New EPA Fuel Economy Rules: A Look Behind The Numbers

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On Monday, the US EPA announced new fuel economy rules that ratchet up the pressure on automakers to manufacture more fuel efficient vehicles. The devil is in the details, of course. Let’s begin at the beginning, shall we?

Engadget claims the new rules require a corporate average fuel economy of 55 miles per gallon. What? That’s impossible, right? Can you imagine an F-150 that gets 55 mpg? Hang on, grasshopper. There’s more. Car and Driver and Autoblog both report the new standards require a CAFE of 40 mpg. So which is it, 55 mpg or 40 mpg? The answer is, both are correct. Figures lie and liars figure and that old aphorism is particularly pertinent in this instance.

Two Standards

To understand the dichotomy, we need to go back in time to the OPEC oil embargoes of the 1970s. Suddenly, unlimited supplies of cheap gasoline were no longer a fact of life. The US responded by creating fuel economy standards that led to the now familiar Monroney sticker found on all new passenger cars and light duty trucks sold in the United States. It was designed to help consumers compare models and make informed buying decisions.

There was a problem, however. The numbers on those stickers were created by a formula, not by driving the cars in the real world. Drivers complained long and loud that the cars they were buying did not get anywhere near the gas mileage they expected. After 30 years or so, the formula was rejiggered to make the numbers more realistic.

For instance, I once purchased a new 2007 Toyota Prius. Before the formula was changed, the Monroney sticker said I could expect to get 60 mpg city, 50 mph highway, and 55 mpg combined. After the formula was changed, the same car suddenly got a new sticker quoting much lower numbers — 50 mpg city, 40 mpg highway, and 45 mpg combined, as I recall. (That was 16 years ago. My memory isn’t what it used to be.) In 3 years of driving, my actual real world average fuel economy with that car was around 39 mpg — pretty good, but a long way from the 55 mpg the original formula touted.

Here’s the point. CAFE numbers are calculated using the old formula — you know, the one that has little basis in reality? So when Engadget says the new standard is 55 mpg, that is a grossly distorted number using a long discredited formula. When Car and Driver says the new standard is 40 mpg, that is closer to a real world number. So starting with the 2023 model year, passenger cars will have to get roughly the same fuel economy as 2007 Prius.

What difference does it make? You can bet your bottom dollar Faux News will scream about how cars will need to get 55 mpg thanks to the hated Biden communist agenda. Let’s go Brandon! NPR will cite the lower number and all its listeners will think to themselves, “That seems reasonable.” Expect all the attorneys general of states controlled by the Red Team to sue in federal court to block the news rules, citing government overreach and the God-given right of every right thinking Amurican to drive a beast that gets 8 miles per gallon because doing so is an exercise of personal liberty as guaranteed (somewhere) in the Constitution.

The Footprint Rule

There’s more murkiness behind these numbers, though. Thanks to unrelenting pressure from the automotive industry, labor unions, oil companies, and auto dealers, there is a sneaky little piece of witchcraft embedded in all these calculations, known as the footprint rule. Starting with model year 2008 vehicles, the larger it is, the lower the fuel economy it needs to comply with the rules. Originally, the idea was to save contractors, farmers, and ranchers from having to drive high fuel economy vehicles that would cost more to buy.

But if you have been awake over the past 13 years, you will notice that the size of pickup trucks and large SUVs has gotten larger and larger during that time period, to the point now that people need little step ladders to get into the load beds of the pickups and running boards to get behind the wheel. Not only that, the price of these beasts has climbed exponentially. The footprint rule has been the greatest financial bonanza for Ford, GM, and Chrysler in history, but in an odd twist, a disaster for those it was originally meant to protect. Today it is hard to find a new work truck for under $40,000 — almost double what they cost when the footprint rule went into effect. Karma is a certified bitch, ain’t it?

What Is The New Standard?

According to Ars Technica, five years from now, fuel economy for new light duty vehicles will average about 40 mpg combined. That’s up from about 25 mpg today. The EPA says the new rules will save car and truck owners more than $1,000 over the life of their vehicles. They will cost more originally, but use less gasoline.  The rules will prevent 3.1 billion tons of carbon pollution being spewed into the atmosphere through 2050.

