Truck prices will likely go up - but fuel savings could reach $20,000 annually.
While federal authorities continue debating a massive jump in fuel economy standards for passenger cars and light trucks, a big increase in mileage requirements for heavy-duty vehicles is set to be formally announced as early as today.
The Environmental Protection Agency and the Department of Transportation are reportedly set to require increases of anywhere from 10% to 20% in fuel economy, depending on the size of the truck. The new standards would cover everything from 18-wheelers to school buses, garbage trucks to heavy-duty pickups.
The new rules, which would go into effect in 2014 and extend through 2018, would require a 20% increase in the mileage of the long-haul trucks that handle a huge percentage of America’s freight shipments.
Such trucks are routinely driven 150,000 miles or more annually, and average between 5 and 8 mpg. That means the proposed increase might save as much as 6,000 of fuel per long-haul truck – the equivalent of what a dozen automobiles consumer annually.
In all, medium and heavy-duty trucks consume about 20% of the transportation fuel used in the United States.
The proposed increase would be a “win-win situation for the country, the economy, climate change and energy security,” Marge Oge, director of the EPA’s Office of Transportation and Air Quality, said last week.
President Barack Obama has moved the issue of fuel economy to the front burner since taking office. His administration has already approved new standards mandating a minimum 35.5 mpg by 2016 for passenger cars and light trucks. And a debate is underway on where to go next; current proposals could push the light-duty Corporate Average Fuel Economy, or CAFE, standard to anywhere from 47 to 62 mpg by 2025.
At a session in the White House Rose Garden, last May, the president was joined by major truck manufacturers as he proclaimed it possible to boost heavy-duty fuel efficiency by 25% using existing technologies. He promised to put in place the revised standards expected to be revealed today.
The government has also been offering financial assistance – including $187 million in aid delivered last January – to encourage the development of advanced truck propulsion systems, such as heavy-duty hybrid drivelines. Hybrid technology is already going into extensive use on short-haul bus fleets where stop-and-go driving yields major improvements in mileage.
While the proposed increases in medium and heavy-duty truck mileage will almost certainly increase vehicle costs, proponents contend there will be a rapid payoff. At the current price of diesel, around $3 a gallon nationwide, a fleet or owner/operator could stand to save nearly $20,000 annually with a 20% bump in mileage.
Hey Paul,
It has been a while, but since your post covers my area of focus, I thought I’d pass along a few thoughts.
Apart from a few critical nomenclature issues (and typos) that a truck-savvy copy editor should have caught, . . .
One key point is that the Bush-era hybrid truck tax incentives expired nearly a year ago, and there has been no serious effort to get them renewed. Even with the incentives in place, the breakeven on the added cost of the hybrid tech doesn’t come until diesel prices hit nearly $4.50/gallon. Having talked with the fleet managers who make the buying decisions, the “aid” isn’t being delivered where it will do any good.
Given the potential economies of scale, fleet managers and truck builders continually pursue fuel economy improvements all the way down to tenths of a percent, because that can add up across a fleet of a thousand trucks. However, this means that virtually all of the efficiency “fruit”, not just the low-hanging variety, has already been picked clean.
To reach the 20% improvement you’ve mentioned here, or the 50% goal of the SuperTruck program, will require paradigm shift changes in equipment, procedures and policy.
When you consider that every time the industry seeks to make even the most minor alteration to regulatory policy to improve efficiency, its efforts are quickly smacked down by the rail industry and its front groups, I can’t really see the needed systemic changes coming to pass.
Let’s talk the next time I’m in your neighborhood and I’ll bring you up to speed on some of these issues.
TK
Hi, Tom,
I’m always looking to learn more and I will cautiously accede to your contention that the low-hanging fruit will be difficult to come by. But I also must point out that I have long heard that from Detroit and the rest of the industry when it comes to improving automotive technology and yet we are suddenly seeing significant improvements from all sorts of places: Direct Injection, turbo technology (ie Ford’s EcoBoost), the addition of more gears, as witness the sudden spread of 7- and even 8-speed gearboxes, etc.
My own sources suggest there will be more ways to move ahead on the truck side than might first be argued.
And I wouldn’t exactly dismiss the $4.50 price that you quote, even if that really were the breakeven point. We’ll be there soon enough with a global economic recovery. Meanwhile, considering the number of years a truck is in operation, never mind the annual mileage, the benefits of an extra 20% fuel efficiency is significant.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
I’ve heard the same claims that you have from Detroit, et al, on the technology hurdles. Those are an apples to oranges comparison to the realities of the trucking industry .
Car buyers, for the most part, don’t want and won’t pay extra for for added technology, so absent a regulatory mandate, the car manufacturers have no incentive, and progress toward more efficient cars would be much slower.
As a brief aside, it’s interesting to note that all of the technologies your mention as being new on cars (injection, turbos, gears), have been standard features on commercial trucks for decades now.
The difference between the car and truck worlds is that pretty much continually since the first big oil shock in the 70s, commercial truck buyers have pushed truck builders extremely hard to research and develop every remotely plausible technology for increasing fuel efficiency.
Many ideas turned out to be snake oil, while others that were laboratory possible weren’t real-world practical, and the others that provided even minuscule gains were adopted, improved, and in many cases perfected on commercial trucks before being adopted later on cars.
There isn’t a week that goes by that I don’t get a snake-oil pitch for something that claims to improve commercial truck fuel economy, so I don’t doubt that you’ve heard lots of ideas, but without a SAE Type II, TMC, or brake-specific fuel consumption test, which rarely comes along with the idea, most of the ideas are nothing more than fantasy or fraud.
The fleet managers I talk with most certainly do consider annual mileage, useful asset life, and much, much more when calculating payback/break-even/ROI. I have one guy who can tell you the difference in his maintenance cost per mile, with or without equipment amortization, between his gasoline vehicles and his propane vehicles. Numbers don’t get much more thinly sliced than that.
As for the nearly $4.50/gallon figure ($4.41 to be exact), while that price level is quite likely, I’m betting it’s a bit farther over the horizon than you seem to be. For the record, I’ll say we won’t hit a 90-day average price of $4.41/gallon or higher till summer 2013 at the earliest. How does a steak dinner at the Capital Grille in Troy sound for the wager?
The trouble is, the hybrid truck buyer not only needs the now-missing $12K tax credit, but also needs the average fuel price to stay at that $4.41/gallon for the entire seven-year life of the asset, just to break even, say nothing of seeing a benefit.
My readers, colleagues, and I would all love to see a real-world 20% improvement in truck fuel efficiency, but it won’t happen because of a “field of dreams” decree. Nor will it happen without significant regulatory policy concessions, because more than a few efficiency hurdles exist in the form of counterproductive regulations.
Hi, Tom,
Well, I’m a bit reluctant to take that bet because I also think $4 a gallon is a 2012 to 2013 trend point, at the soonest, barring some unusual global petro-crisis. But, heck, you’re on.
Paul E.