CAFE
Although 2005 has come and gone, this month many car manufacturers have to pay for their previous sins. In an Detroit News article, the car industry has been fined $32 million for violating fuel economy regulations.
The fines are a result of the Corporate Average Fuel Economy (CAFE) regulations that were instituted by Congress in 1975. The regulations mandate fuel economy ratings based on a sales weighted average. The current edition states that the average must exceed 27.5 mpg for cars and 20.3 mpg for light duty trucks. Vehicles over 8,500 pounds are exempt (Ford Excursion, Limosuines, Hummer H1, Hummer H2, etc).
This years biggest offender, with total fines coming to $12 million is BMW. Second place went to DaimlerChryslerAG at $8.5 million, and Porsche, Volkswagen, and Ferrari finished out the top five at $6.4, $3.5, and $1.5 million respectively. All of the fines are paid directly to the National Highway Traffic Safety Administration.
The question is whether or not these fines affect the industry and actually promote companies to develop more fuel efficient vehicles. I contest they don't and are simply a small cost of doing business.
Lets take a look at DaimlerChryslerAG, or DCX as it is commonly abbreviated (its stock ticker), and how their fine of $8.5 million compares to their other costs. DCX has 384,724 employees. Now lets assume a cup of coffee costs $0.10, because GM used to charge me $0.15 when I was an intern. Now lets assume on average that each employee has one cup of coffee a day and that there are 300 work days a year. Using these numbers, DCX spends $11,541,720 a year simply on supplying their workforce with coffee. Furthermore with an annual income revenue of $192.319 billion, both of these costs together are still a very minor cost to the company (0.01%).
Therefore, how can the NHTSA actually think they are succeeding when these fines are equivalent to $5 parking tickets to the average citizen. State College has $5 parking tickets and I still park illegally and forget to pump the meters with money.
If Congress and the NHTSA wants to affect change then they need to dramatically increase the level of fines. Otherwise they should simply throw the towel in and give up.
posted by Aventius @ 6:52 PM
6 comments
6 Comments:
Interesting video. Skepticism is healthy and the "loose ends" regarding 911 are really to big to ignore. As far as CAFE, i think that it's good in theory, but horrible in practice. I question the scince behind global warming. For an interesting read on the hypocrisy of the west in the middle east, read "The War on Civilization".
A good site to check out..
www.junkscience.com
Great minds think alike. or something like that
I feel the same way about CAFE. Thats basically what I was trying to get across. They have the ability to affect change but don't, so they need to either make some changes and do their jobs or just throw in the towel and admit defeat.
People mostly care about price. So the current thinking is that companies would not want to add cost to their vehicles because that DOES affect demand. Therefore, they would regulate themselves and produce more fuel efficient cars.
But I do agree with you. CAFE is not working and I do believe in a "free" economy, companies should be permitted to manufacture the cars that they want to manufacture. CAFE is a fascist organization. Instead of going after the manufacturer, they need to instead focus on the consumers of the market. This would be much more effective than nickle and diming the industry with small fines that most companies consider insignificant and are simply the cost of doing business.
Global Warming rulez its 60 degrees in DC in January!
I agree about CAFE to a point. I think that there is some sort of oversight necessary, but I also think that they need to make the fines more. I also think that there should be an increased tax on heavier, less fuel efficient vehicles. About two years ago the governor of Arizona proposed taxing SUVs more as their extra weight stressed the roads more. This was shouted down by the SUV owners, but I think that it is indicative of why CAFE is not working. Considering that our government is now run by a kabal of men wedded to the petroleum industry, and over half of the cars on the road are SUVs, career politicians can't risk losing their jobs over something so trivial as decreasing our independence on the middle east and saving our health by reducing emissions.
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