Obama administration wreaks havoc on transportation sector

Now that the Obama Administration has finished wreaking havoc on the electricity generating sector, it is continuing its vengeance on the transportation sector. From onerous energy efficiency mandates for new vehicles to new regulations on heavy trucks and even regulations on the energy efficiency of aircraft, the Obama Administration is driving up the cost of transportation. This is costing Americans more for their vehicles, more to transport food and goods, and more to fly to visit friends and family. Now, it wants to change our cities to increase city density, limit parking spaces, confine us to smaller areas, and increase the use of public transportation to reduce energy use. In essence, he wants to make auto-mobility as expensive in America as it is in Europe.

Corporate Average Fuel Economy Standards (CAFE)

In 2012, the Obama Administration enacted new fuel-efficiency standards (CAFE standards) that doubles car-and-truck fuel efficiency by 2025, with sales of light duty vehicles reaching an average 54.5 miles per gallon. To achieve this, automakers will have to reduce the weight of vehicles, use more aerodynamic designs and decrease engine size, as well as manufacture more hybrids and electric vehicles.[i] However, even if auto manufacturers reach an average of 54.5 miles per gallon for new vehicles sold, most cars and trucks on the road will get lower mileage in real-life driving.

The Obama Administration estimated the new standards would reduce oil consumption by 12 billion barrels over the course of the program and that these rules would cut greenhouse gas emissions in half by 2025, eliminating six billion tons over the course of the program. The Obama Administration, however, does not highlight that these rules will increase the cost of new vehicles, costing thousands of dollars more than what they will save on fuel,[ii] which will shut out almost seven million people from the new car market.

Source: http://www.heritage.org/research/reports/2016/03/fuel-economy-standards-are-a-costly-mistake

Heavy Duty Vehicles

In August, the Environmental Protection Agency (EPA) and National Highway Transit Safety Administration (NHTSA) released the final version of their Corporate Average Fuel Efficiency (CAFE) standards for medium- and heavy-duty vehicles manufactured from 2018 to 2027. This rule represents the fifth and final set of CAFE standards under the Obama Administration, which cumulatively are expected to exceed $245 billion.[iii]

NHTSA estimates the cost for the truck rule to be $29.3 billion, while EPA estimates it at $97.8 billion using a different methodology. The hardest hit areas are those states where the truck industry is mostly located. Apportioning EPA’s $97.8 billion in life-time costs to those states with a heavy-duty truck manufacturing presence, the following states are the most affected:

State Cost Share
Ohio $11.1 Billion
California $7.4 Billion
Florida $6.2 Billion
Minnesota $5 Billion
Missouri $5 Billion

These rules are based on the premise that there is a market failure where transportation companies cannot figure out the importance of fuel economy and need the federal government to step in and require trucks to be more fuel efficient. This is, of course, absurd. Trucking companies understand very well, and much better than federal regulators, the important of fuel economy and fuel costs.

These rules will be the first to require not just more efficient tractors, but aerodynamically improved trailers. EPA is not just redesigning our electrical grid, they are now determining the style of vehicles allowed on the road.

In 2010, the average efficiency of heavy-duty vehicles was between six and six-and-a-half miles per gallon, with the best vehicles getting up to seven miles per gallon. By 2027, the average new tractor trailer would get between 9 and 10 miles per gallon. Semis produce about two-thirds of the greenhouse gas emissions from this class of truck.

Because the mileage of heavy duty vehicles does not significantly change in response to varying fuel prices, increasing the efficiency of these heavy duty vehicles should provide a good estimate of how much greenhouse gas emissions can be reduced. Passenger vehicles are different, where the rebound effect causes drivers to increase their miles driven when the price of driving decreases.

Further, also in August, the U.S. Department of Transportation released a proposed rule that would equip trucks and buses with devices to limit their speed, which would reduce fuel consumption and greenhouse gas emissions. The department will consider speed limits at 60, 65 or 68 miles per hour for heavy commercial vehicles. Speed limits on interstate highways vary across the United States–some states allow vehicles to drive up to 85 miles per hour, while other states have lower maximum speeds for trucks.[iv]

Aviation Emissions

In February, the International Civil Aviation Organization (ICAO), the United Nations agency that oversees passenger flights, determined limits on carbon dioxide emissions on new airplanes delivered after 2028. The new standards require a 4 percent reduction in fuel consumption of new aircraft beginning in 2028 compared with 2015 deliveries. They also set new limits for airplanes in production that are delivered after 2023. Depending on the size of the aircraft, actual reductions would be from zero to 11 percent, with a bigger emphasis on larger commercial airplanes.[v]

The proposed standards must be formally adopted by the civil aviation council of 36 member states and endorsed by the council’s assembly in October. They then need to be enacted by each member state in its national legislation or regulation. Once the ICAO finalizes the rules, the EPA will likely issue engine-efficiency rules that are in line with the ICAO standard, which can be expected by the end of this year.[vi] The upshot of this regulation will be more expensive planes, more expensive fuel, and more expensive ticket prices for travelers worldwide. The increased prices do not matter for people who fly around on government jets, but it will harm American families who just want to visit their friends and family.

