What Fuel Efficient F-150s Mean
Posted September 19, 2008 at 4:20 pm 
Filed in: Today’s New York Times reports on how automakers have been working hard to improve the fuel efficiency of their vehicles for the new model year. Noting that even small improvements in fuel economy are important, particularly to fleet buyers, the automakers have improved efficiency not by significant changes to their vehicles, but simply by looking carefully at each little opportunity to reduce weight or aerodynamic drag. Ford, for instance, improved the average fuel efficiency of the F-150 pickup by 8 percent over last year’s model.
This demonstrates that the car manufacturers can produce more efficient vehicles, and that consumers want them when gas prices are high.
This somewhat weakens the automakers’ long-time protests against being forced by regulation to market more efficient cars. In fact, the new CAFE standards called for a 38 percent improvement in the fleet by 2020, which automakers could achieve by 3.3 percent increases fleet-wide beginning in 2011. Ford’s improvements in the new F-150, for instance, represent more than 20 percent of the overall improvement necessary by 2020, and took months, not years. Moreover, they seem to have been accomplished without any meaningful decline in vehicle performance.
The problem is what happens to these improvements if and when gas prices fall. According to a 2002 report by the National Research Council, an affiliate of the National Academy of Science, if retail gasoline prices average $2.50 per gallon, it would be cost-effective to increase the fleet efficiency standard to 33.9 mpg. At $3.55 per gallon, the figure rises to 37.6 mpg, which equates to annual fuel economy increases of approximately 4.6 percent year for 10 years, a less stringent increase than required by the Energy Independence and Security Act of 2007. We can assume, however, that if/as gasoline prices fall, demand for more efficient vehicles will follow, undermining market incentives to increase fuel efficiency and promote enhance energy and national security. Thus, tighter CAFE standards must be implemented aggressively in order to ensure that we remain working on critical improvements in efficiency to enhance our energy security.
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