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President Obama wants to make gas guzzling vehicles go extinct with tough new CAFE rules.

Michigan Governor Rick Snyder (R) is concerned the bill could cost American jobs.  (Source: Rick Snyder via Flickr)

The standard could also lead to more crash deaths, as automakers say such standards lead to cuts in material density and safety features to save on weight. The resulting cars are more fragile.  (Source: Car Insurance Comparison)
Plan would save on pollution, oil costs, but could increase vehicle costs, job losses, and accident deaths

The debate over the next Corporate Average Fuel Economy (CAFE) standard (set to run from 2017 to 2025) has just begun, and the political posturing appears to be in full effect.  From Department of Transportation (DOT) Secretary Ray LaHood to Senators and governors, everyone was expressing vocal thoughts about the "rough draft" of standards that United States President Barack Obama's (D) advisors unveiled on Monday.

I. 56 MPG = Lost Jobs?

Given that much of America is still recovering from recession, the topic of job loss is a sensitive one for many Americans, and is a powerful phrase to invoke in rhetoric.

Governor Rick Snyder (R-Michigan), whose state is home to America's three biggest automakers, was among 14 governors who wrote a cautionary letter to the heads of the DOT and the Environmental Protection Agency (EPA), employing this phrase to its full effect.

They write:

If fuel economy standards are increased too quickly, resulting in more expensive vehicles, many consumers can be expected to hold onto their older vehicles longer and defer buying a new car, which could put auto jobs across the country at risk.

The letter does not specify whether the proposed 56.2 mpg standard counts as increasing fuel economy "too quickly", but the timing certainly make it seem like a criticism of the plan.  Governor Snyder points to estimates that the plan will add between $2,100 USD and $2,600 USD to the cost of a vehicle, on average.  He urges the government to adopt a "sensible" standard, but stopped short at saying what such a standard would be in mpg.

The White House apparently decided to take the letter as a compliment, with spokesman Matt Lehrich writing:

We appreciate the governors' support for a national fuel economy standard that will save American families money at the pump and keep the jobs of the future here in America, and we share their commitment to preserving affordability and consumer choice.

II. Mich. Sen. Levin (D) Expresses Mixed Feelings on Bill

Sen. Carl Levin (D- Michigan) sent a separate letter to the White House demanding information on what data they used to decided on the proposed CAFE numbers.  In an interview he states, "We want to know how they arrived at that starting point. We will get that information one way or another."

The Senator admits, though, that without an agreement on the standard, the solution might be even less appealing.  If an agreement is not put in place, states like California will likely look to enact their own guidelines.  While this might please some state rights advocates, it is something automakers oppose -- they prefer a national standard.  Sen. Levin also opposes such provisions, stating, "[States] should not be given a waiver [to set their own standards]."

But without a binding national agreement, the government may have a tough time stopping states from doing so.  Technically the U.S. Environmental Protection Agency, a federal entity, has to approve of states' plans and grant them waivers from national standards.  A 2007 Supreme Court ruling in the case Massachusetts v. EPA, (No. 05-1120) found that it was illegal for the EPA to obstruct states from implementing their own standards by refusing to grant waivers.  The message seems unequivocal -- the EPA must grant waivers if states want them.

Sen. Levin adds that he is "very concerned" about the prospect of lost sales and jobs from the proposal.

III. Ray LaHood Wants Standard to be Finalized by July

Whether or not the final draft of the standard contains compromises, such as a lower mpg target, Secretary LaHood wants it to be delivered to the EPA and DOT by the end of July.

Secretary LaHood was critical in finalizing the current CAFE standard, which will require automakers to reach 34.1 mpg by 2016.  That standard, first set into motion by departing President George W. Bush (R) and finalized by President Obama, is estimated to cost automakers $51.5B USD over its course.

The tricky part about the standards is that while they cost on the vehicle side, they force savings at the pump.  The current standards are estimated to cut 1.8 billion barrels of oil by 2016.  With oil currently at $94.77 USD/barrel, that's a savings of $170.6B USD.  Further, by cutting fossil fuel combustion, the bill reduces emissions of toxic nitrogen and sulfur-containing gases that have been linked conclusively to chronic conditions such as asthma.

