The corporate average fuel economy (CAFE) standard for mileage is currently 27.5

Question

The corporate average fuel economy (CAFE) standard for mileage is currently 27.5 miles per gallon of gasoline (the defender) for passenger cars. To conserve fuel and reduce air pollution, suppose the U.S. Congress sets the CAFE standard at 37 miles per gallon (the challenger) in 2010. An auto will emit on average 0.7 pounds of carbon dioxide (CO2) per mile driven at 27.5 miles per gallon, and it will emit 0.6 pounds of CO2 per mile driven at 37 miles per gallon. a. How much fuel and carbon dioxide would be saved over the lifetime of a passenger car with the new standard? Assume a car will be driven 97,000 miles over its lifetime. b. If CO2 costs $0.02/lb to capture and sequester, what penalty does this place on the defender? Should this penalty affect the CAFE replacement analysis? a. The fuel savings are gallons over the life of the car. (Round to the nearest whole number.)

Explanation / Answer

Current mileage = 27.5 mile per gallon

For driving 97,000 miles, fuel needed = 97,000 / 32 = 3,527 gallons

Cost of CO2 = 97,000 x 0.7 x $0.02 = $1,358

Revised mileage = 37 miles per gallon

For driving 97,000 miles, fuel needed = 97,000 / 37 = 2,622 gallons

Cost of CO2 = 97,000 x 0.6 x $0.02 = $1,164

Reduction in fuel requirement = (3,527 - 2,622) = 905 gallons

Total Cost savings = $(1,358 - 1,164) = $194

Total fuel savings = 905 gallons

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