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American Drivers of New Cars Emit 22% Less CO2 that 6 Years Ago. What Happened?

fueleconomyepa

After almost three decades of stagnancy US fuel economy is finally on the move.  Its actually quite something.  Fuel consumed peaked in 2004, miles driven in 2006 and vehicle numbers topped out in 2008.  Could motorization in the US have peaked?  That’s a tough one, but driving emissions may well have.

What we do know is that the last time we saw this type of improvement was when the Iranian Revolution resulted in 4.5 million barrels of missing production.  In the image above we can see that fuel economy was stagnant for decades as all engineering improvements were eroded by American’s buying bigger and bigger cars.

So what’s has finally changed?  Was it the recession?  It may have played a part, but it certainly isn’t the whole story.  First let’s unpack that headline.  A 22% reduction in emissions in six and half years is quite something.

Eco Driving Arrives in America

The University of Michigan does some epic number crunching on US fuel economy which they keep in the form of the Eco Driving Index. The total EDI for vehicle emissions tells use that an American driver of a new car in March 2014 generated 22% fewer emissions that a similar new driver in October 2007.

EDI_March-2014

Happily the index is comprised of two sub indexes, allowing us to separate the effect of changes in distance driven and fuel used. From this we can see that the big change is improving fuel economy, with new cars requiring 19% less fuel to cover the same distance as in 2007.  Distance driven is off 4%.

Below is a chart the sharp rise in fuel economy of new cars (adjusted to window sticker ratings).

MPG march 2014So what happened?  Given that the economy is up significantly since the crisis and mileage only down 4% its tough to say how big a part the recession had.  It could have helped to skew purchases towards more economic cars, but I prefer the following two explanations.

Obama’s Quiet CAFE Revolution

Everyone knows the EPA under Obama has been grinding up the corporate average fuel economy (CAFE) standards.  It’s not got the column inches of the power regulation proposals of late, but the effect will be profound.

Here’s a chart showing the ramp up:

Cafe Standards

The Third Oil Crisis

Okay, no one actually calls it this.  Krugman jumped the gun in 2002. But we were so busy with global financial crisis a few years back that no one bothered to get excited about it rising oil prices.

Just indulge me a little. Look at this chart:

The third oil crisis The 11% decline in US oil consumption from 2005-2012 does not match the 19% drop from 1978-83, but it dwarfs anything else in the last 40 years.  This graph actually looks like it’s straight out of Econ 101.  Stick the price up, we’ll consume less.

So there you go.  Three potential ideas for why American’s are finally finding their love of fuel economy.

What do you think?  Anything else going here?

Lindsay Wilson's picture

Thank Lindsay for the Post!

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John Miller's picture
John Miller on June 28, 2014

There are a couple other very significant factors that have also affected the Transportation Sector’s carbon emissions, and likely to greater extents than recent new vehicle CAFE standards.  Probably one of the larger impacts has been the magnitude of the 2007-09 economic recession and historically very slow recovery.  Transportation Sector petroleum consumption peaked in 2007 and has been relative flat since 2010.  Yes, increased CAFE standards have helped contribute to this lower consumption, but this improvement is relatively small due to the fact that ‘new vehicle sales’ have also declined (at least 20%) and are slow to recover to historic levels, and ‘vehicle miles driven’ also declined due to the recession and are slow to recover and remain relatively flat.  Another factor that reduces the impact of CAFE mileage improvements is the fact that actual fuel economies are significantly less than (down about 20% lab. vs. actual) fuel efficiencies.  Refer to a past TEC Post: ‘Can the New CAFE Standards Deliver (Promised Benefits)?’.

Agreed, increasing oil prices have also contributed to reduced petroleum consumption; in combination to reduced Household incomes.  Since 2005 average gasoline prices have increased from $2.31 up to $3.58 per gallon recently.  This 55% or $1.27 per gallon increase definitely reduces the average Household’s ability to purchase the same level of motor fuels as they did before their average annual income dropped by almost $5,000 or over 8% since 2007.

Bob Meinetz's picture
Bob Meinetz on June 29, 2014

What happened? Lindsay, what happened was George W. Bush’s term as President of the United States ended and he thankfully returned to his ranch in Texas to take up oil painting.

Bush was undeniably, unqualifiedly, and unabashedly the worst environmental president in U.S. history. For those who aren’t aware of it or are still in denial, an exhaustive list of why can be found here. Most of his “crimes against nature” are outside the scope of your post. Here are three which aren’t:

  • The EPA under Bush-appointee Christy Todd Whitman spent $1 million on “public service” messages portraying a man attempting to lower his auto emissions as a geeky, hapless nerd
  • In 2003 Bush’s economic stimulus plan included a $100,000 tax credit for business owners who purchase any vehicle weighing 6,000 pounds or more when fully loaded. The bill was passed by Congress.
  • Bush Energy Secretary appointee Spencer Abraham, a former one-term senator from Michigan and cash-rich from auto company contributions, led the administration effort to scuttle fuel-economy standards and allow SUVs to escape fuel-efficiency minimums.

Bush’s tenure was centered part-and-parcel around encouraging the use of more oil, ostensibly with the cynical purpose of enriching the supporters and entities who got him his job. The war he started to that same end will hopefully result in war crimes one day, but this is also outside the scope of your post. A relative assessment of his legacy would put his artistic talent on par with Picasso.

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