“We followed the science, we listened to stakeholders, and we are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet—and save families money at the same time,” EPA Administrator Michael Regan said in a statement. “At EPA, our priority is to protect public health, especially in overburdened communities, while responding to the President’s ambitious climate agenda. Today we take a giant step forward in delivering on those goals, while paving the way toward an all-electric, zero-emissions transportation future.”

Here’s more from the EPA announcement:

“These ambitious standards are cost-effective and achieve significant public health and welfare benefits. The benefits of this rule exceed the costs by as much as $190 billion. Benefits include reduced impacts of climate change, improved public health from lower pollution, and cost savings for vehicle owners through improved fuel efficiency. American drivers will save between $210 billion and $420 billion through 2050 on fuel costs. On average over the lifetime of an individual MY 2026 vehicle, EPA estimates that the fuel savings will exceed the initial increase in vehicle costs by more than $1,000 for consumers.

“While these standards are ambitious, they provide adequate lead time for manufacturers to comply at reasonable costs. EPA’s analysis shows manufacturers can comply with the final standards with modest increases in the numbers of electric vehicles entering the fleet. By MY 2026, EPA projects that the final standards can be met with sales of about 17 percent electric vehicles (EVs), and wider uptake of advanced gasoline engine and vehicle technologies available today.

“Auto companies continue to invest in, and develop, zero-emissions vehicles to meet rising consumer demand, while making make public commitments to build these vehicles in the future. Today’s final standards have been calibrated to align with and support those investments. Companies are announcing unprecedented plans for an increasing diversity and production volume of zero- and near-zero emissions vehicle models, while also implementing a broad array of advanced gasoline vehicle GHG emission-reducing technologies. As the GHG standards get stronger over four years, sales of EVs and plug-in hybrid vehicles will grow from about 7 percent market share in MY 2023 to about 17 percent in MY 2026, the agency projects. These increasing levels of EVs will position the United States to achieve aggressive GHG emissions reductions from transportation over the long term.”

MPG Is A Stupid Way To Lower Emissions

The European Union has a way of regulating tailpipe emissions. It sets acceptable limits, measures what actually comes out of the exhaust pipes of cars covered by the standards, and fines the companies whose cars don’t comply. The US approach is a two step process. By setting fuel economy standards rather than emissions standards, it is managing indirectly what should be done directly. And the ridiculous footprint rule remains in effect.

Then there is the complex credit trading system that operates in the background, out of public view. Wikipedia says that process greatly favors foreign manufacturers at the expense of domestic automakers, with Toyota being the big winner. “The estimated value of the CAFE exemption gained by Toyota is $2.5 billion; Honda’s benefit is worth $800 million, and Nissan’s benefit is valued at $900 million in reduced CAFE compliance costs. Foreign companies gained $5.5 billion in benefits compared with the $1.8 billion that went to the Detroit Three.” You can bet as soon as the first Chinese cars come to America, that will change in a hurry.

Digging Out Of A Deep Hole

The Big Three have dug themselves a huge hole in the past few years. They have stopped making the small, efficient passenger cars that could have helped them meet the new EPA regulations. Now all they have to sell are gas guzzlers. “Nobody wants to buy sedans!” they wailed, while Hyundai, Kia, Toyota, and Honda continued selling sedans. Clearly, somebody got their sums wrong.

Is it possible Ford, GM, and Chrysler made a cynical decision to stop making sedans — which have low profit margins — so they could sell more gargantuan vehicles — which bring in enormous profits? Now they are stuck with nothing to sell until their electric behemoths come to market in the next year or so. How much of Ford’s rush to get the F-150 Lightning into production is in response to the tougher fuel economy standards everyone in the industry knew were coming as soon as Joe Biden took over the Ovate Office?

No matter how glowing the EPA press release may be, the domestic manufacturers will have an uphill battle to reach the 17% market share for plug-in hybrids and battery electric vehicles the government expects to happen by model year 2026. Perhaps they will be content to buy credits from others while continuing to sell their hugely profitable large SUVs and trucks. The new rules may seem like a victory for sanity, but the nation would have already achieved the 2026 goals today were it not for the destruction of the Obama-era rules engineered by Scott Pruitt and Andrew Wheeler when they took over the reins at EPA.

Looking behind the gloss of this announcement, the United States needs to dramatically reduce the extraction and burning of fossil fuels if it wishes to be a leader in the struggle to minimize global heating. These rules, as welcome as they are, constitute only a very small step forward. In the words of Winston Churchill, “So much to do and so little time.”