JetBlue, seeking to get ahead of the upcoming restrictions on airliners’ greenhouse gas emissions, agreed to buy over 330 million gallons of renewable fuel over 10 years from the bioenergy company SG Preston. JetBlue expects to cover around 20 percent of its annual fuel use at Kennedy International Airport, its home base, with a biofuel blend, which is equivalent to about 4 percent of the total fuel used throughout its system. Under the agreement, JetBlue will purchase over 33 million gallons annually of the biofuel made from plant oils for at least 10 years, blending that fuel with 70 percent traditional jet fuel.[vii]

Other airlines are in a test mode. United began using a biofuel blend on some of its flights from Los Angeles last year. Recently, Lufthansa tentatively agreed to buy about eight million gallons of fuel annually for five years from Gevo, a Colorado-based biofuel developer. Virgin Atlantic announced a successful test of a jet fuel from LanzaTech derived from waste gases from steel mills.

That said, Bloomberg is reporting that, “The airline industry’s plan to ease its impact on global warming hinges on fuels made from vegetable oil, corn and household garbage. The hitch: nobody has ever been able to produce the stuff in the volumes needed.” In fact there is only enough biofuel capacity to make 100 million gallons of jet fuel, but airlines consume 83 billion gallons a year.[viii]

Eliminating Parking Spots; Making Cities Denser

The White House wants to reduce greenhouse gas emissions from transportation, which overtook electricity as the top greenhouse gas emitter in the country this year due to low gasoline prices and record driving. But, the Obama administration’s ambitions do not stop at mandates for fuel economy improvements of vehicles, it also wants to change cities to force people to use alternatives to private automobiles. The White House sees better access to public transit and alternative forms of transportation like walking or biking as a way to reduce greenhouse gas emissions.[ix]

As such, the White House recently released its recommendation to: eliminate off-street parking requirements, create zoning that allows high density and multi-family developments like townhouses and apartment buildings, require developers to build additional “affordable” housing, incentivize developers to build more “affordable” units, and tax vacant land so it gets used. This is a push for more multi-family buildings and less vehicles in our cities, initiating a transition from an American living style to a European living style.[x]

The issue of zoning and transportation in our cities is complex. While it is good that the Obama administration realizes that there are some issues with zoning regulations, it fails to grasp that zoning itself has made cities less affordable.[xi] Furthermore, public transit systems are incredibly expensive, massively subsidized, and ridership is not keeping up with population or it is declining as in Washington, DC.[xii] Top down solutions to issues in American cities has not worked for the last 50 years and will likely continue not to work in the future.

Conclusion

President Obama, having instituted onerous regulations on the generating sector, is now moving to wreak havoc on the transportation sector as it has become the largest producer of greenhouse gas emissions in the country. Not only is President Obama regulating the efficiency of autos and trucks, he is proposing limits on heavy truck speed and recommending that parking spaces be reduced in cities, making them denser to encourage walking, biking, and mass transit. Clearly, what he wants to do is change American cities to be more like high-cost European cities. These regulations and recommendations will cost Americans more and reduce Americans’ mobility.


[i] New York Times, U.S. Sets Higher Fuel Efficiency Standards, August 28, 2012, http://www.nytimes.com/2012/08/29/business/energy-environment/obama-unveils-tighter-fuel-efficiency-standards.html

[ii] Daily Caller, Obama Fuel Economy Regs are Making Cars Far More Expensive, March 9, 2016, http://dailycaller.com/2016/03/09/obama-fuel-economy-regs-are-making-cars-way-more-expensive/?utm_source=twitterfeed&utm_medium=twitter

[iii] American Action Forum, Final Phase 2 Heavy-Duty CAFE Standards, August 22, 2016, https://www.americanactionforum.org/regulation-review/final-phase-2-heavy-duty-cafe-standards/

[iv] Yahoo, U.S. considering speed limit device rule for trucks, buses, August 26, 2016, https://ca.news.yahoo.com/u-mulls-rule-require-speed-limiting-devices-trucks-145040555.html

[v] New York Times, U.N. Agency Proposes Limits on Airlines’ Carbon Emissions, February 8, 2016, http://www.nytimes.com/2016/02/09/business/energy-environment/un-agency-proposes-limits-on-airlines-carbon-emissions.html?_r=0

[vi] The Atlantic, The Supreme Court Didn’t Block These Obama Administration Climate Policies, February 18, 2016, http://www.theatlantic.com/technology/archive/2016/02/the-supreme-court-didnt-block-these-climate-policies/462618/

[vii] NY Times, JetBlue Makes Biofuels Deal to Curtail Greenhouse Gases, September 19, 2016, http://www.nytimes.com/2016/09/20/business/energy-environment/jetblue-makes-biofuels-deal-to-curtail-greenhouse-gases.html?emc=edit_th_20160920&nl=todaysheadlines&nlid=63692790&_r=1

[viii] Bloomberg, Airline Low-Carbon Future Needs Fuel Nobody Makes in Volume, October 4, 2016, http://www.bloomberg.com/news/articles/2016-10-03/airlines-pin-low-carbon-future-on-fuels-nobody-has-mass-produced

[ix] Climate Wire, White House—curb GHGs by eliminating parking spots, September 27, 2016, http://www.eenews.net/climatewire/2016/09/27/stories/1060043466

[x] Grist, Obama pushes to make cities denser and more affordable, September 27, 2016, http://grist.org/cities/obama-pushes-to-make-cities-denser-and-more-affordable/

[xi] The Antiplanner, More Regulation Won’t Make housing More Affordable, http://ti.org/antiplanner/?p=12309

[xii] Washington Post, Metro’s multi-million dollar mystery: Where have our riders gone?, October 1, 2016, https://www.washingtonpost.com/local/trafficandcommuting/metros-multimillion-dollar-mystery-where-have-our-riders-gone/2016/10/01/2949d226-85b8-11e6-92c2-14b64f3d453f_story.html

The post Obama administration wreaks havoc on transportation sector appeared first on IER.

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