More Efficient Trucks Will Save Fuel -- But Only If Drivers Can Afford Them

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Joann Muller / Forbes / February 19, 2014

President Obama painted an ideal scenario Tuesday as he announced his plan to push tough new fuel efficiency standards on everything from heavy-duty pickups to 18-wheeled semi trucks.

“Improving gas mileage for these trucks is going to drive down our oil imports even further,” Obama said. “That reduces carbon pollution even more, cuts down on businesses’ fuel costs, which should pay off in lower prices for consumers. So it’s not just a win-win, it’s a win-win-win. We got three wins.”

I’m always suspicious when someone tells me everybody wins. And judging by the reaction of independent truck drivers who are already getting squeezed by the cost of regulations enacted a few years ago, they’re afraid they’ll be the big losers.

“Each year for the past 10, more and more truckers are squeezed out of the option to buy new equipment because of ever increasing prices due to government requirements that are long on promises but way short on performance,” said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, a trade group of small business trucking companies and professional drivers.

“We’re not talking about some 60-watt light bulbs here where poor performance or premature failure is a minor inconvenience. Large trucks are vital tools, essential to our economy and our way of life, and most trucker operators are small-business people just getting by.”

OOIDA, which represents 150,000 owner-operators, leased operators and company drivers, says the standards will keep driving up the price of new trucks, forcing truck owners to hold on to older equipment longer and put off buying new trucks and trailers as long as they can. I doubt that’s the outcome Obama is looking for.

But the president is committed to finding a way to push his climate change agenda, even without the help of Congress. On Tuesday he asked his administration to draft the new efficiency standards for medium- and heavy-duty trucks by March 2015, with the goal of enacting them a year later. The new rules, governing fuel economy for trucks built after 2018, would follow the first phase of mpg improvements for heavy-duty vehicles in model years 2014 through 2018.

According to the EPA, the 2014-2018 standards will add approximately $6,200 to the price of a new truck. The administration has not yet released how much the second round will tack on.

But the EPA says an operator of a new semi truck could pay for the technology upgrades required under the current law in under a year and realize net savings of $73,000 through reduced fuel costs over the truck’s useful life. And it argues that savings would flow through to American families, since lower transportation costs can ultimately lower the costs of groceries and other products.

Again, I’m skeptical. Show me the money.

The American Truck Dealers, a division of the National Automobile Dealers Association, estimates that EPA mandates from 2004 through 2010 added $21,000 to the price of new trucks.

Similar efficiency standards for passenger cars and light trucks have already added thousands of dollars to the price of new vehicles. That trend will only continue under the latest rules, which require average fleet fuel economy to reach the equivalent of 54.5 miles per gallon by 2025.

There’s no argument the fuel savings is substantial. Since 2008, the unadjusted average test fuel economy of new passenger cars and light trucks sold in the U.S. has increased by about 4 mpg, thanks not only to new regulations but also to consumer demand for better mileage in the face of higher gas prices.

Who doesn’t want to save money on fuel and reduce the country’s dependence on foreign oil? Elissa Maurer, a spokeswoman for Navistar, says fuel economy is always top of mind for its customers, which is why Navistar and other truck and engine manufacturers are cooperating with the Environmental Protection Agency and the Transportation Department to draft the next set of standards.

Possible solutions include greater efficiency for engines and powertrains, improved aerodynamics, weight reductions, improved rolling resistance for tires, hybrids, automatic engine shutdown and accessory improvements for fans, auxiliary power units and air conditioning.

Many of these fuel-saving technologies are not yet in production, and somebody has to pay for them. Jeremy Anwyl, president of consulting firm Marketec Systems, warns that if the tougher standards outpace technology development, costs could skyrocket. “Push the number up suddenly and the costs associated with the increase shoot up,” he said. “But a measured set of increases over a reasonable timeframe can be managed fairly easily.”

The Obama Administration would be wise to take it slow when it comes to racheting up fuel efficiency standards or risk triggering unwanted economic consequences.