The SUV—whether you think it was a great vehicle or a gas guzzling monster, rules the road in America. “The debate over this immensely popular vehicle rages on. To some, the high gasoline consumption of the vehicle is a symbol of decadent waste. To others, the large size of the vehicle is a symbol of status and safety” (Kic). What is certain, however, is that the SUV, the way it is, creates definite economic problems. Many things can be done to change this, but many automakers feel it is in their best interest to not fix those problems.

There is a enormous gap in the fuel economy between what the average passenger car receives (28 miles per gallon) and what common SUVs receive (12-16 miles per gallon) (Economics of SUVs). An example of the real difference this makes would be to contemplate a driver of a passenger car that receives 28 miles per gallon—a 2005 Chevrolet Impala SS fits this category, and a driver of a SUV that receives 15 miles per gallon—a 2005 Chevrolet Tahoe fits this category, that both drive 12,000 miles per year (MSN Auto). The driver of the Impala will spend $1, 213 a year on gas at $2.83 a gallon. The driver of the SUV will spend $2,264 a year on gas at $2.83 a gallon. This is a difference of $1,050 a year! I am sure the average consumer can collect a noteworthy better diagram to spend over a thousand dollars.

Improving fuel economy standards could be done with relatively low cost compared to the excess amount of money that would be spent on gas. “Duleep identifies feasible fuel economy improvements that can be made in the upcoming five to ten years and their respective costs. He estimates that average efficiency can be increased from 28.1 to 37.6 by model year 2001 at a cost of approximately $860 per vehicle” (Krupnick).

One study pointed out the problem of the ‘rebound effect’. “Since fuel economy improvements lower the cost per mile of driving, people may drive their more fuel efficient cars more than they would a less fuel efficient one. This behaviorally-based ‘rebound effect’ will result in actual emissions reductions (and reductions in overall gasoline use) being smaller than would be expected with no driver response to lower vehicle operating costs” (Krupnick).

Not only do SUVS have significantly higher fuel costs, they also tend to cost more to absorb and repair. Sometimes bumpers alone can cost of $5,000. The Insurance Institute for Highway Safety conducted a study in June 1999 that concluded that many popular SUVs can retain quite expensive damage in ‘crashes’ of five miles per hour. They tested types of accidents that would usually occur in parking lots. The results were astonishing. “The Jeep Astronomical Cherokee cost $5,107 to repair after those tests. The Mitsubishi Montero Sport cost a whopping $6,282 to fix. The best SUV tested, the Mercedes ML 320, came in at just under $3,000 to repair (Economics of SUVs). While SUVs put forth a tough and rugged appearance, they reason they don’t beget up in crashes is because of the lack of federal standards. “Passenger car bumpers have to meet federal standards in low-speed crashes, and most of the bumpers on passenger cars include a reinforced bumper bar and foam to absorb crash energy. But SUVs are not subject to any kind of bumper requirements, so they are allowed to crumble in low-speed accidents” (Economics of SUVs).

The effect of the low crash standards of SUVs also affects insurance companies. “Several national insurance companies are raising liability rates on SUVs while providing other car owners with discounts in several states. The insurance rates on SUVs have been rising in part due to studies showing that insurers have been paying out at higher rates for liability insurance on SUVs. A study conducted by the Insurance Institute for Highway Safety concluded that liability insurance claims average $107 for large SUVs, $94 for smaller SUVs, but only $71 for other cars. In the New York Times, Diane S. Taska, a spokeswoman for Farmers Insurance, states “The regular car drivers are subsidizing SUV and pickup drivers on liability insurance.” (Economics of SUVs).