On the other hand, the bill may have raised other costs, as it is thought to have made the average vehicle less safe, contributing to automotive fatalities.

More extreme elements of the environmentalist movement have criticized both the previous and the pending CAFE provisions as being too weak.

The DOT Secretary offered cautious optimism that a compromise will be reached, commenting, "Our people are very professional at this. I think we proved that with the last CAFE standard. We got it right because we had every car company standing in the Rose Garden with the president. We want to get it right this time.""



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RE: Car Sales
By dsx724 on 6/30/2011 5:36:41 PM , Rating: 1
Last time I recall, you can still buy Ferraris, Lambos and Range Rovers. Whats with all the complaints about CAFE when the options are out there?

Those lazy people that do not work and do not pay taxes account for less than 10%. Be the better person and ignore minute amount that comes out of your paycheck.

On an individual scale, your usage isn't reflected but if there were a million people who think like you, the price of gas will increase by 1-2% for entire pool. Thus the extra demand you've created is causing everyone to play more whether they like it or not.

The statistics are out that shows that returns on improved fuel economy have three fold returns in gas saving. For each dollar I'm paying into the American economy for research, I'm saving $3 from going to Saudi Arabia.

The free market has failed and will continue to fail based on externalities. By driving around in your oil guzzling sports car, you are increasing the prices for the pool and polluting the air that I breathe. I would like you see you repair the damage to the road and clean up the smog created per gallon of gas using the 10 cent per gallon tax that is put into gasoline. It simply doesn't work because there's insufficient taxes to cover the cost associated with its consumption.


RE: Car Sales
By acer905 on 6/30/2011 10:52:19 PM , Rating: 4
........... You do realize that a) $0.184 per gallon of gas is the federal tax, with state tax added on to that, and then sales tax added at the end. For states like Connecticut or Minnesota, which have state taxes in the mid $0.20's, that can easily get to 4x your estimate.

http://www.gaspricewatch.com/usgastaxes.asp

http://www.taxfoundation.org/taxdata/show/26079.ht...

http://www.api.org/statistics/fueltaxes/upload/GAS...

b) The breakdown of US oil suppliers does not start with any OPEC member. It starts with Canada, supplying nearly twice what Saudi Arabia does. Because Canada actually uses the vast oil that can be found in the Arctic Circle, much like Russia, which happens to be another of the worlds oil suppliers.

ftp://ftp.eia.doe.gov/pub/oil_gas/petroleum/data_p...

http://www.consumerenergyreport.com/2010/01/25/top...

http://en.wikipedia.org/wiki/Petroleum_industry_in...

http://www.nytimes.com/2009/09/09/business/global/...

c) Based on the US gasoline usage, 378 million gallons a day, and the average gas tax of $0.495 per gallon, the government rakes in $187.11 million a day from gas sales, or $68.295 billion a year, pure "profit". ExxonMobil, the worlds largest oil refiner in the world, only managed $30.46 billion in net income for worldwide sales in 2010. Thats off of $383.221 billion in revenue. I'd say the Gov is getting their fair share.

http://www.eia.gov/energyexplained/index.cfm?page=...

http://en.wikipedia.org/wiki/ExxonMobil_Corporatio...

http://biz.yahoo.com/ic/10/10537.html


RE: Car Sales
By dsx724 on 7/1/2011 2:14:25 AM , Rating: 2
a) true, i am wrong on that figure
b) oil futures are global, just because our money isn't going directly to opec member nations doesn't mean opec member nations aren't getting more money because of us. canada could be selling that oil to europe and china and thus reducing the share of their oil imported from middle eastern countries.
c) the US has 4 million miles of roads and 2 million miles of oil/ng pipeline of which a significant portion has lighting, traffic lights, guard rail and sound walls. where is the pure profit when you have to build and maintain all of this and build parking space? for every dollar you spend on gas, the government pays more than a dollar to enable you to drive.
c2) 8% profit after costs are factored in. the government is running a negative balance that must be supplimented by non-gas taxes to break even.


