Last Friday night, after months of wrangling, House Democratic leaders agreed to support legislation requiring the average car and light truck to achieve 35 miles per gallon by 2020.
House Speaker Nancy Pelosi (D., Calif.) hailed the measure as the “cornerstone” of the energy package the House will debate this week.
Current average fuel economy standards are 27.5 miles per gallon for passenger cars and 22.5 miles per gallon for light trucks (vans, mini-vans, pickups, and SUVs weighing up to 8,500 pounds). The House leaders’ plan would increase the overall stringency of these standards by 40 percent.
Now, many people might think this is a fine idea. After all, nobody likes paying a small fortune for gasoline. Most people wish their current vehicles got better gas mileage.
But if fuel-economy mandates improve consumer welfare, why stop at 35 mpg? Why not decree that the average car must achieve 100 mpg?
The answer, in part, is that few people could afford to buy a 100-mpg vehicle. No hybrid today gets anywhere close to 100 miles per gallon, yet hybrids can cost several thousand dollars more than comparable non-hybrids. Also, just as the current 27.5-mpg standard eliminated the large station wagon, a 100-mpg standard would eliminate many other vehicle types (probably anything larger than a go-cart). Our pain at the dealership would vastly exceed our pain at the pump. The U.S. auto industry would implode.
The question then arises: How do House leaders know that a 35-mpg standard will not put Detroit at a competitive disadvantage, increase vehicle cost, or restrict consumer choice?
Maybe they believe that lots of vehicles on the road already get 35 miles per gallon, so what they’re demanding can’t be very onerous.
This is a natural assumption to make, because government and industry have invested considerable resources over many years to improve fuel economy, and much hoopla surrounds those efforts.
The Clinton administration’s Partnership for a New Generation of Vehicles aimed to build a sedan that could get 80 miles per gallon without sacrificing “the level of performance, utility, and cost of ownership that today’s consumers demand.” Industry contributed $980 million to the PNGV during 1993 to 2001. Various federal agencies also funded the program, spending $234 million on R&D in 2001 alone. Similarly, President Bush has requested more than $850 million since FY 2003 for his Freedom Car and Fuels program to develop fuel-cell vehicles and other advanced technologies.
In Speaker Pelosi’s home state, the California Air Resources Board in 1990 issued a zero-emission vehicle (ZEV) mandate requiring that 10 percent of all new cars sold in the state to be battery-powered by 2003.
The ZEV and PNGV programs did not come anywhere close to accomplishing their missions, and Freedom Car and Fuels may similarly fail. Nonetheless, the websites of these programs take credit for important technological advances, such as hybrid engines. From all the self-congratulation, you might suppose that at least 25 or maybe even 50 vehicles today get 35 mpg or better.
Let’s check this against the Environmental Protection Agency’s fuel-economy ratings for 2008 model-year passenger cars and light trucks.
EPA rates the city/highway fuel economy of 1,153 vehicles in all classes. Guess how many vehicles achieve 35 mpg for city and highway driving combined? Exactly two: the Toyota Prius (48 city/45 highway) and the Honda Civic Hybrid (40 city/45 highway).
Nine other vehicles get 35 mpg in city or highway driving conditions but not both — and all of those vehicles are either subcompacts or compacts. The Prius and Civic Hybrid are classified as mid-size cars. However, no other mid-size car and no large car, station wagon, SUV, van, or minivan gets 35 mpg under any driving conditions.
Someone who is not a congressman might see a pretty clear “market signal” in the fact that, out of 1,153 models rated by EPA, only two fully meet the House energy bill’s proposed standard, and a mere nine meet it partially. Yet House leaders assure us their proposed standard is realistic and practical.
What are the likely consequences of mandating that all new cars and trucks on average achieve 35 mpg by 2020?