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President also calls for increases on federal spending for CNG vehicles, vehicle research, and EV tax credits

At a speech at Georgetown University in the nation's capitol, President Barack Obama's (D) message to automakers was simple -- "told you so."

I. Obama Crows Over Fuel Economy Victories

He remarked:

The fuel standards that we put in place just a few years ago didn’t cripple automakers.  The American auto industry retooled, and today, our automakers are selling the best cars in the world at a faster rate than they have in five years — with more hybrid, more plug-in, more fuel-efficient cars.

The old rules may say we can’t protect our environment and promote economic growth at the same time, but in America, we’ve always used new technologies — we’ve used science; we’ve used research and development and discovery to make the old rules obsolete.

The Obama administration is celebrating a win in which it convinced automakers to adhere to signficant increases to the CAFE (Corporate Average Fuel Economy) standard.  


Under President George W. Bush (R) and the 2007 Congress, the CAFE standard -- which covers light trucks and sedans -- was scheduled to hit 35 mpg by 2020.  President Obama first succeeded in bumping that target to 34.1 mpg by 2016 after initially asking for 35.5 mpg by 2016.

Following that success, the President's team pushed for a much higher standard for 2025 -- as high as 62 mpg.  Automakers said that increase would "kill" the auto industry, but eventually begrudgingly caved to a target of 54.5 mpg by 2025.

The result is a mixed bag -- customers will save thousands of dollars at the pump over the lifetime of their vehicles (the exact amount is dependent on the price of fuel), but will pay $2,059 USD more for a new truck and $1,726 USD more for a new car on average (critics contend the true price increase will be at least twice that).  And automakers have to swallow an estimated $200B USD in costs for developing advanced fuel efficiency technologies.

In his speech, the President also plugged General Motors Comp. (GM) -- a bailout recipient -- for making a climate change pledge. The President remarked, "More than 500 businesses, including giants like GM and Nike, issued a Climate Declaration, calling action on climate change 'one of the great economic opportunities of the 21st century.'"

GM makes the Chevy Volt plug-in electric vehicle that both President Obama and former President George HW Bush are big fans of.

II. More Regulation Ahead?

Emboldened by the concessions that he has already won from the industry, the President proposed more regulation in his speech -- including a fresh round of CAFE targets for heavy duty trucks.  The heavy-duty truck segment (which includes semis, garbage trucks, buses and three-quarter-ton pickups) was first regulated under President Bush's Energy Act of 2007, which calls for a 20 percent increase in average fuel economy by 2018.

The standard refresh would go into effect by 2018, and force that vehicle segment -- which typically features inherently poor fuel economy -- to continue more yearly bumps in efficiency.  Despite the gains since 2007, heavy-duty vehicles are still the second largest source of emissions in the transportation sector, according to the White House.

Super Duty rear
President Obama was new fuel economy targets for heavy duty trucks.
[Image Source: Jason Mick/DailyTech]

Other automotive highlights of the speech included a reiteration of the President's call to bump the electric vehicle tax credit to $10,000 USD, a demand for more federal advanced vehicle research funding, and a push to give new tax credits compressed natural gas (CNG) vehicles.

The President also called for regulations to limit the amount of carbon power plants can emit -- regulations that could force coal and oil burning plants to purchase expensive carbon capture and storage systems.

The speech compared these changes to the introduction of the federally forced introduction of the catalytic converter in 1970 (via the 1970 expansion of the Clean Air Act to cover automobiles), which critics complained would damage the industry.  He remarked:

At the time when we passed the Clean Air Act to try to get rid of some of this smog, some of the same doomsayers were saying new pollution standards will decimate the auto industry. Guess what — it didn’t happen. Our air got cleaner.

The President threatened the oil industry that he wouldn't approve the Keystone oil pipeline unless it cooperated with emissions improvements, remarking that the pipeline would be approved "only if this project does not significantly exacerbate the problem of carbon pollution."

Coal power station
The President wants stricter emissions standards for power plants. [Image Source: Reuters]
 
At least some of the President's demands are unlikely to be fulfilled given the Republican control of the House.  Thus far Republicans in Congress have fought efforts to bump tax credits for EVs/plug-ins and efforts to increase vehicle research funding.

Source: White House on YouTube



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RE: He is right....
By Solandri on 6/26/2013 4:08:35 PM , Rating: 4
CAFE mileages are different from EPA mileages. They used to be the same back in the 1970s when CAFE was created, but the EPA tests have been updated multiple times while CAFE has not. So 54.5 MPG CAFE is probably closer to 40 MPG EPA.
http://www.edmunds.com/autoobserver-archive/2009/0...

The bigger problem is that all these benchmarks are based on MPG, which exaggerates both the benefit of higher mileage, and the contribution of higher mileage vehicles to the fleet average. If you want to reduce the country's oil consumption, it's much more effective to discourage people from buying low-mileage SUVs, than it is to encourage people to buy high-mileage hybrids. Unfortunately, our use of MPG makes the opposite seem true.

The measure you want to be using is the inverse - gallons per mile. MPG tells you how many miles you can go on a single gallon. But that's not how people drive. You don't fill your car with 15 gallons and say "I have to make this last two weeks," and stop driving when the tank is empty. You have a fixed number of miles you need to drive in two weeks, and use however many gallons are needed to drive that distance. So the correct measure is GPM.

e.g. If your work commute is 150 miles in a week, switching from a 15 MPG SUV to a 25 MPG sedan will go from burning 10 gallons to 6 gallons - a savings of 4 gallons.

Switching from a 25 MPG sedan to a 50 MPG hybrid will go from burning 6 gallons to 3 gallons - a savings of only 3 gallons.

So in a switch from an SUV to a hybrid, the majority of the fuel savings (4 of 7 gallons saved) comes from the 15->25 MPG portion (a 10 MPG difference). Only 3 of the 7 gallons saved comes from the 25->45 MPG portion despite the difference in MPG being 2.5x larger (25 MPG). MPG exaggerates the impact and importance of high mileage vehicles.

Same thing with fleet average mileages. If you're using MPG, the correct way to calculate the average for two cars is 2/MPGavg = 1/MPG1 + 1/MPG2. If you use (MPG1 + MPG2)/2, you exaggerate the impact of the higher MPG vehicle.


RE: He is right....
By Mint on 6/26/2013 9:06:09 PM , Rating: 3
CAFE averages are calculated with the sales-weighted harmonic mean:
https://en.wikipedia.org/wiki/Corporate_Average_Fu...

If a company had two models - one 20mpg, another 40mpg - of standard footprint and they sold equally, then CAFE doesn't consider the average to be 30mpg, but rather 26.7mpg.


RE: He is right....
By BRB29 on 6/27/2013 8:23:56 AM , Rating: 2
the simple explanation is the harmonic mean captures the fuel economy of driving each car in the fleet for the same number of miles, while the arithmetic mean captures the fuel economy of driving each car using the same amount of gas.


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