Tadge Juechter — Jan 26 2009 11:23 AM

Roland,
Is the NRDC going to push for all auto manufacturers to have to meet AB1493? I don't understand why some manufacturers are exempt. Mercedes Benz just paid record fines for failing to meet CAFE. Do they now have to meet AB1493? The Porsche Cayenne gets horrible fuel economy, Why should they get a free pass?

mk — Jan 26 2009 12:37 PM

is there a statistic somewhere that shows how many people in the US would be affected by the new standards? (in other words, what is the % of population in the 14 states that would adopt the California regs?) thanks!

mk — Jan 26 2009 01:54 PM

got a general answer to my own question. if anyone's interested in this stat: EDF says "So far, 13 states have adopted the California standards, and several others are considering doing so. All together, these states represent almost half the U.S. population."

Len_A — Jan 26 2009 09:22 PM

Tadge Juechter - they don't get a free pass, they get fined and the consumer pays the fine. It's called a gas guzzler tax. The consumer is going to pay a fine on all of this one way, or the other. It's called significantly higher prices, and no, the gas savings, even at $4, $5, or even $10 a gallon won't offset it.

One, all the auto makers oppose this, not just Detroit. Toyota, Honda, Nissan, BMW, and Mercedes are all on record saying this is unworkable, expensive, and will deprive the real consumers of vehicle choice or saddle consumers of anything larger than a Honda Fit or Toyota Yaris with a gas guzzler tax. BMW put their objections to the Federal regulations last year and 2007 in the Federal Record, and were the first to do so.

Second, Toyota and Nissan all build 1/2 ton (full size) pick up trucks, and both mainstream (Toyota & Nissan) and Luxury brand (Lexus & Infiniti) SUV''s off those truck platforms. All three transplants, Toyota, Nissan, and Honda, have made their main stream, bread & butter sedans, the Camry/Avalon, Accord, and Altima/Maxima larger than they were six years ago, more powerful, and less fuel efficient. All it takes is to do some "used car" research on Edmunds.com to verify that.

Sales of all hybrids dropped 9.8% last year, with the entirety of the sales drop occurring after gas prices fell after the beginning of August.

The proponents of this ill conceived move had better understand that it's not only the Detroit automakers whose product offerings will be drastically affected by this, it's also the anti-Detroit crowd's favorite transplants and imports. As of last spring, 2007 BMW already wrote off the United States as the beneficiary of their biggest marketing efforts (which, contrary to the anti-automobile crowd means listening to consumers wants and needs, not hard selling them cars they didn't ask for, but it would be developing markets of Russia and China.

John May — Jan 27 2009 09:24 AM

What bothers me the most about this discussion is that auto makers are in the business to sell a product at a profit. It seems obvious that if everyone wanted hybrids and nobody wanted gas-guzzlers then the auto makers would only be building hybrids. They can only sell what a consumer will purchase. Why are we blaming the auto makers for the dearth of offerings in the hybrid category? If there was sufficient consumer demand then I am sure they would be building more. The government cannot create demand.

Mandating that auto makers build more hybrids/etc because it is seen as the 'responsible' thing to do (independent of any consumer demand) would be tantamount to mandating that the fast food industry begin selling vitamins, free-range beef and chicken, wild caught fish, organic wheat buns, organic french fires, fair trade shade grown organic coffe, (lest we forget PETA breast milk milkshakes), use only 100% recycled paper for all paper products, remodel all of their locations with no VOC paints, and use only ethanol, NG, LNG, bio-fuel or Hybrid powered delivery vehicles to ship their food products to their stores. At some point you just have to shake your head and say "WHAT?".

The only reasons any business exists is because they have consumers. In other words a business is in the business of satisfying some form of consumer demand. No demand then no business. Therefore we should stop blaming the business for the consumers choices. They have a fiduciary responsibility to their owners (in the case of the auto industry that would be Joe the plumber in the form of stocks, IRA, 401K, etc) and would cease to exist as a business if they ignored what their consumers wanted.

Anthony Watkins — Jan 27 2009 08:25 PM

I would have preferred to send you a private email, but dont find that option.
my proposal is original, though others may have gotten tot he same place, i am yet to see this in the MSM:

Funding the War on Global Warming

We are currently spending over $100 Billion per year to fight a war in Iraq. If we end the war, we could use that money to fight a more important war, the war on global warming.

There may be better ways to spend the money, but I have a plan that I believe would be a huge help on many levels.

