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Fool Efficiency

the truth behind hybrid cars, fuel efficiency, and EPA testing

It's hard to tell who is more confused: journalists, consumers, or members of congress and political officials connected to the White House. All of a sudden everyone's jumping up and down about the official U.S. mileage rating system for cars and light trucks. EPA's energy efficiency ratings are getting folks hot under the collar. Gasoline is expensive. More and more of the nation's relatively intelligent consumers are looking to trade in their petrol-guzzling SUVs and mini-vans for smaller cars--especially, hybrid gas-electric offerings. There's a war in the Middle East going on too, and at least some folks in the country feel their may well be a connection between their driving habits and daily reports of death in Iraq. In addition, a number of our fellow citizens have been waiting since 1972 for state-of-the-art, super-efficient vehicles--knowing full well that oil is a non-renewable resource and therefore something it is not good to be too dependent upon.

Whatever the reason, and it may well be "all of the above", consumers in the land of big-gulp gas monsters have started to pay close attention once again to EPA mileage ratings. This is particularly true with the smartest and most ballsy Americans who over the past five years have been standing in line--sometimes in excess of an entire year--in order to buy Honda's and Toyota's hybrid vehicles--the Civic Hybrid, Insight, and the Prius Classic and 2.0 (named the Motor Trend Car of the Year in 2004).

Civilized Discontents

But a bunch of people are starting to freak out about lower than expected gas mileage. This is partially because of the digital read-out that comes standard on hybrid vehicles, providing drivers with instantaneous and historical fuel efficiency data. In the old days if you wanted to figure out your fuel economy, every time you filled up you needed to write down your mileage and the number of gallons you bought and then do the math after a few months. But the new hybrid vehicles tell drivers exactly how well they're doing on a special digital screen. Sadly, more than just a few environmentally conscious drivers aren't achieving the efficiency levels posted on these car windows at the time of purchase. According to EPA, the new Prius is rated at 60 miles per gallon in the city and 52 miles per gallon on the highway. The Civic Hybrid is rated at 47 and 48 respectively (a bit higher for the manual transmission model). Yet many drivers find that they get far below this number--30-35% below in some cases. And this is where all the dumb stuff starts happening.

First came the discovery by consumers, most of whom had waited for months to buy new Priuses and Civic Hybrids, that their lovely statements of social and environmental responsibility did not necessarily get the gas mileage they wanted. One particularly dismayed customer, Pete Blackshaw, who lives in Cincinnati, wrote in his blog, "First, let me repeat a key point. I, Pete Blackshaw, am a passionate believer in hybrid technology. But I'm equally passionate about truth in advertising. This blog has shifted from high-octave "love letter" to dispirited "tough critic" because I fear there's a troubling and well-documented gap between the brand "promise"--reflected in Hybrid advertising, promotion, and dealer representations--and the actual product "benefit" and performance. Nothing will kill this industry faster than consumer cynicism, especially in the internet age of high-velocity word-of-mouth."

Along with Blackshaw, AAA, Consumers Union, and San Francisco-based Bluewater Network have also been running the numbers for different automobile brands in real-world settings. Efficiency levels were anywhere from 15%-30% below what was being posted on new cars--all new cars, not just hybrids. In fact, several years ago Bluewater Network petitioned the EPA to consider adjusting its analytical techniques. They were ultimately turned down, but in the last several months this petition has gained enough traction to merit a proposed bill in Congress called the Fuel Efficiency Truth in Advertising Act of 2005, sponsored by Representative Nancy Johnson of Connecticut.

Pete Blackshaw’s blog opened up a firestorm surrounding hybrid efficiency, beginning with a Wired piece on his troubles and then rapidly spreading across the major print and video landscapes with stories on numerous "dissatisfied" customers who felt duped. Blackshaw’s problems were covered by CBS News, Newsweek magazine, and dozens of electronic media sources. Many of the stories pointed out in one way or another that hybrids cost about $3,000-$4,000 more than comparable cars and that even with perfect gas mileage, savings achieved in comparison would mean a 10-12 year payback to hybrid owners. Real world gas mileage, reporters would continue, meant a payback on this additional investment of 15-20 years.

EPA’s Old Math

Many in the electronic and print media weren't completely stupid. Fuel efficiency performance figures are not rigged by auto company marketing directors. The EPA is the only official source for these numbers. It is illegal for auto companies to represent their vehicles with gas mileage other than what the EPA says it is. Indeed, Toyota and Honda have said that they would love to provide real world numbers, they're just not allowed to. But the media enjoys making nasty smells with specifics. The truth is not that hybrids aren't getting the mileage they should (it is important to note that a number of drivers actually report better mileage than the EPA figures), it’s just that most cars (and drivers) are much less efficient than the EPA numbers would lead consumers to believe. This is the real story which has, of course, been obvious for the past thirty years and only now actually means something in this world of $2.00 per gallon regular and soldiers dying in Iraq. There may also be something about the editorial need to attack America’s newest class, hybrid elites, and their symbols of holier-than-thou social responsibility.

