Friday, May 29, 2009

GPHM Table to see Gas Savings on Trade Ins (Including Cash for Clunkers)

[Update June 10: There are two personal benefits from Cash for Clunkers. One is the voucher. That one's clear. But the other benefit is the dollar value of the gas savings that result from a trade in. That one is less obvious because gas savings are a not a one-to-one function of MPG increases.

In many cases--especially for very inefficient cars--the savings in gas costs will be larger than the rebate. In that sense, the gas savings can be thought of as a kind of "matching" program for the voucher. It doubles the value of the voucher.]

The table below shows how different levels of Miles per Gallon (MPG) translate to Gallons per Hundred Miles (GPHM). You can easily calculate the gas savings from a trade in by subtracting the new GPHM from the old one. For example, trading in a 17 MPG car for a 28 MPG car saves 5.9 minus 3.6 = 2.3 gallons per hundred miles. That saves more than 200 gallons of gas (and $500) over 10,000 miles of driving. It also saves 2 tons of CO2 emissions over that distance. The gas cost calculations below assume that gas costs $2.50 per gallon.


Here is a downloadable version of the table below.


These tables directly caclulate the gas and cost savings of trading in a car that gets 18 MPG or less for different combinations of cars with higher MPG.


Finally, this online calculator will let you compare gas consumption and gas costs for any combination of MPG, driving distance, and gas price. It also allows you to calculate gas consumption and cost information on 2009 cars.


MPG

Gallons per 100 Miles

Gas Costs to Drive 10,000 Miles

10

10.0

$2,500

11

9.1

$2,273

12

8.3

$2,083

13

7.7

$1,923

14

7.1

$1,786

15

6.7

$1,667

16

6.3

$1,563

17

5.9

$1,471

18

5.6

$1,389

19

5.3

$1,316

20

5.0

$1,250

21

4.8

$1,190

22

4.5

$1,136

23

4.3

$1,087

24

4.2

$1,042

25

4.0

$1,000

26

3.8

$962

27

3.7

$926

28

3.6

$893

29

3.4

$862

30

3.3

$833

31

3.2

$806

32

3.1

$781

33

3.0

$758

34

2.9

$735

35

2.9

$714

36

2.8

$694

37

2.7

$676

38

2.6

$658

39

2.6

$641

40

2.5

$625

41

2.4

$610

42

2.4

$595

43

2.3

$581

44

2.3

$568

45

2.2

$556

46

2.2

$543

47

2.1

$532

48

2.1

$521

49

2.0

$510

50

2.0

$500


Thursday, May 28, 2009

Op-Ed on GPHM and Cash for Clunkers

This Op-Ed summarizes why "gallons per hundred miles" (GPHM) makes it easier to formulate a Cash for Clunkers policy:

http://news.duke.edu/2009/06/larrick_oped.html

For a longer version of these ideas, see this May 10 post. The USA Today’s automobile writer, James Healey, has started adding GPHM to his automobile reviews. We need the EPA, DOE, and Consumer Reports to follow suit.

To see the gas savings from a Cash for Clunkers trade in use the table from this May 29 post or go to the gallons per mile calculator at http://www.gpmcalculator.com to explore savings over different distances and gas prices.

Wednesday, May 20, 2009

CAFE Math -- Percent cleaner versus percent further?

The Obama administration has proposed raising CAFE standards from an average of 25 MPG in 2009 to 35.5 MPG in 2016. We applaud this improvement because it accelerates gains that were planned for 2020. Detroit has signed on. However, we note that MPG has again caused confusion. Many prominent sources have interpreted the improvement from 25 to 35.5 as "40% cleaner" and as cutting "tailpipe emissions by almost 40 percent."

Before exploring the percentages, it is important to note that CAFE math is hard to interpret in general because it describes the average new vehicle sold in the fleet that year, and does not adjust either for an increase in total vehicles sold or for increases in the miles driven, both of which will diminish actual CO2 benefits. With that caveat, here's the right way to think about the increase of the average car's MPG from 25 to 35.5.

It is true that there is a 40% improvement, which can be seen by taking the difference between 35.5 and 25 (10.5), and dividing it by 25. However, this number does not tell you how much cleaner the average car is in terms of CO2 emissions. Instead, it tells you how much further you can now drive in a new vehicle on the same gallon of gas. One gallon will now take you 40% farther than it did before.

To see the percentage reduction in CO2 emissions, you need to calculate the percentage decrease in GPM. In this case, it is (1/25 - 1/35.5)/(1/25), which is 30%. Thus, for an average car driven a mile in 2009 and 2016, there will be a 30% reduction in gas consumption and CO2 emissions. (Many sources do get this right.)

