Obama Administration Proposes MPG Standards In Line with Other Major Countries – Fair?
The Obama Administration is proposing increased automobile gas mileage standards for 2025. The number is a whopping 56.2 miles per gallon. How does that sound to you?
Let me guess. Does it sound anti-American? Here’s the Government telling us what to do again. What’s wrong with the free market. Why should I have to pay for an expensive new car I like, or be forced buy a puny little one that’s not fun to drive but I can afford? The Tea Party will almost certainly characterize this proposal in some way as unpatriotic.
Surprisingly the new standards will be in line with those in China, Japan, and Europe (the other three large automobile markets in the world). Implicit is the potential for “world cars” where American automobile manufacturers could design and develop cars for a market almost 4 times as large as our domestic market.
The other obvious positive will be the reduced demand for gasoline. This will benefit the individual American’s pocket book and provide a direct shot in the arm for America’s balance of payments through lower oil imports.
These new standards, if adopted, will present a second chance for the Big Three. As you may remember, when the first challenge came from CAFE standards, the Big Three cried foul. Instead of accepting the challenge and building a fleet of energy efficient cars and trucks, they sort of “cheated”. They introduced a few “clunky” small cars and sold them at discounted prices (read at razor thin profit levels). As a result, their fleet average met the standard.
There were two undesired consequences. (1) Americans chose Japanese small cars and the Big Three began their slide from an almost insurmountable market share lead to just one of many suppliers. (2) Profits for the Big Three tumbled until two of the three were forced to declare bankruptcy.
This time, the Big Three could potentially benefit. Here is a chance to move the market share game to foreign soil, that is markets in Japan, China, and Europe.
Opportunity used to be the battle cry for American innovation and entrepreneurship. I wonder whether 56 MPG will strike a similar sound?
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About Jack Lewis
Jack Lewis is a retired, former senior executive of a large chemical company. He has lived twice in Europe, has traveled extensively to Asia, and is the author of 'Vision, Values, and Results', a how-to business book. He began posting to his blog, Regaining the Center, in 2007. Jack firmly believes in progressive values, and finds his way to the center by balancing these values with practical solutions supported by data.
Many Americans don’t want really little lightweight cars. And ask any physicist, that’s the only way to get 56 mpg.
Little lightweight cars are a bad fit for the lifestyles of many Americans. they simply don’t suit the needs of most families in a mobile society. This proposal is IMO a total nonstarter.
If I lived in China and could by law have only one child, I wouldn’t mind. If I lived in Japan where the population density is off the chart, nothing but a small car would make sense. Same goes for anyone living in or near a major european metropolitan area.
But since I live in America, I want vehicle options that suit the much broader range of needs. That doesn’t make me a zealot wrapping myself in the flag. It just makes me an intelligent American who is accounting for the relevant difference between my country and the ones you cite.
Sure. If you believe that more efficient cars will actually lead to a reduction in fuel consumption. Sadly, most economists will tell you that efficiency increases almost invariably lead to increased consumption. Maybe you find this hard to believe. Do the research, and find out for yourself.
The only thing that needed to happen for more efficient and electric cars to become market-viable was for gas prices to increase. Now, it’s clearly not happening fast enough for you. But it’s happening plenty fast enough for most of the rest of us.
I am probably going to buy a small efficient car for my next vehicle. But that’s because it will suit my needs. I don’t want to be forced to buy a car that poorly suits my needs due yo progressive political objectives. I’ll vote against that, and so will many others. Believe it or not, that’s not a bug in democracy, it’s a feature.
Cranky, you have outdone yourself in this reply…
Increased fuel mileage standards are average requirements… so there still will be expensive fuel consuming vehicles… You can buy any if you want and can afford…
Interestingly, electric vehicles are fun to drive… they accelerate with the best and are quiet… There are two limitations… battery technology and the infrastructure to provide on the road recharging… In time they will come because recharging will be useful for hybrids…
With respect to China, it has a car park that looks a lot like the US or Europe today… lots of cars with average fuel efficiency… Someday you should visit and see for yourself… The Chinese car market is bigger than the US and will only get bigger… building cars for such a market could only lower the cost of US cars…
You are seriously lost if you believe that less gas efficient cars will be better than more efficient ones in overall gasoline consumption… I can not add more…
Nice response Cranky, you put some thought into your reply and it shows.
