasting.

"The market will decide, not mandates."

That's your hope, not a necessity.

The (slight) rise in CAFE standards are (slightly) good. I'm not going to complain about them if the aggregate result is fewer barrels of oil consumed.

I think they could have done more, and I believe that if the Democrats can make gains in the House and Senate and win the Presidency in 2008, you'll see even higher CAFE standards.

It's all about the Fundamental Theorem of Calculus. If you want to go from a low point to a higher point, you've got to move upward.

"Because the government you criticize had a two-tier CAFE standard."

This is exactly why I don't trust the government in the first place. They do more harm than good, putting a noose around the market with layers of regulations.

"That's your hope, not a necessity."

It is a necessity. And as sales figures show, it is working. Barring major advances in biofuels and synthetics, I doubt we'll see gas prices below $2.50 again. This allows the automakers to build big SUVs with no tradeoff with smaller SUVs. Exactly what they wanted! What a sham. And talk about complicated. "This is exactly why I don't trust the government in the first place. They do more harm than good, putting a noose around the market with layers of regulations." That's silly. Without regulations, you'd be drinking polluted water, breathing polluted air, poisoned by food, and people would be dying in much larger numbers on the roads, etc. Really, the world is more complex than can be accounted for by absolutist ideology. Markets have their place as does regulation. "It is a necessity. And as sales figures show, it is working." And if the government taxed cheap fuel to$2.50/gallon, the same exact thing would happen. The only difference is the money would stay in this country to be invested in worthwhile things (eg, moving away from oil and car dependence, paying down the debt, etc). Instead, we send hundreds of billions of dollars extra overseas on an annual basis.

"Barring major advances in biofuels and synthetics, I doubt we'll see gas prices below $2.50 again." Hard to tell, now isn't it? We thought the same thing in the early 80s and during the first Gulf War. No one would have thought oil would go below$10/barrel in the late 90s.

Point is, consumers respond to consumer prices. The components of that pricing are irrelevant with respect to the effect of price on demand.

"That's silly. Without regulations, you'd be drinking polluted water, breathing polluted air, poisoned by food, and people would be dying in much larger numbers on the roads, etc. Really, the world is more complex than can be accounted for by absolutist ideology."

I am no absolutist. But there comes a point where it becomes more and more expensive to squeeze out less and less pollutants, for less and less reduction of risk. That's the law of diminishing returns. When overzealous regulatory agencies think they have to remove every last part-per-billion of pollutant, the costs outweigh the benefits.

I see a lot of environmental groups trying to push things to just that extreme. Patrick Moore, for instance, founded Greenpeace but later left the organization because it became too extreme.

"And if the government taxed cheap fuel to $2.50/gallon, the same exact thing would happen." Creating an artificial distortion in the marketplace. And even then, it hasn't held back Europe much. They still buy lots of cars and transport 80% of their goods by truck. Meanwhile, the deregulated railroad industry in the United States is experienceing swift growth, with new locomotives pushing the envelope of fuel efficiency. "When overzealous regulatory agencies think they have to remove every last part-per-billion of pollutant, the costs outweigh the benefits." Strawman argument. You made no such distinction in your original statements. "When overzealous regulatory agencies think they have to remove every last part-per-billion of pollutant, the costs outweigh the benefits." That's a glib generality, meaning it could be true depending on what you mean by "overzealous". Point is, you have no idea what the cost-benefit calculus is for a given issue a priori, so to make a blanket statement like that (like many of your blanket statements) is silly. "I see a lot of environmental groups trying to push things to just that extreme. Patrick Moore, for instance, founded Greenpeace but later left the organization because it became too extreme." Relevance? Or now are you just moving on from government-bashing to ecogroup-bashing? "Creating an artificial distortion in the marketplace." I hate to break it to you, the price of consumer gasoline is about one of the most distorted ones there is -- and it has a lot to do with US foreign and military policy. Libertarianism is a wonderful ideal only because it never has to be tested in reality. There are no free markets, and there never will be, so to complain about the effects of regulation on price is silly. It's always going to be that way as long as governments exist. They influence things in all kinds of ways. "Meanwhile, the deregulated railroad industry in the United States is experienceing swift growth, with new locomotives pushing the envelope of fuel efficiency." Another glib generality with no discernible relevance to the discussion. If you want to spout more silly libertarian rhetoric, have at it. I don't feel like shooting it down any more. CAFE should be scrapped, and a per-vehicle, individualized guzzler tax/credit should be used. If you did it right now, with tax/credit = 3000 - (EPA combined mpg * 10) Then you'd get credits for efficient cars, and it would pay for itself. Well, the Republicans were never going to shoot themselves in the foot by tipping GM and/or Ford into bankruptcy in an election year, were they? The standards announced today are just more hide-the-salami tactics. No wonder Detroit welcomed the proposal. It would have been better to treat all vehicles not registered for legitimate commercial use as one category and set two targets for those: a corporate average of e.g. 30-35 mpg and a minimum of 20-25 mpg. By legitimate, I mean that commercial operators should be asked at the time of registration of a low MPG vehicle that it will really be used for hauling heavy loads on a regular basis to support the business, e.g. in construction, ranching, landscaping etc. It's the full-size trucks and SUVs that cause the most problems. Btw, the new standards do not affect vehicles above 8500 lbs GVWR like the Hummer. Cervus - freight is transported on the road in Europe in spite of the relatively high cost of fuel because, for historical reasons, the railway systems are not compatible across national borders. For expample, Spain and Portugal each have their own track gauges. Locomotives typically have to be changed at each border due to incompatible electric grids. Etc. The EU has not yet overcome these hurdles. As for cars, those in Europe are on average smaller, lighter and rarely feature more than four-cylinder engines, precisely because of high taxes on initial purchase and fuel. The only thing that's cheaper is insurance because we don't allow our trial lawyers to run wild. > legitimate commercial use Why do commercial vehicles need relative subsidies? If the truck a contractor uses to haul tools in order to fix home appliances needs a subsidy, why not subsidize the car a doctor uses to get to the hospital and fix people? Or, are the particulates out of 18-wheelers hauling vegetables "better for you" than the benzene from a teacher's car? Joseph: "Relevance? Or now are you just moving on from government-bashing to ecogroup-bashing?" You had said: "Really, the world is more complex than can be accounted for by absolutist ideology." I was attempting to show by example that absolutist ideology is not exclusive to any one side. Moore left Greenpeace because they became an extremist organization. Perhaps I chose poorly. I was attempting to show that I am not an absolutist regarding regulation. I think that once they hit that point of diminishing returns, that's where we should stop. "Libertarianism is a wonderful ideal only because it never has to be tested in reality." Look up New York City in the 19th and early 20th centuries. I'm done here. As with any addiction, the petroleum habit obviously doesn't hurt Joe Sixpack badly enough...yet. "I think they could have done more, and I believe that if the Democrats can make gains in the House and Senate and win the Presidency in 2008, you'll see even higher CAFE standards." Its not apartisan issue. Guys like Carl Levin, who is otherwise very liberal, who are from big GM/Ford states oppose CAFE. Which is OK, since it is a stupid useless policy. To lower US fuel consumption simply tax gas more. Scrap cafe alltogether. Bring in more$ for the government, its simple. Doing so puts capitalism in control and gas consumption will go down.

