The U.S. government will require automakers to produce 35 mpg cars by 2020.   But what if you don’t want to wait 12 years?  What if you want to buy a 35 mpg car today?  There is a solution.  You could always go buy your car in China.  China’s cars have been getting 35 mpg for over three years.

No American-made Car meets China’s Fuel Efficiency Standards

In 1990, China only had 250,000 private passenger cars in the entire country.  Less than two decades later, China has over 11 million private cars on the road with close to 10 million new cars sold each year.  And still only 1% of the population has cars.

The Chinese government passed its first fuel economy standard in 2002 to curb its rapidly growing oil imports.  They mandated that by 2005, every new car in China had to get a minimum of 35 mpg rising to 41 mpg in 2008.  While the world accused China of being protectionist, their government claimed it was for “Energy security” and “Reduced dependence on foreign oil”.  Sound familiar?

Fast forward 6 years.  The U.S. government praised itself for raising average fuel efficiency standards to 35 mpg by 2020, the same level China set back in 2005.  Meanwhile, the Toronto Star reported an interesting fact:  no car assembled in the U.S. meets China’s fuel efficiency requirements.  The few fuel-efficient models produced by Ford, GM, and Chrylsler are all made outside the country, and none of those models are sold in the U.S. If you look through the EPA’s 2008 Fuel Economy Guide, you will be hard pressed to find any American car getting much better than 27 mpg.   So buying your car in China may be your only option.

U.S. in Last Place in fuel efficiency

Source: International Council on Transportation – 2007 Study

The problem is never so simple.  Fuel efficiency in the US is lower partially because of our air pollution standards.  But the fact that our cars are not efficient enough for China is a symptom of a different problem.  Government policies such as subsidies for oil companies fueled the fantasy that gas would stay at $1.50 forever. We could afford to drive SUVs because gas was cheap. Ford, GM, and Chrysler happily supported the American love affair with big cars.  And when the U.S. government gives out a tax break for driving Hummer’s, it like letting Americans shoot gasoline straight into their veins.

Compared to all other developed countries, the U.S. comes in dead last on fuel efficiency.  In 2007, the average U.S. car drove just 25 miles on a single gallon of gas.  Meanwhile, Europe and Japan get an average of 40 mpg. Even Canada, our neighbors, average 5 mpg more than us. While China’s leaders had the foresight to mandate better fuel efficiency in 2002, our leaders repeatedly caved to the pressure of oil companies and automakers.  Now, instead of preparing to compete in the world of high oil prices, we are playing catch-up, targeting the same 35 mpg in 2020 that China had back in 2005.

China’s cars could save the U.S. $200 billion

If the U.S. vehicle fleet today were as efficient as China’s, we would reduce our oil consumption by close to 2 billion barrels per year.  At $100 per barrel, that is an annual savings of $200 billion dollars.  That is savings today, not 10 years from now when the first drop of oil would come out of any new offshore well.  Just for the sake of comparison, this week the government might spend $700 billion to bailout Wall Street.  Or perhaps more relevant, the US government currently owes China $500 billion.  Maybe we could use some of the savings to pay them back.

Oil Efficiency and Competing in the Global Economy

Theoretically, as a country develops and becomes more technologically advanced, its energy use is decoupled from its from economic output.  An economy as advanced as the U.S. should be able to get more out of your average barrel of crude oil than most other countries.

The reality is very different.  China averages twice as much economic output for every barrel of oil as the U.S.  The U.S. economy produces $1,900 of GDP or economic output for every barrel of oil we consume.  China, on the other hand, generates $3,700 and they are still considered a developing country.  Even the European Union gets $2,800 of output for each barrel of oil.  Our economic engine has the same oil efficiency as Europe in 1980.

Since the U.S. economy needs more oil than all other countries in order to function, we are the hardest hit when oil hits $140 a barrel.  Sub-prime mortgages and cocky investment bankers may have ignited the current financial crisis, but it was skyrocketing oil prices that pushed the economy over the edge just like in the 1970’s. There is only one way to keep this from happening again:  Use less oil.

To beat the Competition, Beat the Oil Addiction

If the U.S. wants to compete with China, India, or Brazil (which has already converted its entire economy to ethanol), then we need to break our economy’s addiction to oil. Countries that get better mileage from their cars,have better public transportation, and do not depend on oil to produce electricity are poised for succeed on that inevitable day when oil reaches $200 a barrel or $500 a barrel.

If we want the U.S. to be the strongest player in the oil-free global economy, then we need to stop kidding ourselves that 35 mpg by 2020 gets us anywhere.  We need to be talking about 50 mpg within 5 years and 100 mpg by 2020.  This is not an impossible task.  Cars in Europe and Japan already get 40 mpg.  Plug-in hybrid and electric cars in development already get 100 mpg.  With leadership and commitment, we can build the necessary infrastructure and help car companies get these vehicles to market.  Only then can we honestly expect to compete against other countries that are a decade ahead of us in terms of oil efficiency.

The starting gun has sounded in the race for oil independence.  And right now, the U.S. is running way behind.

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