Obama's New Mileage Standards: Let's Wait and See How the Final Rules Shake Out

The Obama administration is, according to the NYT and others, prepared to move forward vehicle mileage standards.

From the Times:

President Obama will announce as early as Tuesday that he will combine that state’s emissions rules with the existing corporate average fuel economy standard overseen by the Transportation Department, the officials said. As a result, cars and light trucks sold in the United States will be roughly 30 percent cleaner and more fuel-efficient by 2016.

The White House would not divulge details, but environmental advocates and industry officials briefed on the program said that the president would grant California’s longstanding request to implement its tailpipe standards. Thirteen other states and the District of Columbia have said they intend to apply the same rules. That request had been denied by the Bush administration but has been under review by top Obama administration officials since January.

Yet Mr. Obama is planning to go further, effectively issuing a single rule for both fuel economy and emissions that matches California’s strictest-in-the-nation standard.

Under the new standard, the new combined fuel efficiency standard for cars and light trucks will be about 35 miles per gallon by 2016, roughly in line with the California rule.

The first thing to keep in mind is that you need to wait and see how the final rules shake out. There are lots of ways to get to 35 miles per gallon for a fleet. The horse trading is just starting and it’s a long way to the end.

How these rules are written will determine a lot about how they impact the domestic manufacturers. Keep in mind that Ford (F), GM (GM) and Chrysler make their money off of trucks and SUV’s. They build more smaller cars in order to meet the overall fuel efficiency rules but tend to sell them at break even, if they’re lucky. So, the eventual mileage bogey that larger vehicles have to meet will be a very important part of the legislation. I expect that given that the government is now or will be by the time this bill passes a very significant shareholder in two of the three domestics, they will probably go easy on them. No sense cutting off your nose to spite your face.

The other big issue is whether the American driver will buy the type of car that gets 35 miles per gallon. We know from recent experience that with the price of gasoline at $2 per gallon the answer is no. When prices hit $4 a gallon SUV’s collected dust on auto dealers’ lots and smaller cars were in vogue. As soon as prices retreated the preference for big powerful vehicles reasserted itself. So unless the Obama administration has plans to manage up the price of gasoline or the market cooperates and it rises on its own, this policy move is going to be met with the same reaction it always gets. Consumers will forgo smaller cars in favor of larger ones.

Decades of trying to make this plan work have done nothing more than to drive GM and Chrysler to bankruptcy as they couldn’t make enough on their large vehicles to cover the losses on the small cars they had to manufacture to meet the mileage standards. If in making this move the administration were to eliminate the “two fleet”* rule it would go miles (no pun intended) towards both cleaning up the air and enhancing the domestics profitability.

Perhaps with the downsizing of Chrysler and GM the policy could be revisited but it’s doubtful that would happen.

*The “two fleet” rule requires that any manufacturer, domestic or transplant, must calculate its fleet mileage based upon automobiles manufactured in the United States. It’s not quite that simple but that’s the main effect of the rule. It was made a part of the regulations from the outset in order to protect jobs. It is pernicious as it, for example, would do no good for GM to import Opels that it profitably builds in Germany into the U.S. They are very fuel efficient and quite popular in Europe but GM would not be able to include their efficiency in its quota computations. It’s crazy but then so is the whole scheme.

Comments

[belize91:]

No oil will be saved if the milage is higher people will drive farther use just as much. I will keep my SUV' and will buy new ones as long as they make them. It seems odd that the party of choice want;s to limit my choices.

May 19 08:51 AM

[the weakono...:]

Who said anything about limiting choices? Your SUV may still be available if the market is there.

What needs to be done is the creation of incentives to purchase fuel efficient cars even in times of cheap gas. Not sure if it's a subsidy or tax rebate but that is the only way the market would do a full on move to efficiency in a time of cheap gas.

I might also suggest adding the gas guzzler tax to large SUVs and trucks not used for commercial purposes. It's not fair that a recreational BMW M3 that gets 18 MPG pays a gas guzzler tax when the jerk next to him at the stoplight commutes in an f150 with 32 inch tires. This is coming from someone that likes trucks.

