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CAFE Standards and Auto Executive Dunces

By April 8, 2013November 8th, 2021Energy Efficiency, Energy Rant

Provide a chimpanzee with a computer loaded with MS Word and some sort of reward for pounding on the keyboard, and sooner or later it will produce a sentence, probably consisting of two words: subject, verb.  Provide a workbook with a one-trick-pony energy calculation to an unqualified user who applies it to a scenario it doesn’t represent whatsoever, and they may return the “right” answer, once in a while.  Allow 536 mostly clueless individuals[1] to craft laws and policies, and sooner or later by unintended consequences, they may achieve an objective.  And so it goes with automobile fuel economy standards, also knows as CAFE standards, for corporate average fuel economy.

But first, as the energy BS whistleblower, allow me to dispose of some political BS regarding fuel efficiency for automobiles.

Fuel efficient automobiles are less safe than gas guzzling behemoths.  In that case, we should demand military cargo trucks with an optional turret mounted marine with a fully loaded automatic machine gun.  This is ridiculous.  Smaller fuel efficient vehicles are less safe than a larger vehicle when crashing with a large vehicle, all else equal.  Extremely rapid deceleration of mass (human body) causes injury or death.  Each driver of a car or a truck plowing into a rock wall at 60 mph will suffer similar consequences.  Persons in an efficient car plowing into a Tahoe will suffer greater injury, all else equal.  But hey, if you want to be safe plowing into the Tahoe, I suggest the military cargo truck.  Bottom line: if all vehicles are smaller and more efficient, there will be little, if any, degradation in safety.

Fuel efficient cars will cost more.  This is really a load of crap, and I cannot figure out why the auto makers are going along with the aggressive CAFE standards.  Fuel efficient vehicle buyers fall into two categories: wealthy and not wealthy.  The wealthy buy hybrids and electric vehicles, and the not wealthy buy tiny cheap vehicles like the Ford Fiesta, Hyundai Accent, or Toyota Yaris – plain Jane, no frills, lowest total cost, low profit vehicles – the tin can class.

The auto makers cut a deal with the president in 2011 to raise the target auto fuel economy to 55 miles per gallon by 2025.  The auto makers are out of their gourds unless something crazy happens like gasoline prices rise to $20 (not out of the question).  The tin-can class is where the money is when it comes to hitting these targets; but the tin can class is barely at 35 mpg today.  Why do I think the auto execs are fools about this?  There is no profit in the tin can class (they say) and the demand for the hybrids and electrics is puny.  Hybrids feature complexity, expensive controls/electronics/powertrain and thus have a bit of a price floor.  The small cars have no pricing power because the market (people) is cheap, and they want low cost.  Good for them.  Bad for car makers.  In order to meet the aggressive CAFE standards, car makers will have to practically give away hybrids and tin cans while losing money doing so.  Or perhaps the auto makers believe the electric car will be their white night.  Sorry, the frivolous novelty will still be a frivolous novelty 12 short years from now.  Bottom line: When big business gets in bed with the federal government to make policy, they always contract disease, if you know what I mean.

So how can the 536 mostly clueless in-duh-viduals achieve such lofty goals?  If they do, it will be with a combination happenstance of unintended consequences and underlying political agendas.  One unintended consequence is high gasoline prices driving demand for efficiency caused by contagious, globalized currency devaluation.  This is a consequence of massive government debt and money printing.  But inflation is only 2%?  Not for dollar-denominated oil on the world market – up over 100% since the latest easy money flood began five years ago.  Not so with natural gas which is not an international commodity (yet).  Meanwhile, domestic petrol production is up as sharply as natural gas, but unlike natural gas prices, petrol prices cannot escape the weak dollar.

The US is exporting inflation around the world.  As the Ben Bernanke prints money, our currency falls against others’.  Their import costs drop and their export costs rise putting them at a trade disadvantage.  What to do?  Fight fire with fire and devalue the currency.  Last week Japan joined the Bernanke’s monetary punch bowl.

Don’t expect this to end any time soon.  The Bernanke plans to keep the presses going 24/7/365 until employment numbers improve.  It isn’t working.  Hello?

After five (5) years of this, last week’s labor report for March included 88,000 new jobs[2] while a whopping 500,000 people left the labor market.  So gasoline prices could hit $20 by gosh / by golly.

Lastly in the non-disclosed agenda, we starve ourselves of energy and that isn’t bad for sustainability reasons.  But Keystone pipeline is an environmental hazard?  Give me a break[3].  The real agenda is constrain supply.  Can we just be honest?  Answer: no, because the masses already broadly favor its construction.  I appreciate self restraint and sustainability but truth in advertising would be nice.

[1] 100 senators, 435 congress people, 1 president.  Thousands of aids, advisors, and lobbyists not included.

[2] Not enough to keep up with population growth.

[3] The San Bruno CA natural gas pipeline explosion leveled about 40 homes and killed eight people, but I don’t recall any talk of moratoriums on gas pipelines nor do I recall any deaths due to an oil pipeline leak.  And we have thousands of miles of pipelines of all ages and suddenly we don’t know how to do it safely?  Laugh test score: F.

Jeff Ihnen

Author Jeff Ihnen

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