Of Hummers, Government Motors and Fuel Economy.
From my Chinese Column
©2009 Isaac Hernández
It always puzzles me how the English language refers to fuel consumption as fuel economy. Perhaps it’s all relative; I suppose a 100mpg AutomotiveX-Prize contender (see last month’s column) really has fuel economy, compared to the current consumption standards.
While we wait for the X-Prize winner, the US government has proposed a 35.5mpg goal by 2016. This is not new. The Bush administration had already proposed in December 2007 a fleet-wide average goal for cars and trucks of 35mpg, by 2020. In the current regulation, cars must average 27.5 and trucks 23.1mpg. The CAFE standard will increase by five percent each year, building on the 2011 standard, until we get to 2016. The new goal is a national fleet mpg average of 39 mpg for cars and 30 mpg for light trucks.
According to the White House, “the projected oil savings of this program over the life of this program is 1.8 billion barrels of oil. The program is also projected to achieve reductions of 900 million metric tons of greenhouse gas emissions under the life of the program. That is equivalent to taking 177 million cars off the road or shutting down 194 coal plants.”
What the White House has accomplished is for the Environmental Protection Agency (EPA) and the Department of Transportation (DOT) to work together to set standards for greenhouse gases. From these standards, they’ve come up with the fuel consumption figure.
It took some compromises from everybody. California, for example, had to give up their own Clean Air Act and go along the goals set for the rest of the nation. Under California’s plan, the fuel consumption average still worked out to be 35.5mpg by 2016, but the curve to get there was a bit steeper. The White House wants to give car manufacturers more time to get to the new goal.
And, like all laws, there are exceptions manufacturers can work around. For example, heavy vehicles, like the Hummer H2, are exempt from this regulation because they are considered farm or work vehicles. In fact, during the Bush administration, you could even get a tax rebate for the value of your car, if it weighed over 8500 lbs. and was used for business. Other loopholes include mileage credits for selling flexible-fuel vehicles, even if these never run on E-85 fuel.
In my hometown of Santa Barbara, for example, there are no Ethanol fueling stations. I’d have to drive over 100 miles, to Los Angeles, to refuel on E-85; a short distance, if you consider that a couple of years ago, the only E-85 gas station in California was in San Diego, another 150 miles south. Today there are five of these stations in Sacramento (propelfuels.com), one in Brentwood (conservfuel.com) and the mentioned one in San Diego.
Yes, California has a long way to go, but there are also many agents of change, including Daniel Emmet, from Energy Independence Now (ein.org), who pitched governor Arnold Schwarzenegger the idea of a Hydrogen Highway.
Emmet has an ally in Arjun Sarkar, whose official title at the University of California at Santa Barbara is “sustainable transportation change agent”. He has been championing alternative fuels for many years, and is the brain behind our very own Green Car Show, since 2001. Through this show, our citizens have been able to choose more wisely among many different alternative fuel options, including some electric cars from Miles Automotive (milesev.com), manufactured in China. Sarkar is a big proponent of the use of multiple fuels, from natural gas, to electricity to hydrogen.
Perhaps because of the government credits for flexible fuel cars that can burn ethanol, General Motors and Chrysler invested energy in developing this kind of vehicles. They also touted fuel cell and electric car prototypes, but it wasn’t until 2008 that they brought a full hybrid into the market. While we wait for the promised land of the plug-in hybrid Chevy Volt, GM is selling hybrid versions of the Saturn Vue, the Chevy Malibu and the GMC Sierra/Cadillac Escalade. Chrysler launched a hybrid Dodge Durango (sharing technology with GM), but never brought it out to dealerships.
The two other big players in the US automotive industry, Ford and Toyota, have been selling hybrid cars for many years now. Is it perhaps a coincidence that these manufacturers haven’t required any government assistance, yet? I’m not saying that the hybrid car saved Toyota and Ford, but the fact that these companies have had these available for almost a decade speaks volumes about the different way of thinking.
Yes, GM brought us the EV-1 electric vehicle back in the 1990’s. And they have shown many fuel cell cars over the years, including a Chevy Equinox Fuel Cell, which is actually being tested in real life in Los Angeles. But where was the GM “Prius” when they needed one?
Manufacturers have claimed that US consumers don’t want fuel-efficient vehicles as long as gasoline remains under $2 per gallon. Last summer, when the price reached $4 per gallon in Santa Barbara, hordes were selling their SUVs and buying small cars.
Will it take a surge in gasoline price to sell cars under the new CAFE standards to the public? An increase in gasoline tax would do the trick, but don’t ask Americans to pay more tax on gas. We have no problem ever increasing taxes on cigarettes, but people have much emotion about their gas. During the last crisis, Oregon tried to pass a law to increase gasoline tax by just 1 cent per gallon with a voter initiative, in order to fund the police force, and it failed to pass.
Some Republicans propose a gasoline tax hike in exchange of lowering employment taxes, thus not increasing taxes, technically, but moving them around. This way we would tax something that we don’t need (CO2) instead of something we need (jobs).
The EPA and NHTSA foresee flexibility in compliance with its proposed standards based on certain credits. Credits can be earned for fleet over-compliance in a given year, and applied in future years. Current consideration is to allow credits to be carried forward for at least 5 years.
And while the new standards are designed to make all type of cars and light trucks decrease their fuel consumption, there probably will be ways in which manufacturers can transfer credits among its fleet. Plus, plug-in electric and hybrid vehicles will count towards “super credits,” by making each of these vehicles count as more than one, with a multiplier to be decided.
And since the mpg figure is actually figured mathematically from the greenhouse gas (GHG) emissions, critics say that the improvement of AC systems will count towards the figurative reduction of fuel consumption.
The car manufacturers seem to like the new plan as it simplifies the system, by getting rid of different laws for California, and the other States that were going to follow the Clean Air Act. Some say that GM and Chrysler had no option but to stand behind the president, after all, the government owns 60% of GM.
Obama’s office, which has been accused of being Communist by conservative right-wing Republicans, is setting these standards for all car companies, but also its own company, GM, which some say that it stands for “Government Motors”.
The irony is that GM may have not been in such dire straits if it wasn’t for the old CAFE standards, which gave unfair tax advantage to large SUVs, by exempting them. SUVs became the chicken that laid the golden egg. And even though SUVs still enjoy relative strong sales in the USA, given the circumstances, the Big Three became too comfortable with large vehicles and an easy profit, and have not quite learned yet how to make a profit with small cars (or so people say).
Does GM have an unfair advantage with the government on its side, and the possibility of setting up laws that favor their own company? The US legal system won’t let the government get away with helping its own company. It will be impossible for GM to be an exclusive supplier of police cars, for example, or for the White House to give away GM cars with your tax rebate.
Some question the government’s investment in GM. If you were to buy a car company, why buy one with so many troubles at such high price? And if we really want to reduce fuel consumption, why not invest in a new company that makes electric cars already, not one that promises a plug-in hybrid in the future? Look at Daimler, which sold Chrysler before it went bankrupt, and now it’s buying 10% of the electric car company Tesla Motors.
As I write these lines, I hear that Sichuan Tengzhong Heavy Industrial Machinery Co. is possibly buying Hummer, contracting vehicle manufacturing temporarily, thus keeping the Shreveport, Louisiana, factory (where the H3 and H3T are assembled) open until at least 2010. While the H3 does have to follow CAFE standards, the H2 doesn’t. It’s up to Sichuan Tengzhong to make Hummers that the public wants. A 100mpg Hummer, anyone? Why not? Who says a purely American brand also has to be a gas guzzler?