More generally, you can calculate the percentage changes for MPG and GPM as follows, where MPGhigh is the MPG for the new, more efficient car and MPGlow is the MPG for the old, less efficient car:

Percentage improvement in MPG = (MPGhigh/MPGlow) - 1
Percentage reduction in GPM = 1 - (MPGlow/MPGhigh)

And you can calculate the relationship between percentage reduction in GPM and percentage increase in MPG as:

GPM% = MPG%/(1+MPG%)

For example, a 100% increase in MPG reduces GPM by 50%. A 50% improvement in MPG reduces GPM by 33%, and so on. CO2 is reduced as a linear function of changes in GPM, not MPG.

Note that CAFE calculations, which are based on the harmonic mean of all vehicles sold by a manufacturer, inherently involve GPM. The harmonic mean is simply a weighted average of GPM that is then flipped and expressed as MPG.

Carolyn Fischer at Resources for the Future has written a brief describing several benefits of switching from MPG to GPHM ("gallons per hundred miles"), including the ability to administer CAFE credits. The government routinely uses GPM for these calculations; why not make it a general practice?

Thanks to Frank Wang and Drew Carton for pointing out these misinterpretations of the CAFE increase.

Tuesday, May 19, 2009

Senate Cash for Clunkers meets the 1 GPHM Rule (Mostly)

[Update June 20 2009

If you are considering a trade in,
please use the tools linked here to see the cash value of your gas savings. The gas savings can be more valuable than a Cash for Clunkers voucher.

The final bill is linked to this post. The details below refer to an older bill.]

Senators Feinstein, Snowe, and Schumer have proposed a Cash for Clunkers bill in response to the House compromise of May 5. Full details of the Senate bill are at the end of this post.

Here's a summary from a "GPHM" perspective:


This is a much stronger plan than the House compromise in terms of CO2 reductions. It is stronger for two reasons.


First, the minimum MPG thresholds (mostly) cover the CO2 emission from manufacturing the new vehicle. (See this earlier post on the amount needed to cover these emissions. This post provides a calculator and table for comparing the gas consumption of an old and new car.)


Second, the system is more tiered than the House bill, encouraging drivers to seek higher levels of gas savings, but giving them the option to choose any level they wish above a responsible minimum.


In previous posts, I've argued for a minimum of saving 1 gallon per 100 miles to pay back the 7 tons of CO2 emitted in producing the new car (this trade in would "pay for itself" in 70,000 miles of driving). Dean Chameides of Duke's Nicholas School has argued for a minimum savings of 2.5 gallons per 100 miles (which would "pay for itself" in 30,000 miles of driving). In my most recent post, I've combined these ideas to argue for a system based on a minimum gain of 2 GPHM with tiered vouchers that increase with additional decreases in GPHM.


I think the new bill does a decent job of setting a minimum (closer between 1 and 2 GPHM) and providing tiered incentives for larger reductions in GPHM. Here's how the new trade ins compare on gphm (voucher value in parentheses):


Cars

17 to 24 saves 1.7 gphm ($2500)

17 to 27 saves 2.2 gphm ($3500)

17 to 30 saves 2.5 gphm ($4500)


Light trucks

17 to 20 saves .8 gphm ($2500)

17 to 23 saves 1.5 gphm ($3500)

17 to 26 saves 2 gphm ($4500)


Large light duty trucks *

(*This category has no maximum mpg for the old vehicle and simply requires that the new truck meet a minimum of 17 mpg. I picked a high starting mpg value for the old car, 16, to make this a more conservative test of gphm savings. A lower mpg value on the old vehicle would yield substantially greater gphm savings for the same mpg increments of 3, 5, and 7.)

16 to 19 saves 1.0 gphm ($2500)

16 to 21 saves 1.5 gphm ($3500)

16 to 23 saves 1.9 gphm ($4500)


The only increase that seems too small is the 17 to 20 mpg gain on light trucks, yielding less than 1 gallon saved per 100 miles.


This is where the MPG Illusion and the use of GPM is critical. Many people might think that the MPG increases on the Large Light Duty Trucks are unimpressive--starting at 14 and then moving to 17, 19, and 21. But those gas savings are greater than the savings produced by larger MPG increases on the Light Trucks (from 17 to 20, 23, and 26).


The night and day difference between this Senate bill and the House bill is the requirements for Large Light Duty Trucks. This bill is fairly responsible in that category.



Here's a cut and paste of the May 19 fact sheet:

The revised “Cash for Clunkers” proposal introduced today would ensure that vehicles purchased under the program do not bring down the fleetwide averages that the Ten in Ten Fuel Economy Act intended to raise.


