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.