May 19 09:26 AM

[Speedzzter:]

The 35.5 m.p.g. fleet average will force a 42 m.p.g. average for cars. There won't be anything remotely like an M3 as we know it possible under that freedom-killing plan.

The average cost of compliance to be passed along to consumers is $1,300.00 per vehicle. Which means that for low-volume sporting and high-performance vehicles, the cost of compliance will be $5,000.00-$10,000.00 or more. Moreover, volume limitations inherent in an "average" will mean that OEM and dealer gouging will be rampant for anything that remotely resembles a "performance" car.

The liberty of regular wage-earners to purchase a large SUV or a high performance car is being regulated away.

Under the quick proposed time-frame, V8 muscle cars are most certainly going to be slaughtered in the headlong rush to build soulless, happy, smiley FWD Obamamobiles that are acceptable the appliance motorist greeniacs and their steroid-addled RINO lap-dog, California Governor Arnold Schwartzenegger.

Detroit, humiliated, humbled and beholden to corporate welfare will meekly comply, mostly out of the horror that could have arisen had the 9th Circuit and the soon-to-be Obama-ized Supreme Court had permitted the Peoples' Republic of California and thirteen other freedom-hating fellow-traveler police states to set their own fuel economy standards.

Thus, the long, gloomy nightmare that will be a redux of the 1970s, albeit about ten times more expensive and repressive this time, has now been assured.

For some of us, the EnviroNazis will get our "antique" V8s only as they pry the pistol-grip shifters out of our cold-dead hands. We are too old to wait out this long, dark, repressive nightmare. They may crush our collector cars and our bank accounts, but the power-mad looter vermin in charge will never crush our spirit and our resourcefullness.

Others, someday, may anticipate a new birth of vehicular freedom. Whether it occurs is up to a number daunting factors, such as advancements in alternative fuel technology, geopolitics and whether a sufficient number of courageous, freedom-loving voters can overthrow this approaching midnight of our discontent.

To say "see, I told you so" would be accurate, but it would not be helpful. We must fight in the short term to preserve as much of our automotive history as possible and in the long term to recover as much of it as we dare.

While the smokey, back-room Obama-Schwartzenegger-... power grab will dissuade millions of casual automobile enthusiasts from any defiance (mostly because pre-packaged muscle and sports cars will soon become neutered, sanitized, homogenized, and priced out-of-reach), a defiant core of resourceful believers in vehicular freedom and self-determination will reject the compromised, store-bought motoring appliances and hack together "freedom machines" that send but one unmistakable message to those who would attempt to crush our liberty and our dreams.

While the going will become much tougher and the way less traveled, rest assured that some of us will keep on keeping on, if only to gouge the eyes of the "Governator," the Obama-nator, and other pansies of motoring.

May 19 09:44 AM

[slowdown:]

Already am taking steps - buying the '69 Roadrunner that I have been putting on the back burner and using E85 in my Impala 100% of the time.


On May 19 09:44 AM Speedzzter wrote:

> The 35.5 m.p.g. fleet average will force a 42 m.p.g. average for
> cars. There won't be anything remotely like an M3 as we know it possible
> under that freedom-killing plan.
>
> The average cost of compliance to be passed along to consumers is
> $1,300.00 per vehicle. Which means that for low-volume sporting and
> high-performance vehicles, the cost of compliance will be $5,000.00-$10,000.00
> or more. Moreover, volume limitations inherent in an "average" will
> mean that OEM and dealer gouging will be rampant for anything that
> remotely resembles a "performance" car.
>
> The liberty of regular wage-earners to purchase a large SUV or a
> high performance car is being regulated away.
>
> Under the quick proposed time-frame, V8 muscle cars are most certainly
> going to be slaughtered in the headlong rush to build soulless, happy,
> smiley FWD Obamamobiles that are acceptable the appliance motorist
> greeniacs and their steroid-addled RINO lap-dog, California Governor
> Arnold Schwartzenegger.
>
> Detroit, humiliated, humbled and beholden to corporate welfare will
> meekly comply, mostly out of the horror that could have arisen had
> the 9th Circuit and the soon-to-be Obama-ized Supreme Court had permitted
> the Peoples' Republic of California and thirteen other freedom-hating
> fellow-traveler police states to set their own fuel economy standards.
>
>
> Thus, the long, gloomy nightmare that will be a redux of the 1970s,
> albeit about ten times more expensive and repressive this time, has
> now been assured.
>
> For some of us, the EnviroNazis will get our "antique" V8s only as
> they pry the pistol-grip shifters out of our cold-dead hands. We
> are too old to wait out this long, dark, repressive nightmare. They
> may crush our collector cars and our bank accounts, but the power-mad
> looter vermin in charge will never crush our spirit and our resourcefullness.
>
>
> Others, someday, may anticipate a new birth of vehicular freedom.
> Whether it occurs is up to a number daunting factors, such as advancements
> in alternative fuel technology, geopolitics and whether a sufficient
> number of courageous, freedom-loving voters can overthrow this approaching
> midnight of our discontent.
>
> To say "see, I told you so" would be accurate, but it would not be
> helpful. We must fight in the short term to preserve as much of our
> automotive history as possible and in the long term to recover as
> much of it as we dare.
>
> While the smokey, back-room Obama-Schwartzenegger-... power grab
> will dissuade millions of casual automobile enthusiasts from any
> defiance (mostly because pre-packaged muscle and sports cars will
> soon become neutered, sanitized, homogenized, and priced out-of-reach),
> a defiant core of resourceful believers in vehicular freedom and
> self-determination will reject the compromised, store-bought motoring
> appliances and hack together "freedom machines" that send but one
> unmistakable message to those who would attempt to crush our liberty
> and our dreams.
>
> While the going will become much tougher and the way less traveled,
> rest assured that some of us will keep on keeping on, if only to
> gouge the eyes of the "Governator," the Obama-nator, and other pansies
> of motoring.

May 19 09:57 AM

[Wadhamite:]

I don't like the government meddling into mileage standards and emissions levels. I believe that when the Orient produces such vehicles at competitive prices, the public will buy them and the made-in-America mantra will fizzle. It's not a question of IF but WHEN.

May 19 10:56 AM

[Brocluno:]

There are millions of older chassis laying out there that can be registered and driven without these penalties. You want big motor go-fast? Build one of your own. Don't depend on factory hardware. The greatness of America is that we are individuals who can tinker, just like the Wright Bros. Electric, steam, E-85, pure alcohol, chicken manure, it's up to you. You want an M-3 - build it. You want a Super Bee, build one. Daily drivers are not collector cars - they are transportation tools. You want 75 MPG - get a motorcycle (just like much of the current developing world). You are the customer, it's your decision - not theirs.

Me, I want tax credits for home grown (or certified specialist shops) electric cars to cover the cost of conversion. I would not mind taking my older BMW and converting to all electric with Li batteries. But, I won't eat the whole cost while GM gets subsidized to keep building what a lot of folks don't want :(

May 19 01:21 PM

[Thomas J. G...:]

Does anyone know if "has good mileage" always means "makes less smog/greenhouse gases" for a car. I would expect that but I wouldn't be certain.

May 19 06:18 PM

[Living4Divi...:]

Are you saying that new "low mileage" mandates will force detroit to make more fuel efficient cars? We've had mileage mandates for decades. But these mandates have had loopholes big enough to drive an SUV thru. Guaranteed that now that GM is on life support, the new mandates will be just as toothless. Mandates about mileage rules have had VERY LITTLE EFFECT. The latest SUV and truck craze started under the guidance of the last mandate. These new mandates are merely another round of political "feel good" legislation. Govt is saying "hey were doing something about the environment" while in the end they accomplish little. My solution: get rid of mandates

May 19 08:42 PM

[Tdot:]

On May 19 06:18 PM Thomas J. Gordon wrote:

> Does anyone know if "has good mileage" always means "makes less smog/greenhouse
> gases" for a car. I would expect that but I wouldn't be certain.

