by Jami Miedema

The Department of Transportation has proposed a regulation which aims to change the standards of the corporate average fuel economy (CAFE) regulatory program. The standards would be increased, relative to the size of the truck as indicated by its “footprint” (wheelbase multiplied by track width), to accomplish the fuel savings, safety promotion, and more favorable economic outcomes. Implementation of this reform would be underway during the transition period for model years 2008-2010, with maximum standards reached in model year 2011 trucks.

Under the unreformed regulation, manufacturers must comply with fuel efficiency standards of 22.5 miles per gallon (mpg) for 2008, 23.1 mpg for 2009, and 23.5 mpg for 2010 model year light trucks. The reformed proposal set its sights on increasing those standards, while recognizing that all light trucks cannot be lumped into the same category. Smaller light trucks achieve more fuel economy than larger trucks. The new CAFE standards address this issue by setting a range of acceptable targets, with consideration to vehicle size. These targets for 2008, 2009, 2010, and 2011 are 20.4-26.8 mpg, 21.0-27.4 mpg, 20.8-27.8 mpg, and 21.3-28.4 mpg, respectively.

Furthermore, after extensive exploration, DOT analysts found that the $7.5 billion in benefits outweighs the total costs of undertaking this project. Total costs were estimated to be about $6.2 billion.

Comparison of Incremental Costs and Incremental Benefits for the Proposed Reformed CAFE Standards [In millions]
MY 2009
MY 2010
MY 2011
MY 2012
Total Incremental Costs*
Total Incremental Benefits*
*Relative to the 22.2 mpg standard for MY 2007.

Although consumers will be paying more for their vehicles, they will be “paid back” in a time frame ranging anywhere from 37-47 months through fuel savings. Of course, this projection assumes a fuel price per gallon in the $1.50 range, a price we may never see again! Also, it assumes the “owner” uses the vehicle regularly for over 37 months, which disregards leases of less than three years. Either way, these higher standards will save up to 10 billion gallons of fuel, a good thing for our economy and hopefully our pockets!

Source: “Average Fuel Economy Standards for Light Trucks; Model Years 2008-2011.” Federal Register 70 (2005): 51413-51466.