The new CAFE system is down right stupid. Punish Subaru for marking efficient SUV's, reward GM for making guzzlers.

UGGG.

Hampden,

The US chooses to avoid excessive gas taxes for good political and governmental reasons.

The politics are obvious, taxes are never popular, especially on items considered neccessities.

The good governance reasons are that taxes introduce morals and inefficiency into markets. Maybe you and I agree with the morals of encouraging vehicles that use less fuel. Other people favor their moral right to buy whatever they want. The market inefficiency is that it introduces an artificial cost that all consumers and businesses have to pay, leading to more expensive transportation, which increases the price of virtually all goods, leading to inflation and a slow down of our economy.

If done gradually, I agree that artificially inflated gas prices would benefit the US without harming the economy, but I say this in a moralistic qualitative way. The real economy of the situation is harder to determine.

The trouble with enviros and (that's some of those posting here) is that they want the progress of a free market i.e. hybrids but then want to impose a marxist type control over who can own what. It's the economy stupids ! The free market economy. Any of you old enough to remember what the buying public did during the 1970's when OPEC was hostile to the U.S. That explains why there are so many Japanese cars on the American roads. Hey, just remember the philosophy of your favorite movie: build it and they will come. Forget this marxist ideaology of "giving" the government more of our money by raising taxes on gasoline.

I love how the same morons that whine about suvs drive 4 motor speedboats on the weekend each one of which guzzles more gas then a fleet of suvs nd belts out more pollution then many small towns entire stock of suvs.

Pot meet kettle..

It is a long way from taxing "bads" and encouraging "goods" to a so called Marxist economy. Under a taxation scheme, the market is used as a way of distributing the goods in our society. While I can appreciate the possible upsides of a completely free market, one would have to dismantle all sorts of subsidies that go all energy sectors in our society. Put everything on a completely level playing field and then come back and tell me how a taxation scheme should not be used as a way of encouraging behavior that could very well help save the planet and make us much less reliant on a resource that appears to be peaking.

You can't pick out taxes out of the general context that we live in a society that is already heavily influenced by subsidies of all kinds to all parts of the energy sector. If one is so down on market distortions, one could start with ethanol, biodiesel, petroleum, and then go from there. The market is just a tool that our society uses to allocate resources. Just because we want to alter somewhat those outcomes hardly makes us Marxists.

Thats a joke. Taxing is marxist? It seems quite American to me. Marxist would be rationing gas or setting a selling price or cap regardless of the actual cost.

Raising gas taxes just makes gas priced closer to its true cost. A cost the government currently subsidises. Slowly and predictibly raising the gas tax would hurt the US economy less then any other means to conserve.

I agree CAFE standards are silly.
Instead of taxing gas at the pump we should impose stiff tarrifs on fuel imports.
The reason car insurance is lower in Europe is universal health care not wild lawyers over here.

Please don't feed the juvenile troll. Thank you.

Uh, save the planet? So if I/we pay more taxes we will save the planet? Whoa ! Nothing out there now has the power to reduce ghg significantly to stop the temperature from increasing. Stop. I've already rejected your following argument.
It isn't taxation that makes it a marxist system it's the idea behind having the government force people into they're way instead of leading people to a better way with good ideas.
Prius was developed by a private company not government mandate. The actual cost is not reflected in the stcker price but is subsidized by sales of other non hybrid models. If the hybrid is a good idea individuals will come to that conclusion without government coercion. And guess what? You don't hurt the economy at all.
What is the true cost of gasoline? I'm interested to hear the explanation. But please don't give me that gobbledegook about human suffering.Just the facts.

"Marxist would be rationing gas or setting a selling price or cap" - like in Hiwaii?

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