Monthly Archives: June 2007

Care for some more CAFE?

CAFE, as in corporate average fuel economy, that is. CAFE is the government’s requirement that car and small truck manufacturers meet an average fuel economy standard for all the vehicles they sell. It’s a twisted average based on production, not actual sales, so Toyota, for example, gets to average the EPA mileage for all the Priuses they sell in with the fuel economy numbers for the Tundra Crew Cab. Currently, the CAFE standards call for an average of 27.5 mpg fpr autos and 20.7 for trucks (“trucks” include SUVs since they are based on a truck chassis, despite looking more like a car than a truck). Only the government could class an SUV as a truck.

The Senate has passed a bill to modify CAFE standards, and it’s now headed for the House. If passed,  car manufacturers would have to increase the average mileage of new cars and light trucks to 35 miles per gallon by 2020. The NHTSA (National Highway Traffic Safety Administration) could modify the standard if it was not feasable to attain.

Conservative opponents (and the auto industry) complain that the standard proposed represents a 40% increase in fuel economy standards. Considering that the existing standard has been on the books and totally unaltered in twenty years, despite regular efforts, if the standards do not get raised there will be no incentive to make cars and trucks more efficient. Had the original law been written to push mileage levels steadily upwards, we’d already have more efficient vehicles on the roads. Just a tiny 2% increase in mileage standards per year since the original CAFE standards were enacted would have taken that 27.5 mpg to just over 40 mpg as an average.

Is it possible to meet these standards? In my opinion, it is. First, this country has always been able to discover new ways to do things and I feel confident that engineers will coms up with a way to meet these standards. Second, having said that, my family has three vehicles and one of them (a Honda Civic) already meets the new standards and there are lots of cars for sale that also meet them. It’s just the trucks and SUVs and vans that will need some work. Our second car, an Infinity G20, gets around 32 mpg, which isn’t far from the standards and it was made in 2000. The third, a Nissan truck, only gets about 20 mpg but it isn’t driven much any more.

Have you noticed?

How excited you can get when the price of gas drops way down to something like $2.95 a gallon? Stop and think about that a second. Why is $2.95 a gallon exciting? At that level, ExxonMobile will probably make yet over $39 and a half billion dollars in net (after all the costs the best accountants on the planet could possibly imagine have been deducted) income this year. After all, they made $39.5 billion (no typo, it’s a B) last year and they ought to do better this year. Over the last five years (2006 to 2001), their annual report shows that they have paid $92 billion dollars to their investors (and rest assured they kept some inside the company too).

You paid for it. Every cent. it’s no wonder studies show that people would have to see prices above $5.50 a gallon before they would change their driving habits substantially. After all, if we can get excited about prices a nickle under $3, once prices have stayed at $4.50 a while, we’ll begin to think $4.25 is a steal. That’s it. We’re stealing money right out of the oil companies’ pockets. The only problem is that it’s our money we’re stealing and they’re still keeping most of it.

Want to buy a Jaguar or a Land Rover?

If so, call Ford. They’ve got the idea that selling off those two divisions will let them focus on the blue oval. CNN and others are reporting that Ford has asked investment banks Goldman Sachs and Morgan Stanley to find buyers. They got rid of their other luxury brand, Aston Martin, in March. Jaguar has always been operating at a loss for it’s owners, whoever they have been, for a very long time but Land Rover makes money, something Ford itself can’t do. Car companies Alchemy, Renault, and Fiat have all said they’re not in talks (although Alchemy is said to be iunterested on an “emotional level”. Having owned a Jaguar, I understand that all too well – it’s an emotional interest, not a practical one.). It might require real alchemy to get Jaguar to turn a profit.

Ford is keeping Volvo.