The ol’ CAFE standards debate is floating around the blogosphere again thanks to new higher rates on the way. Instead of writing anything substantive about it I want to point to an excellent post from Ed Dolan that says pretty much everything that needs to be said on the issue.
For example, he reports on a newer study that shows price elasticities once proclaimed to have fallen are now on their way back up, and in the range -0.4 to -0.8.
His post also nicely presents some externality based arguments against CAFE standards:
The tendency of more fuel-efficient vehicles to induce additional driving is known as the “rebound effect.”… [T]he rebound effect causes an absolute increase in those externalities that are proportional to miles driven, including road congestion and traffic accidents. It also increases the cost of road maintenance, because the wear and tear from more miles driven is only partly offset by the lower average weight of high-mileage vehicles.
Note that these externalities are ones that in other contexts are frequently (and rightly) appealed to by the same people who argue for CAFE standards.
In addition, Dolan draws our attention to this graph showing how fuel cost is related to consumption across OECD countries:
As he says, there is a convincingly tight relationship between price and quantity… go figure!
For some good analysis of the new fuel economy standards for big rigs I recommend Megan McArdle’s take.
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Friday ~ August 12th, 2011 at 7:16 am
coeruleus
Big rig rebound effect? So after the trucker has driven his maximum 10 hours for the man, he…what…lets his son take the rig out for a spin with his GF?
Friday ~ August 12th, 2011 at 9:22 am
Megan McArdle
A lot of fuel efficiencies are wrung out by either decreasing aerodynamic drag, or by making them lighter. Since in the case of a big rig, the weight is in the load, not the truck, making the trucks lighter (or decreasing their power, another common trick for increasing efficiency), means carrying less weight. Since those loads have to be carried somehow, that means putting another truck on the road.
Similarly, while there are some ways to make containers more aerodynamic with outside fittings, garnering further gains may mean changing the shape–which means less efficient packing.
But also, yes, if CAFE actually reduces the marginal cost of driving the trucks, it’s quite possible that shipping by truck becomes cheaper and people do more of it. Which would be an especial tragedy if it diverted traffic from freight rail.
Friday ~ August 12th, 2011 at 10:46 am
coeruleus
I don’t know: do the CAFE standards apply to the load? I thought they’d apply to the rig. Increasing fuel efficiency of the trailer is starting to become more important as fuel prices rise, and we’re seeing more of it in the U.S. now (the Europeans are already more efficient). Ideally one wants an aerodynamic, light weight cabin and then one can do other things with the trailer like doubling up the load, using canvas siders and undercarriage aerodynamic flow shields, without significantly affecting the standard size of the trailer.
Additionally, planning routes for efficiency helps. A relatively small increase in fuel efficiency can, but doesn’t necessarily have to mean putting more trucks on the road.
Freight rail: usually becomes more efficient than trucking at distances greater than about 300-400 miles since it takes a lot of diesel to propel the freight train to cruising speed. Thus, trucks will likely continue to handle the distances below that as well as some of the other stuff: moving someone’s home, or specialty items.
Friday ~ August 12th, 2011 at 11:35 am
coeruleus
Sorry about my other comment: I understand what you’re saying now. Lighter trucks = less load carrying capability = more trucks carrying the same loads. Good point, but consider Freightliner trucks.
Way back when Consolidated Freightways needed a truck that could jolt up and over the Cascade Mountains faster and cheaper (more efficiently) while still carrying the same loads as the heavier trucks that were on the market at the time. So Freightliner was founded and began producing their trucks out of aluminum (and coincidentally fostered a local aluminum production industry that got its power from the cheap BPA dams nearby). Currently, the market will likely continue to demand performance in terms of load carrying, while also demanding more fuel efficiency, so we might not see too many unintended consequences since companies will likely attempt find other ways to increase efficiency first.
[BTW: I also agree that increasing the gasoline tax in a responsible, gradual fashion would be ideal to achieve this goal.]
Friday ~ August 12th, 2011 at 1:26 pm
Megan McArdle
That’s not exactly what I mean. I mean that a lot of the big fuel efficiencies are in weight, and the truck isn’t most of the weight–if you did manage to lighten it, I take it, you’d have to lighten the load, not the truck itself (although that does offer some gains). If you did that, you’d need more loads.
Similarly, as I understand it, there’s a tradeoff between speed/power and efficiency; lower the power, and the truck can’t carry as much.
Friday ~ August 12th, 2011 at 7:42 am
Th
Who thinks raising CAFE standards is a better policy than raising the gas tax? I don’t know anyone arguing this. I do think that raising CAFE standards is possible and raising the gas tax is not. I also think that raising the CAFE standards is better than doing nothing.
When you title your post, “Just Raise the Gas Tax Already” I will take your argument seriously. At least Dolan has the guts to say he is in favor.
Friday ~ August 12th, 2011 at 10:57 am
DJAnyReason
If I am reading this right, the argument goes that the CAFE standards are bad because they encourage people to drive more due to their cars being more fuel efficient.
To me, this seems like we have a problem where space on a road is being underpriced and should be solved by congestion pricing.
To Adam, this is a reason to abandon fuel efficiency standards.
Saturday ~ August 13th, 2011 at 8:56 pm
ezra abrams
uh, don’t know if you are an ivory tower economist, but you sure think like one
Perhaps, if you bothered to do a few minutes research on lexis/nexus, you would find out that fuel taxes are a political non starter
great for angels on the head of a pin discussion in econ seminairs; not so much in the real world.
I mean, do I actually have to tell you this ?
Monday ~ August 15th, 2011 at 10:04 am
Gepap
I would love to see all the liberterian bloggers get to gether and maybe start a SuperPAC designed to drum up support for a higher fuel tax. That would be a fun thing to see – I mean, if Steven Colbert can start his own SuperPAC, you folks should be able to as well, no?
Monday ~ August 15th, 2011 at 10:27 am
Craig
You win the Internet with just the title of this post. I bet I will be quoting it twenty years from now.
Sunday ~ November 6th, 2011 at 5:46 am
Used Cars Minneapolis
One concern is that auto makers will produce much lighter cars in order to meet the CAFE regulations. Lighter cars are great for mpg but not so great in case of an accident.