Michigan Lawmakers Prepare to Fight Possible Proposed Fuel Economy Standards

fuel economy standards, michigan fuel economy standards, white house fuel economy standards

Why can't we seem to figure out this gas mileage stuff?

Despite having a large portion of their state’s economy saved by the Federal Government’s auto bailouts, lawmakers in Michigan are preparing to express concerns and discontent over the White House’s rumored new fuel economy standards.  In case you’re not already aware, it is believed the White House will push CAFE standards to 56.2 miles per gallon (mpg) by 2025, nearly doubling today’s standards.

In an article entitled “Michigan Lawmakers Prepare Letter on Fuel Economy Rules”, published in the Detroit Free Press, Aaron M. Kessler writes:

It currently remains unclear whether the letter will specifically take on the 56 m.p.g. target by 2025 that the White House wants, or raise more generalized concerns.

As the Free Press reported Tuesday, Michigan’s congressional delegation gathered this morning to decide whether to publicly join the fuel economy debate. Michigan’s members of Congress had mostly remained silent in public as the negotiations have continued in recent weeks.

While this article seems to be rather ambiguous, if you read between the lines it’s obvious to see that the Michigan lawmakers will oppose the large raise in fuel economy standards, mostly because they will be inconvenient to some of the largest businesses in Michigan.

You see, state and local governments are not immune to being “persuaded” (read: in bed with) corporations, and will do whatever is in the company’s best interest.

Despite the fact I believe simply raising the fuel tax would achieve a greater reduction in fuel consumption, I’m still all for raising fuel economy standards.  Unfortunately, it appears that Michigan lawmakers will take the stance of going with neither.

What are your thoughts?  Should Michigan lawmakers oppose?  Are you tired of our governments putting the best interests of corporations first?  Leave your comments below or share this post via the social sharing buttons – especially Facebook and Twitter.

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Fuel Economy vs. Fuel Taxes – Which Will Do More?

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Which is better, higher fuel economy or higher fuel taxes? Image via Wikipedia

Here’s an interesting question: which is more likely to make you use less fuel, forcing you to buy a more fuel efficient vehicle or forcing you to pay a much, much higher fuel tax?

This is sort of a relevant question because there is news that the Obama administration is considering raising fuel economy standards for all cars and trucks sold in the U.S. to 56.2 miles per gallon by the year 2025:

The Obama administration is considering a fleetwide average of 56.2 miles per gallon for all new cars and trucks sold in the US by 2025, The Wall Street Journal reported late Saturday citing two people briefed on the matter said.

The proposal would roughly double current fuel-economy targets, and would likely raise the price of some cars by several thousand dollars.

Read more of this Fox News article by clicking here.

2025 is certainly a long way off, these new standards are certainly worth debating in the meantime.

While I think most of us would be willing to argue that reducing fuel consumption is certainly something we need to do, there are arguments that simply raising fuel economy standards isn’t the best way to go about it.

In an interesting article entitled Fuel Taxes vs Fuel Economy: Are Stricter Fuel Economy Standards a Good Idea? by Ed Dolan (published on OilPrice.com), it is argued that raising fuel economy standards tackles only a small portion of the problem:

The problem with higher CAFE standards is that they encourage fuel saving only with regard to the choice of what car to buy. Once a consumer buys a low-mileage vehicle, the cost of driving and extra mile goes down, thereby reducing the incentive for fuel-saving measures like moving closer to work, working at home, riding the bus to work, or consolidating errands.

The very fuel-saving strategies that CAFE standards discourage, like moving closer to work or consolidating errands, are often the ones that have the lowest costs. That is why the total cost of reaching a given national fuel-saving target will be greater when achieved through CAFE standards than when induced by an increase in fuel taxes.

If you’re a fan of economics, studies in spending habits, or just interested in the topic, I highly recommend you read the article in its entirety.

Anyway, in looking at this side of the argument, I think I would have to agree with Dolan.  Think about it, in order to get the biggest environmental bang for the buck you need to fundamentally change people’s driving habits.  You’re not going to do that by increasing fuel economy standards.  That’s painless.

The only way you’re really going to invoke substantial change is to cause pain, particularly pain in the wallet.  That’s why a dramatic increase in the fuel tax would mass a larger reduction in fuel usage and pollution than simply raising fuel economy standards.

