Wednesday, May 27, 2009

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Fuel efficiency of the fleet

Last Tuesday (19 May), President Obama released a plan for fuel-efficiency standards that would require U.S. car companies to improve their fleet mileage by 10 miles per gallon, to an average of 36.5 MPG by 2016. It’s a modest change; we ought to be able to effect a much greater improvement than that.

That said, it is, of course, a fine thing — assuming that legislators follow through with it and don’t relax it later, as they’ve often done in the past. Such improvements are good for the consumer, decreasing fuel costs. But let’s not fool ourselves into thinking that it’s all good. Making cars that use less fuel also pushes up the cost of the cars, and this is likely to cost more than the $1,300 per car that the plan includes. Further, modest increases aren’t necessarily good for the environment, because they might not adequately offset collateral environmentally unfriendly changes, such as the use of different materials and different manufacturing methods.

But also keep in mind that modest changes in miles per gallon do not save us, the consumers, as much as we think they will. That’s because we don’t drive our cars based on gallons, but based on miles. What matters isn’t how far we can go on a gallon of fuel, but how much it costs us to go where we need to.

Consider my commute, up through February: I used to drive 22.5 miles to work. 45 miles a day, 225 miles a week. If my car got 26.5 MPG, that would be 8.5 gallons a week. If gasoline was $2.50/gallon, it would cost me $21.25 to get to work and back for a week.

Re-compute that with 36.5 MPG: 6.16 gallons, $15.40. I’d save $5.85 a week, or $300 a year, on my work commute. Computing the cost of driving 15,000 miles a year both ways yield’s a saving of a little less than $400 a year.

Note that the companies are saying that effecting the required increase in fleet economy would “add a few thousand dollars” to the cost of a car, according to one estimate. Let’s take “a few thousand” to mean, oh, say, $4,000. That would mean that at a gas price of $2.50/gallon (about what it is in my area right now), someone driving 15,000 miles a year would have to keep a car for at least ten years in order to break even on the cost.

How many of us keep cars for ten years? I do; I had my previous car for 13 years (248,000 miles), and my current car turns 10 this year (about 175,000 miles now). Most people, though, do not. Most people will not save money with this change, unless fuel prices increase significantly — which they certainly could do. If the added cost is only $3,000 and gas costs $3.50/gallon, the break-even point is 5.5 years. Many people will still replace their cars before they break even on this change, but a good number of us will benefit.

Note that I’m not saying that the change isn’t good — it might well be, and it’s certainly a start. What I’m saying is that it’s not as straightforward as it sounds.

5 comments:

Frisky070802 said...

Interesting analysis. But the financial tradeoffs are of course only part, as you point out at the end. And who knows where gas prices will go; by the end of that interval it could be even worse, and the break-even point earlier. But in the end it doesn't really matter. We have to get more fuel efficient, and we have to get off fossil fuels completely. At least this is a step in the right direction.

Barry Leiba said...

Right, the real point of the analysis was to highlight the limited value, in terms of fuel consumed (and, therefore, cost savings to the consumer), of these modest reductions. A mere 10 MPG improvement by 2016 is inadequate, and this may not actually be a "good start" if we settle for it, and it prevents us from demanding more.

For an implementation in 2016, we should be pushing not for 36 MPG, but for 60, perhaps more. We might not get there by making cars that burn gasoline better, but by making cars that don't use gasoline, or use it for less of what they do. Electric motors, solar-powered battery charging, and other options are within our near-term technology.

Call me Paul said...

I'm unsure of how the fleet average MPG figure is calculated. Is it the average of the MPG figures of each model in a car maker's line-up, or is the average MPG of all the cars sold in a year? If it s the latter, the number could be changed a fair amount by trying to change the way people think about cars. Right now, size is the automotive status symbol. The bigger the truck or SUV, the better. If we could change people's thinking away from size and toward some other attribute, and simply sell fewer trucks, we'd be on the right track.

Barry Leiba said...

I'm not certain, but I believe it is the latter, and, yes, changing what people buy is also a way to achieve an improvement there. And, damn, but I wish we could convince people to stop buying Suburban Tanks!

Dr. Momentum said...

I agree we should be looking for even better efficiency, but you missed the sweet spot in your calculation. Car manufacturers are not going to improve their averages by improving the 26 MPG cars, they need to get rid of those 15 MPG cars.

Let's re-do the calculation getting just 10 MPG better on a 15 MPG car.

255 M/week = 17 gallons at 15MPG

At 25MPG that'd be 10.2 gallons.

now you're looking at closer to $900 a year savings.

Those are the vehicles that are really causing a problem.