RE: Car Sales
By JediJeb on 7/1/2011 5:14:36 PM , Rating: 2
quote:
Those lazy people that do not work and do not pay taxes account for less than 10%. Be the better person and ignore minute amount that comes out of your paycheck.


Maybe those that pay no taxes at all is at 10%, but the figures show that now for the first time since the Great Depression US households are receiving more money than they are paying in in taxes. I personally know several people working at minimum wage jobs who get more money in their tax returns each year than they actually paid in.


RE: Car Sales
By MrBungle123 on 7/1/2011 5:31:29 PM , Rating: 2
The bottom 50% of wage earners only pay 3% of the taxes... so yeah, the number of "tax payers" that don't pay taxes is enormous.


RE: Car Sales
By YashBudini on 7/1/2011 9:51:20 PM , Rating: 2
quote:
The bottom 50% of wage earners only pay 3% of the taxes...

How many of them are retired people? Or will you remain perfectly satisfied with half truths?


RE: Car Sales
By MrBungle123 on 7/1/2011 10:32:52 PM , Rating: 2
Retired people are not the problem, the welfare kings and queens are the problem. Far too many people are content to work for $8-10 and hour and collect food stamps. They have children and get health insurance plans and tax payer subsidised housing through the state. This group has a negative tax burden because they do not produce enough in the way of tax revenues to make up for their drain on the system. Thats where the problem lies. The same group that votes for socialists like Obama and the rest of the blood suckers in Washington that buy votes with mine and the rest of the working public's money that pulls their weight.

Now I suppose you're going to reply with some drivel that goes on about how I'm because I would rather people work for a living and don't feel sorry for people that would rather smoke weed and drink themselves retarded than learn a skill and add something to society.


RE: Car Sales
By dsx724 on 7/1/2011 11:10:57 PM , Rating: 2
Retired people are the problem. Labor participation after 65 has fallen drastically from historical trends. The same people keep voting Republican thinking that Republicans will make them pay less taxes but little do they know that Republicans are mostly spend whores that will cut services to the elderly and rip apart sustainable money pools created to assist the elderly. These people then have to depend more on government services to get by.

Many elderly people feel that they should not have to pay for education since they no longer have children but what they don't realize is that the same people that the elderly don't want to pay taxes for will in 10 years have to pay taxes to contribute to sustaining the existing retiree services. The only logical conclusion is that democracy is being cyclically undermined by misinformation and lack of education.


RE: Car Sales
By redbone75 on 7/3/2011 3:24:40 PM , Rating: 2
quote:
the welfare kings and queens are the problem

You mean big oil and other large corporations that constantly look for government subsidies? And then cry foul when it is proposed to remove those subsidies when they are experiencing record profits year over year? You hear the same crap from them, also: "Innovation is being stifled, or prices will go up, or jobs will be lost." Get off that bull$#!&, man. There are actually people that are educated and don't feed into the lies that the right try to spew. Yeah, yeah, I'm going to get voted down by all the right wing morons that would rather just follow the lies their leaders spit (like Rush "The Drug Addict" Limbaugh and Newt "Tiffany's" Gingrich), but try doing a little more research before you start with boring welfare crap.


RE: Car Sales
By YashBudini on 7/1/2011 9:49:24 PM , Rating: 2
quote:
Those lazy people that do not work and do not pay taxes account for less than 10%.

As more and more people retire his kind are really going to freak out.

quote:
Be the better person and ignore minute amount that comes out of your paycheck.

Oh man, you're certainly at the wrong web site. These guys think that a person earning $12-$14/hour can afford to save enough to fund their retirement for 20-30 years and it's totally their fault if they can't succeed, regardless of how much inflation there is on food, energy costs, medical, etc.

quote:
I'm saving $3 from going to Saudi Arabia.

Can't understand why so few people here don't put the Arabs at the top of the screw you list in this manner.


"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer














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