Kazman on CAFE regulations

Michael Giberson

Sam Kazman, of the Competitive Enterprise Institute, opines on the loss of spare tires in some new car models:

Fewer tires, higher taxes.

That may be what’s in store for drivers under the federal government’s spiraling fuel economy mandates (known as CAFE, for Corporate Average Fuel Economy). The Department of Transportation is floating 62 mpg as a possible standard for 2025, more than double the current 27.5 mpg standard. How the industry can meet that target, and at what cost, is anyone’s guess. A new study in mid-June by the nonprofit Center for Automotive Research in Ann Arbor, Mich. put the tab at about $10,000 extra per new vehicle, while admitting that even this estimate might be far too low.

And that’s not the only bad news; in the past few weeks there have been two other unwelcome developments. First, GM announced that several versions of its compact Chevy Cruze would no longer have spare tires; instead, they’ll have vehicle-powered sealant repair kits. This is a major jump in the trend toward eliminating spare tires, a trend due largely to CAFE’s drive to shed every possible ounce of car weight.

Some argue that spare tires are unnecessary, given the growing presence of run-flat tires, tire pressure monitors, and roadside assistance systems. But the fact that spares are being eliminated in the name of fuel economy, rather than market demand, demolishes one of the chief claims of CAFE’s advocates. For several decades, the need to reduce vehicle size and weight in order to raise mileage has been CAFE’s Achilles’ heel. Smaller, lighter cars not only hold fewer passengers and less baggage; they’re also less crashworthy. CAFE-induced downsizing causes several thousand additional traffic deaths per year.

I’m not sure how clearly the loss of spare times can be linked to CAFE, but clearly shedding weight improves fuel economy and therefore is CAFE-relevant. In fact, so long as an automaker is pressed up against the compliance limit, all decisions affecting fuel economy will involve trade offs between consumer demand and regulatory compliance. GM may be testing consumer reactions to elimination of spare times by introducing the innovation on just a few models.

And if there were evidence that CAFE regulation actually secured net public benefits in a cost effective manner, then stories about innovations in regulatory compliance would be good news. In such a case this development would be evidence of companies bringing down the cost of securing a public good. Unfortunately, it just ain’t so.

Christopher Knittel, now at MIT, has summarized the results of some of his recent work as ” performance standards – such as CAFE standards – may be more inefficient than previously thought, and that pricing instruments, such as a gas tax, would likely have a bigger impact on reducing greenhouse gas emissions.” Note that he says “more inefficient than previously thought,” and while the academic literature on CAFE is diverse and complicated, CAFE has never been seen as a particularly efficient set of regulations.

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8 thoughts on “Kazman on CAFE regulations

  1. Small, light weight vehicles also tend to be less “tall-friendly”, particularly for those whose height is in the trunk, rather than in the legs. This tends to be the case because lower vehicle profiles make it easier to reduce aerodynamic drag, which becomes a major factor in fuel economy at higher speeds.

    Lower profile vehicles also make it harder for seniors, especially those with joint issues, to enter and exit.

    However, a 62 mpg CAFE standard would also tend to reduce family size, since vehicles capable of transporting more than 4 people in reasonable comfort would be in short supply. (Sorry about the extra 0.3 children, or grandma.)

  2. I find Kazman’s comment “Smaller, lighter cars … [are] also less crashworthy. CAFE-induced downsizing causes several thousand additional traffic deaths per year” is a one-sided interpretation of the facts.

    CAFE standards will make ALL vehicles smaller. If the guy who hits me is driving a smaller vehicle due to CAFE standards, my life is just as likely to be saved as it is to be lost because I’m driving a smaller vehicle.

    If the concern is really safety, we could save both fuel and lives by lowering the speed limit. Any takers?

  3. So, here is the scam. When you buy a car, you will have to buy two cars. One of them will be a regular car that gets CAFE 30 mpg. The other one will get 100 mpg. That will cause the mfg’s CAFE average to remain at 65 mpg.

    The 100 mpg car will be brutal. No power anything, plastic body, plastic windows, no HVAC. 25 hp two cyl engine, manual transmission. A Tata Nano without the charm.

    You will take delivery of the two cars, and get plates for both of them. Once that is done, you will take (probably on a trailer) the mini car, to a special dealer who will buy it from you at a decent percentage of list price. That dealer will ship the car to a parts company that will reduce it in to parts small enough not to require a VIN. The parts company will sell the parts to an OEM, which will build a new 100 mpg car with them.

    WRR.

    Now how many of you still think that CAFE is a worthwhile exercise?

  4. Ed, you left of the possibility of buying a small commercial bus to transport larger families. Such vehicles will likely be regulated under different rules. So, just like CAFE induced a shift of consumers from station wagons into more lightly regulated minivans and SUVs (classified as “light trucks” in CAFE), in the future some consumers will simply shift regulatory categories for new vehicles or become increasingly attached to restoring vintage vehicles from the past.

    Tom, historically the safety issue has been a real problem with CAFE, for reasons suggested by Kazman. However, not sure there is a close link to the spare tire removal issue Kazman emphasizes, which doesn’t seem to have much of a safety connection. However, the safety issue is complex – more complex than Kazman lets on here – with different implications for vehicle-vehicle collisions and vehicle-fixed object collisions. Also, note that it isn’t the case that all cars get smaller, a manufacturer can just alter the mix of vehicles to sell more small cars and fewer large cars.

    Fat Man, I think CAFE regulations will break down before we get to that extreme, but maybe I’m not cynical enough.

  5. “maybe I’m not cynical enough”

    You can’t be too rich, but you can be to thin. Cynicism is more like wealth, that body weight.

  6. Mike,

    Good point re. small commercial buses. I have difficulty comprehending the truly ludicrous. 🙂

    Also, while small vehicles might survive crashes with other small vehicles, there would still be a range of commercial buses and trucks, as well as “immovable objects” (trees, bridge abutments, etc.) to participate in the “non-survivable” crashes.

    Fat Man,

    Picture a Segway with a mounted umbrella and suspended curtains. I wish I could draw!

  7. Ed: A Segway has too much technology. Think more along the lines of a riding mower with a styrofoam body like a Smart car.

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