1/25/2008

US goes Green?

I'm an avid car lover and have noticed something very strange about the upcoming cars for next year.  After reading this article, I saw that many of the cars were the opposite of "green."  Almost every company came out with a line of hybrids parked right beside their newest gas-guzzling horsepower machine.  All the media is telling us the American consumer is demanding more efficient "green" cars but the supply tends to show automakers forecast strong sales in their less-efficient cars.  It is very interesting to see the difference in what automakers are projecting and what the media shows as popular.  It seems as though talk of "green" is still merely lip service.  

9 comments:

Dr. Tufte said...

What you are seeing is an unintended consequence of CAFE standards.

These require the average MPG for the entire fleet of cars sold by a manufacturer to hit a certain level.

For practical purposes, this means that every gas-guzzler has to be balanced by something that used less gas.

The trouble is that the gas-guzzlers are the vehicles with the more inelastic demand and therefore the biggest markups (if you have a big family, or work at Brian Head, you might not be flexible about your need for a, say, Yukon).

Trinity said...

Thank you for that feedback Dr. Tufte. Could you address the issue about high performance cars (Ferarri, Lamborghini, Bugatti, etc) too? It seems the demand for those is rather inelastic as well because the people that can afford them don't care about a $100K difference on the price tag and changes in gas prices. What do you think?

Emma said...
This comment has been removed by the author.
Emma said...

I am also very fond of cars. In my opinion, the talk of making "green" cars is a way to help the economy. I truly think that the media is pushing this concept of going "green" to increase sales for efficient cars. This will therefore decrease gas consumption in America which will better the economy. However, the price of the new hybrid cars are usually higher then the non-hybrid cars. My dad recently bought a diesel Volkswagen. He later regretted paying the higher price for it because the less efficient gas car would have saved him 2,500 dollars. It is going to take a long time to balance out that difference with his diesel. In my opinion, the push for efficient cars by the media is a way to increase sales for the higher-priced hybrids. They are hoping customers will overlook the higher price when they see the better fuel efficiency. However, customers usually buy what they want no matter what the media is saying.

Reagan said...

If you haven't researched the environmental movement I suggest you take some time and find out what is happening. "Going Green" is a political issue being fueled by people like Al Gore. Al Gore has started his own company that buys pollution credits from people that don't use all their carbon credits and sells them. People that have money buy pollution credits to lower their carbon footprint on the earth. People will continue to purchase gas guzzlers and continue to get pressure from the environmentalists to become more green will the environmentalists put more carbon into the atmosphere then the average person. However, they can feel good about themselves because they have purchased someone else's unused carbon credits and not increased the net carbon released into the atmosphere. We need to take care of the environment but not the way these people want to.

Gavin said...

Extra Credit - Dr. Tufte
Dr. Tufte, how can the CAFE standards be modified to provide an incentive for the manufacturers to make "cool" cars green? For example the re-introduced muscle cars, diesel pickups, and luxury SUV's with the more inelastic demand do not have green technology. I think there would be an inelastic demand for 400+ horsepower hybrids.

William said...

Dr. Tufte,
Don't you think though that there have been some advances to being green friendly?

I was just recently looking at a Ford Escape; they are now selling them in hybrids. It seems to me that car manufacturers are somewhat taking into consideration the environment and the high gas prices. It seemed like before they only had small little cars that were green friendly, but are now expanding them to cars that have power to them.

TheFindlay said...

Dr. Tufte
People are so stupid! “Green” is the biggest scam since Russia told us they were are allies! It reeks right up there with “Global Warming” and it is pathetic that so many people care, are listening, and are doing things about it. The worst part of the whole thing is people are making outrageous amounts of money duping people into thinking that they are making a difference. The loud minority of environmental freaks and celebrities want green, Americans want what they pay for!

Dr. Tufte said...

Trinity: good question. What you are seeing is the effect of CAFE standards. CAFE sets fuel economy standards for a producers entire fleet of sales. Yet, they make the most money off of the inelastic demand cars that you noticed. So ... they have both.

Gavin: like most things with the government, I think CAFE could be improved if they set out some ground rules about what they actually want.

For starters, if we really wanted less pollution from cars, we'd pump the exhaust through the passenger cabin. Not going to happen. But, this silly example points up some of the problems with "green cars". Hybrids don't really require less energy, they just move the production of that energy further away from the end user - say, to a coal-fired plant in Utah. This will encourage pollution.