If we allow every family who lives below the poverty line to replace an existing car with a new American made “Prius” type vehicle, we would jump start on industry, lower production costs, save millions of barrels of oil in domestic consumption and increase the standard of living for our poorest citizens. If the US government awarded a contract to the big three or even to smaller start ups who agreed to produce basic hybrid 4-door sedans, we could probably get the cost in the $10,000 per car range, replace the oldest and least efficient cars on the road.

Of course, we would not limit the technology by requiring a specific type of system only require the maker build a 5 passenger vehicle that met safety standards and durability criteria and achieved 60 mpg hwy and 50 mpg city, and was made domestically.

We could also offer a 50% credit to those who live at or below 100%+ of the poverty line and a 25% credit to those who live at or below 200%. This would allow us in three years to replace 30 million cars. The old cars would have to be crushed or otherwise salvaged so as to not create more cheap polluting cars. There might have to be some kind of partial credit for the poor who have managed to buy a late model fuel efficient normally powered car. The program would be voluntary, but most working class people I know would jump at a free car that used less gas and wasn’t as prone to expensive breakdowns as a worn out old car.

At the end of three years, those of us who fare better in the world’s economy, could afford the lower priced, mass-produced hybrid cars, thereby increasing the impact of reduced fuel usage at no additional cost to the taxpayer.

If 30 million cars that have an average fuel usage of say 20 miles per gallon and are driven and average of 20,000 miles per year, are replaced with vehicles that use at a rate of 50 mile per gallon that would be 18 billion gallons of refined fuel not used per year, if we saw a corresponding switch among non subsidized auto buyers, we would save 36 billion gallons of gas per year, in 30 years, that would be net savings of over a trillion gallons of fuel, and of course a corresponding reduction in pollutants. We also would save the nation and thus those same taxpayers who fund the original investment approximately $3 Trillion for our initial investment of $300 Billion, or a ten fold return in actual dollars, not to mention the benefits of cleaning up the air, reducing dependence on imported oil, and creating a thriving world market leading auto industry.

Just my $100 Billion idea,
Anthony Watkins

John May — Jan 28 2009 08:44 AM

Anthony

Your proposal sounds interesting but I believe some of your underlying assumptions are incorrect and that leads you to draw unrealistic conclusions about the benefits of your proposal.

First your estimates on the number of vehicles that would be replaced over a 3 year period by subsidizing vehicle purchases to people who are at 200% and below the poverty line seem unrealistic. First it seems that you assume that 100% of all of these families own a vehicle (seems implausible to me) and that that vehicle is a gas guzzler. Even if we assume 100% ownership your plan over estimates the total potential vehicle count. Some numbers may help.

According to the Census Bureau in 2007 37.3 million people (12.3% of the U.S. population) comprising 7.6 million families were listed as living at or below the poverty line. If we assume 1 vehicle per family then that yields 7.6 million vehicles. Here are the numbers:

Married-couple families = 2.8 million
Female-Householder families = 4.1 million
Male householder no wife familes = 696,000

Now breaking out counts on families that are above the poverty line and below 200% of that line is trickier because of the sliding scale nature of the definition of "poverty line". So at this particular moment, having done limited research on the Census Bureaus website, I think it would be safe to say that approximately 12 million familes live between the poverty line and 200% of the poverty line. Again assuming 1 car per family this yields another 12 million cars. So that total count of cars that would be replaced by your proposal is 19.1 million.

The second flaw in your proposal is that you assume there would be 100% participation by these families. Actually 100% participation would yield a 'maximum theoretical benefit' but no forecaster worth their salt would do this. Yet even if there was 100% participation you can now see that the maximum number of cars reduced would be 19.1 million and not the 30 million your proposal is built upon.

For a moment let's set all of that aside and give you the 30 million car estimate. You also state that replacing these 30 million cars would lead to a savings of approximately 18 billion gallons of fuel a year. (You arrive at this number by assuming an average 20 mpg for the fleet of replaced cars and estimating that all these cars are driven 20,000 miles per year, a number much higher than the national average of 15,000, and yet even higher than the average number of miles driven by poor families as they are concentrated in urban areas). I am feeling generous so even though your numbers do not support it I will give you the 18 billion gallon fuel savings. Sounds like a lot doesn't it?

Q. How much fuel is used in the U.S. each day?
A. 390 million gallons. (Source: US EIA)
Q. How many days would 18 billion gallons last in the U.S.?
A. 46 (18 billion / 390 million)

I do not think your benefit is sufficient to justify the cost.