The Decaffeinization of CAFE Standards

3/15/09 – Beware the Ides of March

While I do not want to infer that this topic has anything to do with the patriotic honor we owe our Armed Forces, it is sot of my patriotic duty to discuss CAFE Standards and its implications on my favorite 3 Es, energy the economy and the environment. This opening is also used on my ponderings of Points to Ponder -- Cap and Trade 5/16/09.

Also known as the Starbucks enhancement policy, in that past efforts actually encourage additional driving with one obvious economic winner being the drive through businesses. What is to say that higher mileage won’t encourage more miles driven again?

It is human nature to decaffeinate CAFE Standards. The economics of greater efficiency encourage higher usage that defeats the goal of less consumption. This was seen with the first attempt at such standards, and there is no reason it will be any different with even higher mileage requirements.

The goal here is to again reduce carbon emissions and our dependence on oil. This first goal remains quite noble as discussed above. Oil dependence, however, has two solutions. The first is to admit that it is foreign oil that is the concern and putting policies in place to reduce this dependence by opening up domestic oil resources (Off shore, oil shale, etc.) to development. The other solution, that should be pursued at the same time, is to encourage R&D investment in none hydrocarbon based transportation. Such policies are not independent of each other.

Again the most leveraging technology here is in battery development that will make the 500-mile, 6 passenger, flash recharge electric car a reality. Such a car supplied by nuclear electricity, would seem to be one of the most promising solutions available.

It is not an “Addiction to Oil”, it is addiction to a lifestyle and economic growth fueled (pun intended) by cheap hydrocarbons. Energy, which is currently oil, liberates. This lifestyle reminds us that should not be looking a MPG but PMPG or people miles per gallon. After all transportation is to move people (or goods) and not cars.

Infrastructure in terms of automotive fleet, gas line distribution, and industrial uses is a big hurdle to overcome. The hurdle is 3 Is: Investment requirements, Inertia and Incentive. It requires demand-side action.

Points to Ponder

  • If objective is to reduce gasoline consumption by 20%, why should anyone want to build a new refinery or add capacity?
  • The 1954 Nash Metropolitan got 50mpg as did the 1990 Geo Metro XFi. There always has been an un-mandated market for fuel-efficient transportation.

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