Update On CAFE Standards -- Forbes -- July 25, 2016

This is kind of cool. On July 19, 2016, I noted that meeting the US CAFE standard of 55 mpg by 2025 was "impossible." Today, from Forbes: a hard truth revealed from fuel efficiency upset: government can't predict consumer preferences.

The biggest news in energy policy circles this week was the release by federal regulators of a mid-term report on U.S. fuel-economy standards. The report delivered a bit of bad news: Instead of achieving the original, headline-grabbing efficiency target of 54.5 miles per gallon (mpg), the fleet of new vehicles sold in 2025 is likely to clock-in at more like 50 mpg. And even that target depends on fuel prices over the next decade—with oil prices needing to approach $100 per barrel by 2025 to keep efficiency above 50 mpg.

The shortfall came as a shock to many analysts and observers who had long operated under the assumption that U.S. vehicle efficiency targets were effectively written in stone. But those watching recent trends closely were not surprised. In fact, I explained why vehicles might not meet their targets in an earlier post, citing a nearly 30% gap between the levels of efficiency achieved and the target in 2016.

Rightly so, administration officials underscored this week that the projected 54.5 mpg was just that, a projection. As one official said, “54.5 isn’t a standard, never was a standard, and isn’t a standard now. 54.5 is what we predicted, in 2012, the fleet-wide average could get to, based on assumptions that were live back then about the mix of the fleet.”

This underscores an important reason why the target won’t be met, and why achieving future emissions reductions in transportation could be exceedingly difficult: The standards are tied to consumer preferences. As preferences deviate from the forecasts, the target falls short. That’s what has happened over the last few years as consumers went out and bought more pick-ups and SUVs than predicted.

Much, much more at the link. 

Having said that, it will be hard to complain about 50 mpg if gasoline continues to cost less than $2.00/gallon.

Also from the linked article:

Instead of representing 43% of the U.S. market, SUVs and pick-up trucks have accounted for nearly 60% of auto sales this model year. Meanwhile, sales of hybrid electric vehicles in the first half of this year hit their lowest levels in five years, implying that in addition to a shift toward trucks, consumers may be purchasing less efficient vehicles within each given class.