Fuel Economy Benefits

    Table of Contents

    Correct tire pressure will improve a vehicles’ fuel economy. Current radial tires are a vast improvement over the old-fashioned bias-ply tires, yet they still use more fuel when they are run under-inflated, although not as much as bias-ply tires. According to a 1978 report [13], fuel efficiency is reduced by one percent (1%) for every 3.3 pounds per square inch (psi) of under-inflation. More recent data provided by Goodyear indicates that fuel efficiency is reduced by one percent for every 2.96 psi of under-inflation, fairly close to the 1978 estimate.

    For this analysis, we assumed that there was no effect of tire over-inflation, and that savings only started once the warning went on. In other words, if the placard pressure were 30 psi, and a warning were given at 22.5 psi (25 percent below placard), no benefits are assumed for those vehicles that have tires with lowest pressure above 22.5 psi. However, there is a benefit for those vehicles with continuous displays, in that their steady state psi position is higher in Compliance Option 1, than in Compliance Options 2 and 3. Data from the tire pressure survey was used to estimate the average under-inflation of all 4 tires for those vehicles for which a warning would be given. Table V-25 provides the average under-inflation and the percentage of the fleet that would get a warning by the TPMS. All the Compliance Options are the same because they give a warning at 25 percent below placard.


Table V-25
Analysis of Fleet Tire Pressure Survey
  Passenger Cars
Average psi below
placard of those
vehicles warned
Percent of Fleet
Affected
Light Trucks
Average psi below
placard of those
vehicles warned
Percent of Fleet
Affected
Compliance Option 1 6.8 psi 26% 8.7 psi 29%
Compliance Option 2 6.8 psi 26% 8.7 psi 29%
Compliance Option 3 6.8 psi 26% 8.7 psi 29%

    Tables V-26 and V-27 show the weighted vehicle miles traveled by age of vehicle for passenger cars and light trucks. They also show the 7 percent discount rate and the assumed price of gasoline. The projected price of gasoline was taken from a DOE projection from January 2001 [14]. It excludes fuel taxes, at $0.38 per gallon, since these are a transfer payment and not a cost to society. The projections were for gasoline prices to steadily decline from 2001 through about 2005 when they will level off. A second group of adjustments were made to the price of gasoline to account for environmental costs and international oil market costs.

    One product of the combustion of hydrocarbon fuels, such as gasoline and diesel, is CO2. The environmental and economic consequences of these releases are not included in the price of gasoline. While there are estimates of these consequences in the literature, the administration has not taken a position on their costs. Using estimates from the literature would result in very little savings on a per vehicle basis and they have not been included in this analysis.

    A second environmental cost of gasoline use relates to the hydrocarbon and toxic chemical releases from the gasoline supply chain, including oil exploration, refining, and distribution. Marginal costs of these activities combined have been estimated at $0.02 per gallon. [15]

    The Organization of Petroleum Exporting Countries (OPEC) operates as a cartel that restricts the supply of oil to escalate the price above the free-market level. The greater the consumption of oil, the higher will be the price. Since the higher price of oil applies to all oil imports from OPEC, not just the increased oil use, the financial cost to the United States exceeds the market payment for the increased amount. Leiby et al., [16] estimated this impact to be $3.00 per barrel. This equates to $0.07 per gallon ($3/42 gallons per barrel). The impact is dependent upon the amount of oil saved. The $0.07 per gallon is about right for the savings of this program.

    Thus, the price of gasoline has been reduced by $0.38 per gallon to account for taxes, and has been increased by $0.09 per gallon to account for environmental and economic considerations.


