By now you have probably heard about the agreement Obama made with the auto industry to increase the Corporate Average Fuel Economy (CAFE) to 54.5 miles per gallon by 2025. It will be achieved by raising the CAFE 5% every year starting in 2017. While everyone accepts that this will increase the cost of a car, how much that increase will be is uncertain, but the media gives us the good news that the fuel cost savings will make u p for the increased cost of a new car.
Really? Let’s take a look at it and see if that statement passes the smell test.
Let’s say you drive 15,000 miles per year and let’s say that you drive a car that gets 30 miles to the gallon. Over the course of a year, you will burn 500 gallons of gasoline (15,000 miles divided by 30 miles per gallon). If we assume that gasoline costs $4.00 per gallon, you will spend $2,000 for gasoline.
Now, if you suddenly get a new car that gets twice the mileage (60 mpg) it stand to reason that you will burn half as much gasoline and spend half as much money. Therefore, you will spend $1,000 on gas and your savings for the year will be $1,000!
Do you really think that this savings will offset the additional cost of the car that will meet Obama’s CAFE standard? Anyone? Bueller?
If the additional cost of these high mileage cars is $5,000, you will either need to drive 75,000 miles in a year or the price of gasoline will need to increase to $20.00 per gallon. Does either of these things seem likely?
How much are you personally willing to pay to improve the environment because, believe me folks, the additional cost of these high mileage cars will passed on to the consumer and the difference will not be balanced by fuel savings.
There is a saying that if you put a frog in hot water, it will jump out. But if you put him in cold water and slowly raise the temperature, he will stay and boil to death. The government is treating you like a frog. It will slowly ramp up the cost of automobiles hoping you won’t notice the personal cost.
Let’s call this agreement what it is – It’s a tax on the American people. It’s as much of a tax as if the government increased your tax bracket but they do it with regulations instead of changing the tax code. And the frogs don’t notice.
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4 comments:
In your example, if the additional cost of the car is 5K, and you drive the car for 5 years, then you would break even. Unfortunately, at this point that does not encapsulate the true cost for "green" cars because you need to replace pricey components that do not exist on a "conventional" car. And don't even get me started on how plug-ins are "zero emissions." Where do they think the power for those puppies comes from, unicorn farts and fairy dust?
And to make it even worse, the technology does NOT EXIST to get those averages...
Goat - True. You might make up the extra cost if you drive it long enough, but I want to see break even in less than 3 years. These green projects that take 20 years to reach pay do not meet my economic criteria.
NFO - It's called "betting on the come."
Where do they think the power for those puppies comes from, unicorn farts and fairy dust?
No, I think that power comes from a base load plant with far higher thermal efficiency than an automotive engine, call it .5 or so versus .12-.15 (at low RPMs).
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