Fact is markets are different and American consumers and those in other countries are different.
There is absolutely no reason that the market can’t be left alone to determine what gets produced and where. If Americans want different models by all means let them have the freedom to choose these if someone finds it worthwhile to make them. This does not mean that manufactures cannot offer more efficient cars if the demand and profits are there for them as well.
I am a big fan of variety and consumer choice and consumer driven markets rather than manufacturers or governments trying to limit or force specific types of consumption.
Thanks. The way I see it, when you do nothing better but to sport the usual canards and half-truths, I’ve got litle choiuce other than to “outdo” myself.
Cranky, it is difficult to pick back up the thread… let me say a few things I do believe for what they are worth…
1. Increasing fuel prices enough decreases gasoline purchases…
2. Our country has already voted for car size where the two coasts and most large cities prefer smaller more efficient cars… the large middle still has value for bigger cars and trucks
3. The sheet metal shape of a car and the number of cup holders (interior design) are almost always localized for the country of sale. The heart of an automobile, engine and drive train, can be the same on a global basis… This means big money savings for automobile developers and “world car standards” can lower costs (or improve car company profits depending upon how one looks at it).
4. With respect to will people simply drive more if their new cars are more fuel efficient, maybe so although I have seen no data either way… If you believe people drive by how much is in their pocket book, this may be correct. In a way that is why I support higher fuel taxes.
BTW just wanted to add, I do feel the government does have a role to play as far as emissions standards for automobiles, but not for fuel efficiency standards, that should be left to the free market and not centralized control and we should feel no need to emulate more controlled economies on this.
Leonidas, I am actually ambivalent on setting fuel standards… Our country has a huge problem depending upon foreign oil. It si both a drain on the balance of payments and it impacts the atmosphere… I would vote for taxing gasoline so that it reflected an amount closer to its true cost to society, but most Americans disagree…
If you can’t raise gasoline taxes and you can’t set fuel efficiency standards, it looks to me like not much will change (except in the rest of the world).
Jack
1. Pretty sure I already pointed out how higher gas prices led to the reinvigorated viability of smaller more efficient cars. Not sure what your point is in re-iterating that.
2. Our country has been voting for what sorts of cars it wants for as long as we’ve had them. Not sure what your point is. From sales, it surely appears that Americans like variety, are more sanguine about efficient cars than they were a decade ago, and still like much larger vehicles on average than the rest of the world. Are you suggesting otherwise?
3. I think you’re overstating the value of that, or disregarding the drawbacks, or both. It costs to re-fit plants, so you want a long standardized run per plant. But what the really big costs associated with having a different factory in another part of the world crank out lightweight versions? Besides, Us automakers could gear the shitbox economy cars for foreign consumption and sell them to domestic europhiles and that doesn’t have to effect production of SUVs, pickups, and bigger luxury cars one bit.
4. I don’t support higher gas taxes, They’re an extremely regressive form of taxation. I could be persuaded to support short-term surtaxes on less efficient cars, maybe. But I am not such an environmental drain-circling club member that I think we can’t afford to just let gas prices rise naturally in response to current supply and demand trends. That already seems to be doing the trick, even if it’s not quick enough for the Pastor Greenchurches of the world.
Cranky, there are several issues wrapped up in this post and the subject we are kicking around…
First, reducing dependence on foreign oil should help the balance of payments.
Second, reducing the consumption of gasoline should save people money and should help the environment.
Third, history could repeat itself. The last time the world auto manufacturers increased the efficiency of their cars, the Big Three did not follow across the board. Consequence, Big Three lost significant share and profits.
Gas prices are going up whether through supply and demand or additional taxes. Many people will seek new vehicles that deliver significantly better gasoline… If they buy Big Three cars, it will mean jobs for Americans. (The Japanese do make cars in the US and that represents some jobs, but not as many as with the US companies).
So, I think we have to move beyond the wild west idea that our choice of automobile does not need to represent any national economic, social, or safety concerns…Comparing to China, Japan, and Europe just says with the 56 mpg standard we are not putting in rules that are out of touch with the reality others see.