Feinstein-Collins-Schumer Counter Proposal


Passenger Cars

Light Duty Trucks

Large Light Duty Trucks (6000-8500 pounds)

Work Trucks (8500 to 10,000 pounds)

Minimum Fuel economy for purchased vehicle

24 mpg

20

17

n/a

$2,500 for new vehicle purchase, $1,000 for used vehicle purchase, 2004 model year or later

Mileage improvement of at least 7 mpg

Mileage improvement of at least 3 mpg

Mileage improvement of at least 3 mpg

Trade-in work truck must be pre-1999 model (used cars not included)

$3,500 voucher for new vehicle purchase

Mileage improvement of at least 10 mpg

Mileage improvement of at least 6 mpg

Mileage improvement of at least 5 mpg

n/a

$4,500 voucher for new vehicle purchase

Mileage improvement of at least 13 mpg

Mileage improvement of at least 9 mpg

Mileage improvement of at least 7 mpg

n/a

Trade-in vehicles must be 17 mpg or below. All fuel economy values are EPA combined city/highway fuel economy, as posted on the window sticker of new cars.


Details of Feinstein-Collins-Schumer Counter Proposal


Consumers may trade in their gas-guzzling vehicles to be scrapped – with a fuel economy of less than 17 miles per gallon – and receive vouchers worth up to $4,500 to help pay for the purchase of more fuel efficient cars and trucks. The program will be authorized for up to one year and provide for approximately one million new car or truck purchases. There are approximately 27 million vehicles on the road today that could qualify for trade-in under this program.

This proposal is consistent with the framework of the House compromise legislation, and divides the cars and trucks that would be purchased with the incentive voucher into four categories. Miles per gallon figures below refer to EPA “window sticker” values.


· Passenger Cars: The trade-in vehicle must get 17 miles per gallon (mpg) or less. New passenger cars with mileage of at least 24 mpg – the current average for this vehicle class – are eligible for vouchers.

o If the mileage of the new car is at least 7 mpg higher than the old vehicle, the voucher will be worth $2,500 for a new car purchase.

o If the mileage of the new car is at least 10 mpg higher than the old vehicle, the voucher will be worth $3,500.

o If the mileage of the new car is at least 13 mpg higher than the old vehicle, the voucher will be worth $4,500.

o The purchase of a used passenger car with a mileage of at least 24 mpg would qualify for a voucher of $1,000.


· Light-Duty Trucks: The trade-in vehicle must get 17 miles per gallon (mpg) or less. New light trucks, minivans or SUVs with mileage of at least 20 mpg – the current average for this vehicle class – are eligible for vouchers.

o If the mileage of the newly purchased truck or SUV is at least 3 mpg higher than the old truck, the voucher will be worth $2,500 for a new vehicle purchase.

o If the mileage of the newly purchased truck or SUV is at least 6 mpg higher than the old truck, the voucher will be worth $3,500.

o If the mileage of the newly purchased truck or SUV is at least 9 mpg higher than the old truck, the voucher will be worth $4,500.

o The purchase of a used light-duty truck or SUV with a mileage of at least 20 mpg would qualify for a voucher of $1,000.


· Large Light-Duty Trucks: Newly purchased large trucks (pick-up trucks and vans weighing between 6,000 and 8,500 pounds) with mileage of at least 17 mpg – the current size-adjusted Corporate Average Fuel Economy Standard for the largest pickup trucks – are eligible for vouchers.

o If the mileage of the newly purchased truck is at least 3 mpg higher than the old truck, the voucher will be worth $2,500.

o If the mileage of the newly purchased truck is at least 5 mpg higher than the old truck, the voucher will be worth $3,500.

o If the mileage of the newly purchased truck is at least 7 mpg higher than the old truck, the voucher will be worth $4,500.

o The purchase of a used large light-duty truck with a mileage of at least 17 mpg and 3 miles per gallon higher than the trade-in vehicle would qualify for a voucher of $1,000.


· Work Trucks: Under the proposal, consumers can trade in a pre-1999 work truck (defined as a pick-up truck or cargo van weighing from 8,500-10,000 pounds) and receive a voucher worth $2,500 for a new work truck in the same or smaller weight class. There will be a limit on these vouchers, based on this vehicle class’s market share. There are no EPA mileage measures for these trucks; however, because newer models are cleaner than older models, the age requirement ensures that the trade will improve air quality. Consumers can also “trade down,” receiving a $2,500 voucher for trading in an older work truck and purchasing a smaller light-duty truck weighing from 6,000 – 8,500 pounds.