That is part of it. It is true that if an engine uses half the fuel, all other things being equal the carbon dioxide generated would be roughly half. Of course some fuels have higher carbon content than others. Anyway there are other "smog" gases, including NOx and Carbon Monoxide, that are generated in the combustion process and handled and controlled by the catalytic converter and near-stoichiometric operation (exhaust O2 sensors etc.). So your lawn mower, with an untreated open exhaust system, can have far more harmful "smog" emissions per hour of operation than your car does, even though it uses much much less fuel.

May 20 07:49 AM

[Deweyp:]

How in the name of all that's Holy are we supposed to haul our campers, boats and trailers under this new mandate? Probably one of the most dangerous highway issues will be an under powered vehicle trying to haul a trailer full of horses or a boat that weighs twice as much as the car, up a hill at 10 mph. I for one intend to keep my 89 Chevy pickup (245,000 miles) for just that purpose. Twenty years from now these will be more valuable than new cars.

May 20 11:20 AM

[slowdown:]

So…let me see if I have this right….
• cars are going to be smaller and cost $1300.00 more.
• If cars cost more – insurance/maintenance costs more.
• Gas is projected to increase and will not be offset by the increased fuel economy.
• Food costs increased with the last fuel hike and have increased with the fall of fuel prices instead of decreased.
• Household incomes have dropped as much as 40% (mine has) either because of salary cuts/forced retirements/separations.

Someone help me out…how is this going to help our economy and preserve jobs? I’m not a rocket scientist and I don’t think it takes one to figure this out. Incomes are going down and costs are going up. We don’t have as much to spend today as we did a year ago so we’ve cut back on our spending by default. What was left of our pensions is nearly gone so we need to save now more than ever.
Bottom line - - If we don’t have as much to spend…this was a bad decision.

May 20 05:45 PM

[slowdown:]

The answer is no -- A car that gets 60 mpg still burns 17 gallons of gas every 1,000 miles ( Prius) versus a car that gets 21 mpg using E85 (my Chevy Impala) that burns 7.1 gallons of gas every 1000 miles. In my mind – the Prius is not the benchmark, my Impala is because it significantly reduces emissions and oil dependency. That’s where we should be investing our money. The infrastructure/R&D needed to produce Ethanol efficiently and economically whether it’s from our own rubbish, wood chips, switch grass or corn (coskata.com).


On May 19 06:18 PM Thomas J. Gordon wrote:

> Does anyone know if "has good mileage" always means "makes less smog/greenhouse
> gases" for a car. I would expect that but I wouldn't be certain.

May 20 05:50 PM

[honestdevil:]

What is the big deal?

1) I think Detroit CAN make lighter-weight-Camry size sedans for 80% of us commuters with 35mpg NOW, without any gimmicks or hybridization. To say GM cannot make money selling a $30k product is stupid when $2k cars sell in India TODAY!

2) I think behind the curtain OPEC and Big Oil are the big gorillas bankrupting US with TRILLION dollar imports of oil & products. What CAN BE DONE TODAY will hurt big oil massively! However the 1980 legacy of Bush-Regan's Big Oil support has ended with 9/11 GWBush.

3) I am all in favor of government putting BOTH $2/gal taxes to keep at-pump costs high AND MASSIVE 50%+ gas guzzler taxes on the traitorous 10% who insist on buying huge SUVs
when the Uncle Sam has to go on bended knee hold out begging bowls for generous Chinese to buy worthless USD paper. Without such a guzzler tax, the stupid bought-media driven US flock will remain at 40-60% either buying SUVs or WANTING them. This is no different than teenagers WANTING 3000 calorie double cheeseburger/malt/frys... because they taste good regardless of what it does to US health costs.

4) Finally, very little of the gas/SUV tax can easily subsitize the 10% to buy golf-carts for the little drives the missus makes in suburbia or schools. The funny thing is one these 'smart cars' still costs as much as TEN $2k Nano's :) ha ha

May 20 07:43 PM