Drivers May Need a Push Despite New Fuel Standards

By Warren Brown
Sunday, May 24, 2009

The Obama administration's proposed new standards for vehicle fuel economy mark a partial victory for common sense. A complete win is more difficult. It requires a provision ensuring that American consumers will buy the more fuel-efficient vehicles that American politicians are asking car companies to make.

That provision is missing from the White House's proposals, which demand that new cars sold in the United States meet a 39-mile-per-gallon standard and that light-truck fleets average 30 miles per gallon by 2016. That would be 11.5 miles per gallon higher than the current federal standard for cars (27.5) and 6.9 miles per gallon better than the current standard for trucks (23.1).

The administration's suggested standards also would dispense with the silliness of two federal agencies (the National Highway Traffic Safety Administration and Environmental Protection Agency), and would keep the District of Columbia, California and 12 other states from making their own rules to boost the mileage and reduce the tailpipe emissions of cars and trucks sold in this country.

In that regard, the Obama Rules constitute a stroke of genius. They eliminate years of state-federal and interagency conflicts that have done much to enrich lawyers but little to increase miles per gallon or decrease pollution.

Under the Obama Rules, there will be one set of standards -- truly national standards -- cooperatively administered by NHTSA and the EPA. That makes much more sense than a hodge-podge of competing rules, developed through expensive variations in testing procedures that yield marginally different results in real-world vehicle performance.

"It is just so much better with one standard," said Friedrich Eichiner, a member of the board of Germany's BMW Group, who was in town last week for the White House's announcement of the new mileage rules. Multiple standards are costly for manufacturers and confusing for automobile dealers and their customers, Eichiner said. "One set of standards is best for everybody," he said.

BMW initially will attempt to meet the Obama Rules with its advanced diesel technology, which is at least 30 percent more fuel-efficient than traditional internal-combustion technology using gasoline.

Diesel-powered cars from BMW, Mercedes-Benz and Volkswagen -- hugely popular in Europe -- are now ready for sale in the U.S. market. Their tailpipes have been cleaned up with advanced exhaust treatment technology. They are quiet and smooth-running. But they usually are substantially more expensive than their gasoline counterparts, making them a hard sell in a U.S. market awash with the cheapest gasoline in the developed world.

"A better balance" of fuel taxes would help the sale of diesel-powered vehicles in the U.S. market, said Eichiner. But his statement was more a matter of wishful thinking than it was an assessment of practical possibility in a country whose politicians have long opposed doing anything that would require registered voters to buy into energy conservation by paying more for gasoline.

Eichiner's "better balance" would mimic the fuel-tax system widely used in Western Europe, where less-efficient gasoline consistently is taxed at a higher rate than more efficient diesel.

In the United States, the opposite is true.

Federal and state taxes make up 20 percent of the cost of gasoline and 21 percent of the cost of diesel, according to information from the Energy Information Administration. In many parts of the country -- New England and the Central Atlantic region are examples -- diesel prices routinely exceed pump prices for gasoline.

However, nationally, gasoline and diesel prices are reaching parity, with gasoline costing an average $2.31 for a gallon of regular unleaded and diesel, increasingly sold with the super-low sulfur formula favored by modern engines, costing $2.23 a gallon, according to latest available EIA numbers.

Diesel prices have been affected by a decline in demand from long-distance trucking companies, long the biggest customers for diesel fuel in the United States. A national economy stuck in low gear, represented by depressed consumer demand for goods usually hauled by trucks, has played a major role in the decline of diesel fuel prices.

But recessions don't last forever. Economic recoveries often are accompanied by increases in fuel costs, with diesel in the United States taking the biggest price hikes over gasoline as more big trucks start rolling again.

Diesel-powered vehicles aren't the only models made more difficult to sell by the absence of a meaningful federal strategy to get consumers to buy them. Also affected are gas-electric hybrids, plug-in electric extended-range vehicles such as the Chevrolet Volt, 100-percent-electric models such as the BMW-sponsored Min-E car, and other alternatively powered models rolling out of automotive design and development studios.

All of those new models tend to be more expensive than their gasoline-powered counterparts. Many are smaller and lighter in weight. They generally require mastery and acceptance of new learning curves and comfort levels for users. Practically all of those things represent elements of resistance for would-be buyers -- not to mention, again, the pull of cheap gasoline in comparatively less expensive, gasoline-powered cars and trucks.

White House officials and environmental activists can talk all they want about how Obama Rule cars and trucks would decrease the cost of driving. But in the hard-knock world of daily retail sales, such talk is just talk. Consumers need a compelling reason to abandon the old and comfortably familiar in acceptance of something that, for many of them, is radically new.

In the absence of a sensible fuel-tax strategy, or higher pump prices, or an active government-sponsored program such as cash-for-clunkers in which consumers are given subsidies for trading in less-efficient cars for more-efficient models, that something is sadly missing.

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