What You Didn't Know About Obama's Fuel-Efficiency Rule

The Obama administration this week unveiled its new proposal to raise fuel efficiency in American cars. Clear as smog, right? Well, Freakonomics Q&A guest Keith Hennessey, a former economics adviser in the Bush White House, has written up a detailed post on the proposal’s complications and its likely unintended consequences. [%comments]

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  1. DrS says:

    The NHTSA study he cites seems pretty legit, but when you start with a graph that says “Maximum Net Societal Benefits” are the exact Bush administration plans, it seems less so.
    As you hear more stories about the former administration’s control over different departments and their scientific studies'(Interior Dept comes to mind), it makes you think that the NHTSA would come to a different, more liberal result under the new administration.

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  2. Mike B says:

    Nobody seems to be mentioning the FFV (Flexible Fuel Vehicle) fuel millage credit that was somewhat recently regulated into the CAFE standards. This is a millage credit for any vehicle that can run on E85 biofuel. In technical terms this is just about every car made today that has a firmware upgrade and a few extra parts in its fuel system. There are millions of FFV’s on the road in North America and very few new cars that can’t be upgraded for about $100-$200. I forget what the credit is, but it will make the aggressive targets significantly easier to meet.

    It is also worth mentioning that these millage requirements aren’t actually required. Carmakers are free to ignore them and pay some defined gas guzzler penalty. Small European luxury and sports car makers get hit with these every year and consider it a cost of doing business. In essence this can be considered a carbon tax.

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  3. Blashy says:

    Unfortunately the article is from an economic adviser in the Bush years… If that alone is not enough to totally discredit him based on the horrendous record of the White House during that period I do not know what will.

    AND he is obviously biased and thus more than likely manipulating the numbers in his favor.

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  4. Mike says:

    I’m all for smaller, more efficient vehicles (though through market forces rather than government mandates), and safety is of course important too, but the argument that small cars are “death traps” needs to stop. Crash test data strongly disagrees; even if it didn’t, how often are these people in horriffic crashes that the crash worthiness of a vehicle becomes a primary reason for choosing one car over another?

    Perhaps it’s like the mock proposal to replace airbags with big metal spikes – fear for your safety and you’ll drive more safely.

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  5. Mark B says:

    The fuel efficiency targets President Obama seeks would already be quite normal in a lot of the rest of the world, especially Europe. In fact, they are quite modest given currently available technologies. The era of the gas-guzzler is over. WUASTC America!

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  6. Alistair says:

    I thought it was a fascinating analysis. He presented a bunch of consequences and let them largely speak for themselves, but with a clear bias towards ‘these are BAD things’ — and I thought ‘yay, these are GOOD things’ (increasing the power of the EPA, moving policy to Sacramento, etc.). He’s clearly terrified by the idea that regulation of greenhouse gases may insert itself into the local planning/permitting process, but that sounds like a good thing to me too.

    It’s interesting that it won’t help climate change much — but it WILL reduce substantially our oil consumption, and that’s a positive goal in itself. (Also interesting that he didn’t do an analysis on that.)

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  7. Traciatim says:

    Mike, What crash test data disagrees? Hitting a car against a wall at sub-highway speed to get a 5 star rating doesn’t mean that the vehicle is safe by any stretch of the imagination. It especially doesn’t change the fact that Mini and small cars have over twice the death rate per million registered vehicles than large and very large cars respectively.

    More crumple and heavier car makes you safer in an accident. Crash statistics and not lab test prove it.

    Search for “Driver deaths per million registered passenger vehicles 1-3 years old, 2005″ in this link:

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  8. Griff says:

    checking UK mpg figures for most popular UK sold cars shows that very many of these already meet or exceed the new figures.

    (35 mpg US = 42 mpg with UK gallon…)

    I predict that very many european and japanese cars will be sold in US !

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