Costs that affect our wallet in the form of higher repair costs and higher gasoline costs are obvious to the average consumer. What may not be so obvious, however, is the cost of driving SUVs in relation to the environment and pollution. The effect of greenhouse gases on the environment has become a great trouble. California was one of the first states to do something about the great injure that greenhouses gases are doing to the environment. “California’s new law on curbing greenhouse gas emissions is serving as a powerful impetus unhurried bipartisan congressional legislation that would force car makers and other industries to act against global warming” (Epstein). Different states and Congress are beginning to follow California’s step to protecting the environment for the future. “The cap and trade bill proposed by Senator John McCain, R-Arizona, and Senator Joe Lieberman, D-Connecticut, would set an overall national limit on the release of carbon dioxide and five other greenhouse gases. It would also set up a mandatory trading system in which companies that fail to met their reduction goals could buy credits from those that do” (Epstein). These proposals point out the fact that something needs to be done about the amount of emissions that some vehicles (mostly SUVs) are producing. “California’s law started something big, said Anne Petsonk, a researcher with Environmental Defense. ‘California is a signal to the automotive industry is not going to be exempt from greenhouse gas regulations. Other states and many in Congress are looking at what California did in its legislation,’ she said” (Epstein). The reason why this new law in California is so vital is because of the amount of impact California has on the automotive industry. “The new California law that requires state air regulators to start a program by 2009 that would slice emissions form automotive vehicles by a still-unspecified amount may be forcing a national approach. California accounts for 13 percent of the nation’s auto market, so manufacturers of cars, SUVs and trucks are sure to comply with the state’s edict” (Epstein).

Emissions regulation is a very serious problem. “The transportation sector is a major contributor to two important environmental problems—global warming and urban smog. It has been estimated that transportation sources account for 8% of global emissions of carbon dioxide (CO₂), a major greenhouse gas, with U.S. sources alone accounting for 3.4%. At the same time, motor vehicles contribute from one-third to twp-thirds of all volatile organic compound (VOC) emissions—a precursor to ozone—in U.S. ‘ozone nonattainment’ areas (Krupnick).

Much has been said about if we are to improve fuel economy then the main way to do so would be to lessen the weight of the average automobile. So in turn, attempts to improve the Corporate Average Fuel Economy (CAFE) standards would slit the safety of automobiles because some studies have shown that vehicle weight is sometimes related to crashworthiness. “Not all studies rep a positive relationship between weight and safety. The General Accounting Office acknowledged a theoretical link between automobile size and safety; however, they find no direct empirical link between the two. They find the highest fatality rates occur not in the lightest cars, but in the middle-weight cars. The reasoning is the larger, heavier cars increase the probability of a fatality for the lighter automobile passengers, as well as subjecting their own occupants to greater force (i.e. mass times acceleration) at impact. Lighter vehicles, though generally less stable and crashworthy, earn less force” (Yun, John).

Even with all the costs of SUVs described above many Americans detached choose to drive them. Why? “The answer lies in differing concepts of utility. It is utility that accounts for formidable growth of the United States economy. It is utility that accounts for fast-food restaurants and drive-thru banks. It is utility that brings about the construction of 16-lane highways, air disappear and high-tech communication devices. It is utility that money and credit creates, that is solely accountable for a negative savings rate. Utility means a 24/7/365 economy. Utility means there is no economic scarcity except wasted time. For Americans, the pursuit of utility equals freedom” (Kic). The concept of the SUV is very appealing to Americans. But all the costs that reach with SUVs need to be reduced—and it is very possible for this to happen, if they automakers desire to. The only map for this to happen in the foreseeable future, is to have government mandated fuel economy standards, atomize standards, and emission limits.

_________________________

Works Cited

“Economics of SUVs” 14 April 2006

Epstein, Edward. “California emissions law now a model. It’s cited in a major new Senate bill.” San Francisco Chronicle 9 January 2003

Kic, Wojciech. “There are two sides to the SUV debate coin.” Houston Business Journal 27 December 2002

Krupnick, Alan J. et al. “Global warming and urban smog: cost-effectiveness of CAFE standards and alternative fuels.” The Energy Journal v14 October 1993: p75-98

Yun, John M. “Offsetting behavior effects of the Corporate Average Fuel Economy Standards.” Economic Inquiry v40 April 2002: p260-271