Yes, I realize this is a so-called “regressive tax” meaning it affects the poor far more than the wealthy, but, as heartless as it sounds, I don’t think that should stop politicians from moving forward with a fuel tax increase.

What do you think?  Which is more apt to bring bigger changes?  Leave a comment below and be sure to spread the word using the social buttons below.

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The Top Eco Car of 2011

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These fuel economy figures are lame! Image via Wikipedia

After gasoline prices tanked in the midst of the worst economic crisis since the Great Depression and the pain at the pump eased, there wasn’t as much of a monetary incentive for people to get rid of their gas guzzling sports cars, trucks, and SUVs and trade them in for more practical, fuel economy friendly vehicles.

Now that gasoline prices are back to pushing all-time highs, it seems as if buying a fuel efficient vehicle is back in style.

Today, CNET published a great article by Wayne Cunningham entitled By The Numbers: The Top Eco Car, which, as you probably guessed, talks about the most environmentally friendly and fuel efficient vehicles on the market today, and compares all of them based on the following criteria:

  • Cost
  • Range
  • Annual fuel cost
  • Seating
  • Cargo capacity

Looking through the EPA listings for 2011 model year cars, we picked out the most fuel efficient and compared them by a few different data points. Topping the EPA list is the 2011 Nissan Leaf, with its massive 99 mpg equivalent fuel economy. This number represents the combined city and highway mileage.

The 2011 Chevy Volt is more difficult to place, as the EPA lists two fuel economy figures, 93 mpg equivalent for electric operation and 37 mpg for gasoline operation. A simple average shows 65 mpg, which isn’t particularly accurate but will do for this comparison.

That hybrid stalwart, the 2011 Toyota Prius, rings in at 50 mpg, and is the top fuel economy performer that can’t be plugged in. We also decided to throw in a diesel, the 2011 VW Jetta TDI Sportwagen, which gets 34 mpg. We chose the Sportwagen because it gets the same fuel economy as the sedan, yet has more cargo area.

So, which car drove away with the award?  If you guessed the old favorite, the Toyota Prius, you’d be right, although, there were some caveats:

Given these categories, the 2011 Toyota Prius comes out the winner. Its base price is the lowest and it offers the most range, while at the same time having the largest passenger compartment.

That fact, however, does not mean the Prius is the best choice for everyone who wants an ecologically sound car. If the majority of your drives come under 35 miles, than the Leaf or Volt might make a better choice. If you don’t have easy access to the charging stations or need to maximize cargo volume, the Jetta TDI Sportwagen would serve well.

Which would you have picked?  Leave a comment below!

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In Europe, Ford Needs to Highlight Fuel Economy and Technology

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Henry Ford was one of the greatest businessmen of all time. How would he grow his company? Image via Wikipedia

Despite being an American icon,  in order to succeed and continue to grow, Ford needs to expand its reach in two key areas: China and Europe.  (After all, the world is flat.)  While Ford has been growing its Asian presence relatively quickly, they have been unable to expand at the same pace in Europe.

My guess is this is mostly because Europeans have the same misconceptions about Ford that Americans used to have: they produce low quality, gas guzzling, road-hoarding vehicles.

I’ll be the first to admit I’m an American car kind of guy – specifically Ford and Dodge – so I’m a bit biased.  That being said, I think Ford can legitimately succeed in Europe.

In a great article in Motor Trend by Jake Holmes entitled To Win Over European Customers, Ford Will Highlight Vehicle Fuel Economy and Technology, Ford’s path to success is outlined

Ford currently holds just 7.5 percent of the German automotive market, whereas Volkswagen has cornered 20.8 percent of the market. To help woo European buyers into Ford showrooms, the Blue Oval will highlight the impressive fuel economy of its newest models. Sales people will be given Apple iPads filled with information on fuel-saving features of new Ford cars. In addition, the company plans to tout the fact that it builds vehicles and engines in Germany, employing about 29,000 German workers.

On top of those tenets, Ford will use technological prowess to win over drivers. Ford’s Sync connectivity system will launch in Germany in 2012, with electric and hybrid cars arriving in Europe the year after. Such systems are reportedly very important to European buyers, which partially explains why they may gravitate to Volkswagens with more tech features.

If Ford can improve its image among European customers, the company stands to improve sales as well as vehicle purchase prices. That would mean increased profits throughout the European market, assuming that buyers will be influenced by promises of fuel economy.

Seems like a pretty good plan to me!