Table V-26
Passenger Cars Vehicle Miles Traveled, Discount Factor, and
Assumed Price of Gasoline in (2001 Dollars)
Passenger Cars
Vehicle Age
(years)
Vehicle Miles
Traveled
Survival
Probability
Weighted Vehicle
Miles Traveled
Gasoline Price,
Excluding Taxes
7 Percent
Mid-Year
Discount Factor
1 13,533 0.995 13,465.3 $1.05 0.9667
2 12,989 0.988 12,833.1 1.04 0.9035
3 12,466 0.978 12,191.7 1.05 0.8444
4 11,964 0.962 11,509.4 1.06 0.7891
5 11,482 0.938 10,770.1 1.07 0.7375
6 11,020 0.908 10,006.2 1.07 0.6893
7 10,577 0.87 9,202.0 1.08 0.6442
8 10,151 0.825 8,374.6 1.07 0.602
9 9,742 0.775 7,550.1 1.07 0.5626
10 9,350 0.721 6,741.4 1.06 0.5258
11 8,974 0.644 5,779.3 1.06 0.4914
12 8,613 0.541 4,659.6 1.06 0.4593
13 8,266 0.445 3,678.4 1.05 0.4292
14 7,933 0.358 2,840.0 1.05 0.4012
15 7,614 0.285 2,170.0 1.05 0.3749
16 7,308 0.223 1,629.7 1.05 0.3504
17 7,014 0.174 1,220.4 1.05 0.3275
18 6,731 0.134 902.0 1.05 0.326
19 6,460 0.103 665.4 1.04 0.286
20 6,200 0.079 489.8 1.04 0.2673
      126,678    

Table V-27
Light Trucks Vehicle Miles Traveled, Discount Factor, and
Assumed Price of Gasoline in (2001 Dollars)
Light Trucks
Vehicle Age
(years)
Vehicle Miles
Traveled
Survival
Probability
Weighted Vehicle
Miles Traveled
Gasoline Price,
Excluding Taxes
7 Percent
Mid-Year
Discount Factor
1 12,885 0.998 12,859 $1.05 0.9667
2 12,469 0.995 12,407 1.04 0.9035
3 12,067 0.989 11,934 1.05 0.8444
4 11,678 0.980 11,444 1.06 0.7891
5 11,302 0.967 10,929 1.07 0.7375
6 10,938 0.949 10,380 1.07 0.6893
7 10,585 0.924 9,781 1.08 0.6442
8 10,244 0.894 9,158 1.07 0.602
9 9,914 0.857 8,496 1.07 0.5626
10 9,594 0.816 7,829 1.06 0.5258
11 9,285 0.795 7,382 1.06 0.4914
12 8,985 0.734 6,595 1.06 0.4593
13 8,696 0.669 5,818 1.05 0.4292
14 8,415 0.604 5,083 1.05 0.4012
15 8,144 0.539 4,390 1.05 0.3749
16 7,882 0.476 3,752 1.05 0.3504
17 7,628 0.418 3,189 1.05 0.3275
18 7,382 0.364 2,687 1.05 0.326
19 7,144 0.315 2,250 1.04 0.286
20 6,913 0.271 1,873 1.04 0.2673
21 6,691 0.232 1,552 1.04 0.2498
22 6,475 0.198 1,282 1.04 0.2335
23 6,266 0.169 1,059 1.04 0.2182
24 6,064 0.143 867 1.04 0.2039
25 5,869 0.121 710 1.03 0.1906
      153,706    

    The baseline miles-per-gallon figure for cars was 27.5 mpg at placard inflation, and for light trucks was 22.2 mpg (the MY 2007 light truck standard) at placard inflation. A sample calculation for passenger cars for Compliance Option 1 is:

