Monday, September 26, 2005

Fuel Economy and Safety

Karen Lundegaard has an intereting article today in the Wall Street Journal about new thinking about fuel economy and safety.

The story presents a graph from the EPA showing fuel economy over time for cars, trucks, and then their combination. It makes the point well from an earlier discussion of the CAFE standards (here, here, and here). Even though fuel economy per vehicle may have been flat to increasing for both cars and trucks, the shift of more drivers into the less efficient trucks has caused the overall fuel efficiency to fall.

The main new point in the article is to point out that some new research takes issue with the presumption that improvements in fuel economy would come at the expense of safety:

For decades, whenever the federal government leaned on auto makers to improve fuel efficiency, the industry had a ready response: Research showed that lighter, more fuel-efficient vehicles weren't as safe as their heavier, gas-guzzling cousins. Even shedding as little as 100 pounds could lead to a serious increase in traffic fatalities.

The result has been a virtual standstill in fuel-economy improvements for cars, trucks and sport-utility vehicles over the past 20 years.

Now a wave of new studies and technologies -- strong, light materials, better airbags and smarter designs -- are beginning to break the logjam. The upshot: A big shift in government thinking that is paving the way for regulators to revamp fuel-economy rules for SUVs and pickup trucks for the first time in three decades.
I'm glad for the use of research on the other side of a long-held presumption, but I'm not sure the article gets the argument right. Later, we have:

For years, the accepted wisdom in the car industry held that, all things being equal, heavier vehicles are always safer when two vehicles crash. New studies highlight how other factors -- including a car's size, body design and advanced technology -- can do much to counteract the weight issue.

The newer studies also have homed in on the downside of weight: While a heavy vehicle protects its occupants in an accident, it inflicts more damage to those it hits. That means reducing the weight of the biggest vehicles could yield dividends in both fuel consumption and safety.

All of this has contributed to a rethinking of the fuel-economy regulations from the National Highway Traffic Safety Administration. Last month, NHTSA crafted new "Corporate Average Fuel Economy" rules, or CAFE, for light trucks that aim to balance safety and fuel efficiency. The old rules set an average weight target for an auto maker's entire fleet of cars or trucks, encouraging car makers to sell lots of small fuel-efficient vehicles at sometimes unprofitable prices, so they could keep selling their more profitable gas guzzlers.

The article fails to recognize two issues. First, there is a big difference in safety risks that a vehicle poses to its own occupants and the risks that a vehicle poses to occupants of other vehicles. There is a compelling reason for the government to be involved in the latter, far more than would exist for the former. Without government involvement, drivers of heavier vehicles would not bear the costs they impose on other drivers. (It's not clear that they do so now, apart from states without no-fault insurance requirements.)

Second, the flaw in the old system is the presence of multiple categories for fuel economy standards, with lower standards for some groups. That remains in the new system and can be expected to have the same consequences for fuel economy. Exactly what has changed that would arrest the slide in fuel economy shown in the graph above? Only the increase in the standard for trucks as a whole--not the presence of categories.

Consumers can make their own choices about how much safety they want in their own cars. The government can confine itself to providing accurate information about safety. The continued commingling of irrelevant own-occupant safety concerns with legitimate concerns about fuel economy makes the policy less useful than an ideal CAFE or a gas tax.

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