What are your thoughts?  Think Ford will ever be able to succeed in Europe?  Leave a comment below and share this post using the buttons below!

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Government to Allow Automakers Fuel Economy Loophole on Trucks and SUVs

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The White House is thinking of letting trucks and SUVs meet their own fuel economy standardsImage via Wikipedia

Remember way back when the Federal Government was pushing extremely hard and aggressive fuel efficiency standards on automakers? Environmentalists and consumers alike generally liked the new standards, and saw them as a big step forward.

Unfortunately, as is standard in Washington, there has been some reneging.

According to an article by Josh Mitchell and Sharon Terlep in the Wall Street Journal, White House officials are allowing auto makers to somewhat circumvent the fuel economy standards:

The White House is ready to let auto makers improve the future fuel efficiency of pickups and sport utility vehicles at a slower pace than passenger cars, say people familiar with the matter, a move that would benefit Detroit manufacturers.

Officials are scrambling to reach by early next week a broad agreement on a mileage target by 2025 of 56 miles a gallon, roughly double the current level. The concession is an effort by the White House to overcome broad opposition to the mileage figure by auto makers, including General Motors Co., which is still partially owned by the U.S.

While it may appear that the U.S. Government is doing automakers a favor, Roland Hwang, in an article entitled Light Truck Loophole Bad for Pickup Drivers, Oil Dependency and Pollution, says it may actually do automakers more harm than good:

While the U.S. automakers may complain that equal treatment for light trucks is bad for their profits, the opposite is true. By allowing big pickups and other light trucks to lag behind, the Detroit 3 run the risk of falling back into the bad habit that lead them to their downfall — becoming too dependent on fuel-inefficient vehicles.

Ford’s F-150 Ecoboost engine demonstrates that even big pickups can be more fuel efficient. The 40 percent purchase rate for the F-150 Ecoboost demonstrates that pickup buyers are willing to pay more to cut their gas bills. In fact, since light trucks generally lag behind the technology of their gasoline counterparts, these vehicles can improve at an even faster rate.

Equal treatment for light trucks makes sense. It will save truck driver thousands of dollars over the life of their trucks, cut our dependency on oil, and ensure the U.S. automakers don’t fall back into their bad habits.

I can definitely see both sides of the issue, however, I have to side with Hwang. I think it is best to hold automakers’ entire fleet accountable to the new fuel economy standards, not just vehicles that are more apt to meet the standards. Oil and gasoline are only going to get more expensive, so the less we can use the better, both in terms of the environment and our bank accounts.

What do you think? Leave your comments below!

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Oil Dips Below $70 Then Rallies

The price of a barrel of crude oil dropped below $70 yesterday afternoon in intra-day trading for the first time since late February thanks to continued concerns over both the European debt crisis and weaker than expected demand.

However, as the U.S. stock markets rallied to end the session in positive territory, the price of oil finished slightly over $70 per barrel.  In trading this morning, the price of oil has climbed to $71.64 per barrel.

Despite this morning’s small rally, the price of oil has fallen significantly over the last two weeks after hitting a nearly two-year high of $87.15 per barrel on May 3.

The corresponding response from gasoline prices has been relatively muted, with prices falling from $2.94 per gallon on May 5, to this morning’s price of $2.87 per gallon.  However, since we are nearing the start of the busy summer driving season, I suppose this makes sense.

Currently there are nine states reporting an average gasoline price above $3 per gallon, with Alaska reporting the highest price at $3.59 per gallon.  Oklahoma has the lowest state-wide average price at $2.65 per gallon.

Not so Fast for $3 Gasoline?

Turns out I may need to eat my words, because now it’s starting to look like $3 gasoline — this year — might not be so inevitable after all.

Thanks to the European debt crisis, over the past two weeks the price of oil has fallen nearly 16% from its 18 month highs, while the U.S. dollar has substantially strengthened in value against most other currencies.  These two things bode well for falling gasoline prices.

These factors have yet to make a big difference in the price you pay at the pump, however, since the price of gasoline is down three cents over the past week — from $2.92 to $2.89 — as we head into the busy Memorial Day summer kick-off, it’s obvious these factors are starting to have an effect.

Before we get too happy about maybe not having to deal with $3 gas in the near-term, it should be pointed out that the current price of gasoline is still 62 cents, or roughly 27% higher, than where we were at this point last year.

