Tuesday, August 16, 2011

On Fuel Economy Standards

A couple of weeks ago, I wrote about how important the new corporate average fuel economy (CAFE) standards would be to reducing America's oil dependence.

The opponents of fuel economy increases have trotted out their usual arguments about free markets, overbearing bureaucrats, and safety. If you're not familiar with these arguments, they sound persuasive.

I should know - I used to agree with them. I am by nature opposed to government involvement in private transactions. Two things changed my mind: first, the clear and present national security consequences of American dependence on imported oil. Our foreign policy is needlessly constrained by the need to protect low cost oil. Second, and most importantly for this argument, there is clear evidence that the auto companies are not providing the fuel economy that people want. This is a market failure.

However, just because I have changed my mind, it doesn't mean that everyone else has. The best example I can find for the brain-dead opposition to CAFE standards come from Larry Bell's column in Forbes. Reading this guy's stuff drives me crazy. On my previous blog, I wrote a very long refutation of a column of his in 2010. 

Bell's column is notable for his combination of hyperbole, opinion spouted as fact, and being just plain wrong. After the jump, I will go through some of his most egregious examples.



Let's start with some of his hyperbole: he says: "There isn’t any realistic way car-makers can meet this requirement without radically transforming their product lines". The truth is that these fuel economy standards will change the US auto fleet. Reaching 54.5 mpg by 2025 will be difficult, and it could be met with many new battery-cars. However, a recently released report from BCG "Powering Autos to 2020: The Era of the ElectricCar?" states that automakers should be able to meet most of the requirements with steady improvements to existing, conventional technology. Certainly, they will be helped by looking to examples overseas, where most countries have had higher fuel economy standards than ours for decades.

Finally, he goes after the Chevy Volt. Grist did a great piece on the madness of the people who hate electric cars. Basically, they oppose them on principle, ignore the waiting lists, and say that no one will ever buy them. He's wrong in a number of areas on the Volt. According to Chevy's blog, they have sold about 3,200 Volts (not 2,000 as he says). You may have seen that sales were down last month, but that was only because they’ve shut down one of their plants to prepare to ramp-up production of the Volt. And, there’s much higher demand than supply: dealers ave asked for about 4-7x more cars than they’ve been able to distribute, and they’ve had to start waiting lists.

I don’t know where you got the announced 100,000 car production run from (no link), but Chevy says they’re going to produce 60,000 next year. If the waiting lists are any indication, I’ll bet they sell-out.

Just a few examples of how to refute people who oppose increasing fuel economy. 

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