CAFE Vehicle Standards Compared to Speed Limits

What would more effectively reduce pollution from small vehicles?

Recently, there was a significant political argument in the United States about the costs and benefits of increasing the Corporate Average Fuel Economy (CAFE) standards. Increased efficiency, the argument went, would reduce the consumption of fuel, and therefore help restrain fuel prices, also reducing pollution from vehicles causing reductions in greenhouse gasses and even more important things in the immediate term including smog producing substances, which are a major concern in large cities with warm climates like Los Angeles, Houston, Dallas-Ft. Worth, and Atlanta. The counter argument said that the costs would be too high, adding to the prices of vehicles, reducing auto industry revenue, eliminating jobs, and reducing passenger safety.

But, there are choices beyond whether to increase, decrease, or repeal CAFE standards. We could decide to regulate vehicle weights, speed limits (which we already do), fuel composition, or other variables to possibly arrive at the same desireable outcomes. I think we should consider how reducing the speed limit a moderate amount compares to increasing the CAFE standards for efficiency by a moderate amount.

First, let’s address the extraneous effects outside of the pollution argument. Safety could potentially be negatively effected by increasing fuel efficiency standards. As an engineer, I should state that this is not a necessary effect of the change, but one that is possible depending on the design choices made by manufacturers. Reducing the speed limit should only have a positive effect on safety. Fuel consumption could potentially be reduced by either method, so we’ll call the score even on that one. The economic effects beyond the demand on fuel are much more complex to predict, so, unfortunately, I will have to leave those to another analysis. However, my instinct is that job reductions by one manufacturer to meet a new regulation are usually met by job increases in the manufacturer who produces a product to help meet the regulation and potentiall new jobs at the relegulating agency.

So, in 2005, the vehicle fleet in the United States had a overall fuel efficiency of less than 21 miles per gallon (mpg). This was an increase from an average of 14 mpg in 1975, when the CAFE standards were enacted. However, fuel economy for the overall fleet has been nearly stagnant since reaching a peak of about 23 mpg in the late 1980s. In 2007, legislation was passed to raise the standard to 35 mpg by 2020.

For the purposes of our analysis, we will assume that the fleet average starts at 21 mpg in 2005 and increases to 35 mpg by 2025 (since the efficiency of new cars will typically be higher than those already in the fleet. Given an average vehicle life of 10 years, it will probably take longer for the fleet average to reach 35 mpg, but that is generous in favor of the standard. given the increases in fuel prices, however, we have to consider that in the absense of CAFE, fuel economy should also increase slightly, perhaps to 26 mpg by 2025.

I’ll assume miles driven on the interstate highway system increases by 5% per year, starting at 721 billion miles driven in 2005. The average speed limit being 63 miles per hour (mph)in 2005. For the case of the restricted speed limit, I’ll assume a new limit equal to the old one set in 1975, or 55 mph.

Approximately every 5 miles per hour in speed over 55 decreases fuel economy by about 7%. We’ll assume that the people driving over the speed limit are cancelled by those driving under the speed limit, however, my experience would suggest otherwise. Again, this is a beneficial assumption towards the CAFE standard. Also, since driving slower (moderately) requires more time, I’ll assume that miles driven in the future increase at only a rate of 4% instead of 5%. Now, the results.
Graph of Fuel Consumption (CAFE Standards versus Restricted Speed Limit)
So, reducing the speed limit to 55 mph with enforcement similar to today’s standards, actually limits fuel consumption below the new CAFE standards, along with making mostly pro-CAFE assumptions. While there would be other costs involved of course, in either of these options, policy makers should keep in mind that there are many paths to any objective with some more effective than others.

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  1. Pingback: CAFE Standards and Speed Limits, Round 2 | True Progress

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