Currently there are ten states reporting an average price of gasoline above $3 per gallon, with Alaska reporting the highest price at $3.59 per gallon.  Colorado is reporting the lowest average price at $2.70 per gallon.

So, where do you think gasoline prices are headed?  Leave your comments below.

Toyota Knew Of Accelerator Problems Back in 2007?

It looks like Toyota’s recall problems and attacks on its reputation for quality and safety might be on the verge of becoming worse.

According to an article by Peter Whoriskey, published in the February 4 issue of the Washington Post, back in 2007, investigators discovered that “at least three of every 100 Lexus ES 350 owners in Ohio reported experiencing unintended acceleration.”

According to the Washington Post’s article, James C. Fell, former chief of research for traffic safety programs for the National Highway Traffic Safety Administration, went on to say:

“Anything over 1 percent would raise a red flag, particularly for the manufacturer.”

Considering the reported incidences of “unintended acceleration” was at least 3 percent, or three times the red flag threshold, it’s starting to look as if more should have been done earlier.

Granted, I’m sure the population size of Lexus ES 350 owners in Ohio is pretty small, especially if you’re going to use it as the basis for a mass recall.

If this were the only sample population, it’s easy to see why the investigation might not have received the attention it truly deserved from Toyota’s engineering team and federal safety regulators, and why the problem with sticking gas pedals might have been misdiagnosed.

The Washington Post’s article states:

“After the engineering review, Toyota and the regulators decided that the cause was that the accelerator had been stuck in the grooves of the all-weather floor mats some owners had put in. It was shown that the floor mats could trap the accelerator, so the company declared a recall of approximately 55,000 such floor mats and the case was closed.”

I’m no engineer, but that seems like quite an odd misdiagnosis.  After all, wouldn’t it take just a few stuck accelerators in vehicles that didn’t have the grooved floor mats to demonstrate the the problem likely didn’t stem from the mats, but from some sort of design or engineering flaw?

Then again, it’s entirely possible I’m looking at this too simplistically.

Either way, it now appears Toyota could have saved itself a lot of trouble and lost market-share had it been more aggressive in trying to pinpoint the true cause of sticking accelerators when the problem first surfaced two and a half years ago.

GM, Ford Gain From Toyota’s Woes

As I stated last week, Toyota’s woes have been exactly what Detroit needed.

According to an article released by the Associated Press, General Motors and Ford both saw double-digit sales increase for the month of January. Toyota’s sales fell 16% for the month.

Not coincidentally, January was the month that Toyota announced a massive recall of some of their most popular vehicles due to the fact the vehicle’s gas pedals could stick.

And, considering the Secretary of Transportation, Ray LaHood, stated people should, “stop driving it [their Toyota] and take it to a dealer,” it wouldn’t surprise me if February is worse for Toyota, and better for the other car makers, than January was.

(Note: LaHood later explained his comments saying he meant owners should get their cars fixed as quickly as possible, not to completely give up on their Toyota.)

As I’ve stated before, I think we’re in the midst of a giant shift back to the idea that American cars are quality cars and, at the very least, on par with their foreign counterparts. Obviously, situations like this only further that argument.

What are your thoughts?  Do you own a Toyota?  Are you now thinking of buying an American car?  Do you not care either way?  Leave your comment below!

Toyota’s Recall is Exactly What Detroit Needs

For years, it has been a common perception – or misperception as the case may be – that Japanese cars, particularly Toyota and Honda, were of better quality than their American counterparts, Ford, General Motors, and Chrysler.

Don’t get me wrong, American cars did plenty to substantiate those perceptions, especially considering they were behind the curve when it came to moving from massive trucks and SUVs to more fuel efficient sedans, compact cars, and hybrids.

However, with the news the Toyota has recalled 2.3 million vehicles – including some of its best selling models –due to a problem that could make the vehicle’s gas pedal stick, and its announcement that the company will halt sales of all affected models for the time being, is the tide finally starting to turn in Detroit’s favor?

Over the past several years, American car makers – Ford in particular – have received praise for drastic improvements in reliability and quality. In fact, the Ford Fusion was recently named Motor Trend’s Car of the Year for 2010, which is a pretty big deal.

I think when you couple Detroit’s momentum with Toyota’s huge setback, I think we’re on the verge of viewing American cars as being at least as good as, if not better than, their foreign counter parts.

What do you think? Leave your comments below!

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