    The average of all four tires on a passenger car that would be warned based on our survey would be 6.8 psi lower than placard. The average steady state condition after TPMS are in place would be 3.0 psi lower than placard. Thus, the incremental steady state improvement of the TPMS is 3.8 psi (6.8 – 3.0). Since 1 percent fuel efficiency is equivalent to 2.96 psi lower, the average passenger car with a warning would get 1.0128 percent (3.8/2.96) higher fuel economy when re-inflated. With a baseline of 27.5 mpg, the average fuel economy of those vehicles warned that increased their tire pressure up to placard would be 27.5 * 1.012838 = 27.853 mpg. Based on our estimated vehicle miles traveled by age, scrappage by age, a 7 percent present value discount rate and estimated fuel costs per year, the baseline passenger car (at 27.5 mpg discounted by 15 percent to account for real on-road mileage) would spend $3,968.88 present value for fuel over its lifetime. Those drivers warned who filled up to placard pressure and achieved 27.853 mpg (discounted by 15 percent to account for real on-road mileage) would spend $3,918.58 for fuel over their car’s lifetime. The difference is $50.30. Since 26 percent of the fleet get a warning, and it is assumed that 90 percent of the drivers would fill their tires to placard, the average benefit is $11.77 ($50.30*0.26*0.90). The estimated benefit for each subgroup under the different compliance options is shown in Table V-28, under a 7 percent and 3 percent discount rate.


Table V-28
Fuel Economy Benefits Compared to the Baseline Fleet
Present Discounted Value over Lifetime
(2001 Dollars)
  Passenger Cars Light Trucks
3% Discount 7% Discount 3% Discount 7% Discount
Compliance Option 1 $14.35 $11.77 $31.28 $24.53
Compliance Option 2 $11.74 $9.62 $25.95 $20.34
Compliance Option 3 $11.74 $9.62 $25.95 $20.34

    Weighting light trucks (9/17) [17] and passenger cars (8/17) and taking into account the one percent of the fleet that already has a direct measurement system results in the following overall benefit in fuel economy shown in Table V-29.


Table V-29
Fuel Economy Benefits Compared to the Baseline Fleet
Present Discounted Value over Lifetime
(2001 Dollars)
  Average Passenger Vehicle
3% Discount Rate
Average Passenger Vehicle
7% Discount Rate
Compliance Option 1 $23.08 $18.34
Compliance Option 2 $19.07 $15.14
Compliance Option 3 $19.07 $15.14

    Emissions Effect

    Since there are fuel economy improvements, there are comparable savings in gasoline usage. Fewer gallons of gasoline used mean fewer emissions. Table V-30 shows the lifetime gallons of gasoline saved per vehicle for the different Compliance Options. These per vehicle estimates are multiplied by 17 million vehicles. Assuming constant vehicle sales from year to year, once all vehicles in the fleet meet the standard, the annual gasoline savings are equal to the lifetime savings of fuel of one model year. The rule of thumb for equating gasoline savings to emissions savings used by the Department of Energy is that for every billion gallons of gasoline saved, emissions are reduced by 2.4 million metric tons carbon equivalent (MMTCE).


Table V-30
Lifetime Gallons of Gasoline Saved Per Vehicle
  Passenger Cars Light Trucks Average Savings
Per Light Vehicle
Compliance Option 1 16 37 27
Compliance Option 2 13 31 22
Compliance Option 3 13 31 22

Table V-31
Annual Emission Reduction for the Fleet
  Average Gasoline Savings
Per Light Vehicle
Annual Gasoline Savings
(Millions of Gallons)
Annual Emissions Reduction
(MMTCE)
Compliance Option 1 27 459 1.10
Compliance Option 2 22 374 0.90
Compliance Option 3 22 374 0.90


    [13] Evaluation of Techniques for Reducing In-use Automotive Fuel Consumption; The Aerospace Corporation, June 1978.  Original reference from Goodyear, pp 3-45.

    [14] DOE Energy Information Administration, Annual Energy Outlook 2001, Table A3, Energy Prices by Sector. 

    [15] "Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards", National Research Council, July 2001, Pages 5-5 to 5-6. 

    [16] "Oil Imports: An Assessment of Benefits and Costs", P.N. Leiby, D.W. Jones, T.R. Curlee, and L. Russell, 1997, ORNL-6851, Oak Ridge National Laboratory, Oak Ridge, Tenn. 

    [17] We assume sales of 8 million passenger cars and 9 million light trucks for a total of 17 million vehicles annually.


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