Transforming Our Perception of Fuel Economy:
from MPG to Gallons per 100 Miles
June 9, 2009
With the announcement of newly aggressive
Another nice feature of GPHM is that fuel costs rise directly in proportion to that rating. So, a 10 percent decrease in GPHM equals a 10 percent reduction in fuel costs. On the other hand, not all increases in MPG are equal. A 10 percent increase in MPG does not correspond nicely to a reduction in fuel costs—it depends on where you're starting from. Suppose you drive 10,000 miles a year and a gallon of gas is $2. Going from 10 MPG to 11 MPG is worth $180, while going from 30 MPG to 33 MPG is only worth $60.
Finally, an MPG rating makes it difficult to trade CAFE credits. The Energy Independence and Security Act of 2007 set the stage for allowing CAFE credits to be traded across manufacturers as a way to efficiently reach a national target for fuel efficiency. But Fischer notes that CAFE credit trading is plagued by the same complication: different fleet MPG ratings are not always equal. Credit trading using MPG thus requires a very complex formula to ensure the integrity of the trades (specifically, it requires taking the harmonic average of the manufacturers' harmonic averages). "Of course, dedicated EPA regulators, auto manufacturers, and traders would be able to figure out those complicated formulas," writes Fischer, "but there's a much easier and more transparent way. Instead, all we have to do is switch to GPHM, and all fuel consumption is treated the same."