Commentary: Fuel Standards: How to Plug the Leaks

By David Welch

With gasoline prices soaring above $2 a gallon in many places, should fuel-efficiency standards for America's cars and trucks be raised? Many Democrats and environmentalists are clamoring for a hike, a bipartisan group of senators has proposed forcing gas-guzzling trucks and sport-utility vehicles to meet the higher mileage standards set for cars, and even the Bush Administration has been backed into asking the Transportation Dept. to look into stiffening standards.

But forget about the brewing debate. The auto industry is struggling, and this Administration is intensely antiregulatory. So there's little chance that current mileage standards will go up.

Does that mean Washington can do nothing to bring about a boost in the fuel efficiency of U.S cars and trucks? Hardly. A great deal of gasoline could be saved--and carbon dioxide emissions reduced--by more strictly enforcing the rules now on the books. As it is, a host of tricks allows carmakers to skirt current standards. "If you closed all of the loopholes, we could save hundreds of millions of barrels of oil and cut hundreds of millions of tons of global warming pollution every year," says Dan Becker, director of global warming policy for the Sierra Club.

GOOSING AVERAGES. How so? The current standards, known as CAFE, for corporate average fuel economy regulations, were enacted back in 1978. Each auto maker is supposed to achieve an average of 27.5 miles per gallon for its fleet of cars as a whole, and 20.7 for its truck fleet overall.

But what is a truck, and what is a car? The answer is hardly clear. SUVs and minivans have always been considered trucks for CAFE purposes, which wasn't much of an issue back in 1978 when there weren't many on the road. But as soaring sales of gas-hungry SUVs have made it difficult to meet the CAFE standard for trucks, some carmakers have begun redefining cars as trucks. Since cars get better mileage, that helps improve the overall performance of their truck fleets.

Just look at the boost DaimlerChrysler (DCX ) got when it was able to certify its popular PT Cruiser as a truck. Built on the same chassis as a Neon small car, it gets 25 mpg--well above your average truck. Thanks to the 92,000 PT Cruisers sold last year, Chrysler was able to sell another 90,000 Dodge Durango SUVs--which eke out just 15 mpg--without busting its overall 20.7 mpg truck limit.

Auto makers can also benefit by selling flexible-fuel vehicles--trucks that run on either gasoline or ethanol fuel. For CAFE calculations, they're allowed to count the 30 to 40 mpg those vehicles get when they use ethanol, rather than the 20 mpg they get with gas. Problem is, with just 110 ethanol stations in the U.S., only a few of the 630,000 flexible-fuel vehicles sold ever use ethanol. The National Highway Traffic Safety Administration estimates this allows the Big Three to goose the average truck fleet fuel economy by up to 1.2 mpg annually.

Then there's perhaps the biggest game of all. The fuel economy numbers used in calculating CAFE standards bear no resemblance to real world driving conditions. Derived from laboratory tests, they're roughly 15% higher than what vehicles get when they're actually on the road. So U.S. cars burn an extra 1.1 million barrels of oil a day, or more than 400 million barrels a year, than the CAFE levels imply they ought to.

Of course, little of this is new, and carmakers are quick to point out it is all perfectly legal. Indeed, the NHTSA signs off on many of these games. Maybe it's time they stopped.

Welch covers the auto industry from Detroit.

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