Volkswagen “Dieselgate” Scandal

Unless you’ve been living under a rock, doubless you are aware of the Volkswagen “Dieselgate” scandal of 2015. Long unpopular in the US, diesel had just been starting a come-back. Much of that thanks to the performance and economy of VW’s TDI engines. Unfortunately backlash against this scandal probably spells the end of diesel engines in passenger cars, at least in the US.

Certainly I agree that harmful automotive emissions must be reduced. But the way emissions are regulated in the US is broken. US pollution policy as it relates to the automobile has been to put the burden on the producer.

Specifically the Corporate Average Fuel Economy (CAFE) standard requires fleet-wide vehicle fuel economy numbers from manufacturers. If one sells a certain number of gas-guzzlers, one must sell another number of gas-misers to offset that. But it’s not that simple because cars and light trucks aren’t in the same CAFE pool and don’t have the same fuel economy requirements. Manufacturers and consumers have found a way to game the system buying light trucks (pickups, SUVs, etc.) that fall under the less stringent CAFE requirements which also adds safety and increased foreign oil dependency problems to the mix. The system would almost be sane if all personal vehicles were required to meet the same requirements. In the past, farm trucks and some commercial trucks were granted exceptions to avoid burdening those businesses with taxation. That was when light trucks accounted for around 3% of traffic. These days light trucks account for more than 50% of traffic. They have graduated from the exception to the rule, clearly no longer deserving of special exemption.

But CAFE itself is irrational. One cannot direct a market by placing requirements on the producers. It is the consumers who ultimately make the purchasing decisions. The producers necessarily build what they can sell. If the real costs of light trucks and other heavyweight vehicles — emissions, fuel consumption, safety, etc. — were paid by consumers I predict their numbers would quickly drop.