–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –

Good news for Americans with large families or who need to transport substantial amounts of gear: President Obama’s new vehicle emissions standards are not as tough as they seem. But this is bad news for environmentalists, who want to lower the use of gasoline.

When Obama, using authority granted to the president in the 2007 Energy Act, announced earlier this month that automakers will be required to achieve a higher fleet average, 35 miles a gallon, by 2016—four years earlier than Congress had mandated—Americans might have been forgiven for thinking that in 2016 the window stickers on the new cars would reflect this new standard.

Not so.  Window stickers describe only the calculated gasoline efficiency of the model they are pasted on.  Moreover, even if miles per gallon (MPG) were averaged for all models, the result would fall below the new standards Obama announced for 2016.

What he promulgated was a higher “fleet average” for each automaker as calculated by the Department of Transportation, using a kind of vehicular treadmill to test cars’ fuel efficiency.

But MPG for each model is calculated by the Environmental Protection Agency, using a different method that purports to take account of how cars are driven.  Model for model, EPA’s MPG is lower than that of the corporate fleet average calculated by the Transportation Department.

The CAFE standards declared by Obama—for cars, minivans, and light trucks—are scheduled to rise to an average of 35 MPG in 2016 from levels of 27 MPG now for cars and 22 MPG for light trucks.

A 35 MPG CAFE standard corresponds roughly to a 26 MPG EPA standard, according to the automotive information Web site Edmunds.com, a 40 percent increase from present levels. Edmunds.com reports that this is met already by 29 car models and 36 truck models.  Half these trucks and one third of the cars are made by domestic automakers.

In other words, there was less to Obama’s announcement than met the eye—or made the headlines.

If he had aimed at a 35 MPG EPA standard, so that the window stickers of the new cars would show averages of 35 MPG, automakers would have had to increase fuel efficiency by 70 percent. Doing that would lead to even higher prices than will result from the costs imposed by achieving the MPG goals that the president declared.

“The CAFE tests performed now for the Transportation Department are the same as the ones performed under the initial CAFE standards introduced in the 1975 Energy Policy Act,” said Environmental Defense Fund senior fellow John DeCicco in a phone conversation this week.   “Congress has not changed these tests since they were put into place in 1978.”

These scientific tests require special fuel and place the vehicle tested on a dynamometer, a machine designed to measure fuel intake in a repeatable pattern that is not the same as ordinary driving. Plainly, this yields better “mileage” than would driving over the road.

Whatever the “real” MPG of new cars, this approach to raising efficiency has substantial disadvantages compared to a higher gasoline tax.  Last summer, when the price of gasoline climbed above $4 a gallon, Americans cut back on their driving—with no extra CAFE standards. Dealers faced waiting lists for more efficient hybrid models, such as the Toyota Prius.

Raising emissions standards is a complex issue, requiring negotiations between different government departments and nuanced methods of measurement. And automotive fuel efficiency has been rising without stricter CAFE standards, even as engine power increases, because as older cars are replaced with newer ones, fuel efficiency improves.  If Obama wants Americans to use less fuel, a gas tax would be simpler and more effective than higher emissions standards.

– Christopher Swann is a Reuters columnist. The views expressed are his own –

President Obama may have a political Midas touch, but his decision to tighten fuel efficiency rules for cars was assailed from two directions.

Some critics charged that the rules would force car prices higher at the worst possible time — dealing a possible lethal blow to the American auto industry and hurting struggling consumers at the same time. Others berated the president for preferring regulation over a simpler tax increase. The Corporate Average Fuel economy standards — or CAFE — are costly, inefficient and politically craven.

Both criticisms rest on mistaken assumptions about pricing. Firstly there is scant evidence that tightening fuel standards were a major force in pumping up the price of cars in the 1970s and 1980s. Between 1978 and 1985 U.S. automakers managed a 50 percent increase in fuel efficiency without breaking a sweat.

The notion that CAFE standards significantly push up prices assumes technological stasis. Auto research continually spins off fuel efficient technology. The automakers and buyers then face a trade-off between deploying this to cut down gas usage, or to enhance the power and size of the vehicle.

Since the United States stopped tightening the standards in the mid 1980s, carmakers have chosen he latter. Obama’s rules are expected to add just $1,300 to the price of a car by 2016 and it is fair to assume that the price increase would phase in gradually along with the standards.

It would take just three years for fuel savings to put car buyers back in the black, according to the American Council for an Energy Efficient Economy.

The second error is to assume that the car buying public can be swayed by a modest increase in fuel taxes.

Recent history suggests it would take huge and politically implausible tax increases to make much of a difference. Americans started to abandon the SUV only when gasoline prices soared to $4 a gallon in July 2007 — close to double the price at the end of 2006.

To have a significant impact Congress and the White House would need to increase the Federal tax on gasoline at least fivefold (at present, it is a mere 18.4 cents). Not even the wildly popular Obama could get away with that. It might be easier to confiscate all the guns in Texas.

Nor will the cap and trade proposals being mulled by U.S. lawmakers do the trick. If implemented these may add between 10 and 20 cents to the price of fuel, according to the American Council for an Energy Efficient Economy — insufficient to change the behaviour of even the most impecunious American.

The standards certainly have their flaws. They do nothing to discourage the guilty pleasure of using the car for trips within walking distance. By placing trucks in a separate, privileged category, the CAFE standards may have steered Americans towards heavier vehicles. But this is an argument for adjusting the rules rather than abandoning them.

Even so, they have produced results that a price signals alone would not have achieved — forcing auto companies to incorporate fuel saving technologies that might otherwise be used to boost the power of a car or increase its size.

Indeed, even the European Union — with gas taxes that most Americans would consider ludicrously punitive — is embracing fuel efficiency standards. Europeans are right to believe that taxes alone are not always sufficient.