Whatever the case, the methods used by the EPA to establish fuel efficiency numbers are codified by Congress in the Motor Vehicle Information and Cost Savings Act, a law written in 1975. It's exceedingly complicated, but EPA's methodology involves "ideal" testing parameters (albeit 30 years old), usually in a laboratory on a contraption known as a dynamometor where driving conditions are simulated. There is a highway portion and a city-driving portion. Tailpipe emissions are monitored and, using special calculations, fuel efficiency data is derived. The problem is that these laboratory conditions do not reflect what real drivers are facing here in the early 21st century. The city test is an 11-mile simulation of stop-and-go driving with an average speed of 20 mph, complete with 23 stops and a modest amount of idling time. There is no air conditioning, no weather-impacting conditions, and the carrying load is based on a single driver. For the highway test the conditions are similar, with a 10-mile "trip" in which the car accelerates up to cruising speed in 18 seconds, averaging 48 mph for the duration. Critics of this system point out that in today's world, the driving speed on most highways is often in excess of 70 mph (on the Jersey Turnpike it is often near 85 mph), and idling time in city traffic has more than quadrupled in the past twenty years.

To top it all off, the EPA only audits most of the tests. They let the car manufacturers do the lab work themselves using the prescribed methodology. And the cars that are tested are not production line vehicles, they're usually prototypes.

This is not to say that EPA staffers are wholeheartedly defending their system. According to Russel Long, executive director of Bluewater Network, a number of agency professionals feel very strongly that the system needs to be revised. But the methods are codified as federal law and can only be changed by act of Congress. As might be expected, then, the issue is political. And it's not just a simple matter of truth-in-advertising. The Energy Policy and Conservation Act of 1975 established the Corporate Average Fuel Economy program (CAFE), which required automobile manufacturers to increase average passenger car and light-truck fuel efficiency by 75% within ten years under threat of penalty. Although EPA is in charge of data gathering, The Department of Transportation oversees the CAFE program. This is where things get tricky.

Truth in Engineering

Over the years there have been a number of challenges to EPA's method of determining fuel efficiency. The initial goal of 27.5 mpg for cars and 20.7 mpg for light-duty trucks has not changed. In fact, the industry achieved this level in aggregate by the set date of 1985. However, over the years the EPA has assessed its testing procedure several times. In 1984 it was recognized that they needed to reduce results across the board. Correction factors were approved, reducing laboratory results by 10% for the city portion and 22% for the highway portion. A correction factor of 15% was assigned to the combined city and highway number used to establish part of the CAFE standards.

When you couple this with the fact that light-duty trucks, once a category representing less than 20% of all new vehicle purchases, are now roughly 50% of all purchases, it becomes apparent that the overall CAFE standards for automobiles purchased in the U.S. is actually on the decline. Bluewater Network writes in their white paper, Fuel Economy Falsehoods, "The average fuel economy of America's passenger vehicles is as low today as it has been at any time in the past 20 years." Indeed, if SUVs and mini-vans were categorized as passenger vehicles--which they are in reality--they would drag the CAFE numbers down close to 1975 figures. The Union of Concerned Scientists points out at their web site, "In 2000 alone, CAFE saved American consumers $92 billion, reduced oil use by 60 billion gallons of gasoline, and kept 720 million tons of global warming pollution out of our atmosphere. the original schedule for CAFE improvements ended in 1985, leaving Congress and the administration responsible for future improvements--none of which have been pursued, leading to the current drop in fuel economy of the national vehicle fleet."

Put that way, the stakes in this game are very high. The fantasy world created by these EPA numbers has led to industry complacency (and very likely huge donations to all the politicians in Washington, DC who refuse to reschedule a new set of CAFE standards). And it should be no surprise to anyone that Toyota and Honda were able to reinvent themselves with hybrid engines as core technologies and the American auto industry must now license Japanese technology in order to compete.

Final Confusions

In the past several months or so since Representative Johnson's bill was made public, EPA has moved from "considering" changes, to declaring that they will in fact make changes. But so far these changes seem only to be affecting the new car labeling side of the equation. The House Energy Committee has taken up Johnson's bill, but clearly states that the codified EPA method will continue to be used for the government's CAFE standards. In essence then, the EPA numbers are being used for two different purposes. On the one hand they are part of the marketing and sales component of the auto and truck industries. On the other hand, they are used to establish whether the motor vehicle industry is maintaining a base level of energy efficiency--even though it is acknowledged that these numbers aren't real.

In the end, the effectiveness of all these numbers on consumers across the board is not clear. There are many who put the entire fuel efficiency rating system on the "regulations" side of the equation. They argue that the free market should dictate people's purchasing decisions. They cite the fact that with high gas prices large SUVs have declined by more than 20% in sales over the past year--as have small SUVs, with consumers presumably migrating down to more efffcient compact and sub-compact cars. And it doesn't appear that the hybrid markets are anywhere near from tapped out. With something like 16 new offerings coming out over the next year or so from most of the majors (Ford’s Escape SUV and Honda’s Accord Hybrid are already on the market, and Toyota has promised a Camry by 2006), consumers can let their pocket books vote on the issue of fuel efficiency and environmental awareness.

But market economics is also predicated partly on consumers being able to make rational decisions. It is impossible to make a rational decision about a car's efficiency levels without real numbers. As is often the case, the regulatory vs. free market debate falls apart at this juncture. It may be that there need to be more engineers and accountants addressing these issues and fewer politicians, lobbyists, and industrialists.

Bluewater Network’s Russell Long points out that it all comes down to money. The EPA figures don’t just show miles per gallon, they also show annual expected gasoline costs. He wants people to make their choices at the economic margin. "If you were a small contractor, and you had a choice between a vehicle that would cost $2500 a year to fill up versus a vehicle that costs $1800 year, what would you choose?" he asks. Then he mutters almost under his breath: "Assuming the information they were offering you was accurate."


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