V-8 engine rated at a hybrid-like 33 mpg!

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The sticker looks mighty tempting -- a full-size, seven-passenger SUV with a V-8 engine rated at a hybrid-like 33 mpg!

Too bad it's a sham.

Unfortunately, the shuck and jive isn't well-known, or apparent to consumers -- who might be gulled into believing they're helping cut down on energy consumption (and saving the planet to boot) when in fact all they're doing is supporting the latest government boondoggle for the benefit of the politically powerful ethanol lobby.

Here's how it works:

Under the cover of promoting "renewable" energy, the federal government has put into place a loophole in its Corporate Average Fuel Economy (CAFE) requirements -- which require the automakers to achieve a "fleet average" of 27.5 mpg for cars and 21.5 mpg for trucks or face so-called "gas-guzzler" taxes that are passed on to the consumer. This loophole distorts the truth about a vehicle's actual mileage capability -- but only if it's a vehicle made to run on either gasoline or a gasoline-ethanol blend known as E85.

Such "flex fuel" vehicles are credited with much higher miles-per-gallon capability than they actually get -- on the theory that when they burn E85 (which contains 85 percent corn alcohol and 15 percent gasoline) they are using less gas. Thus, a full-size, V-8 powered SUV like the GMC Yukon is rated at 33 mpg for CAFE purposes -- higher than the current passenger car CAFE minimum of 27.5 mpg -- when in fact it only gets 15 mpg in city driving and 20 mpg on the highway, according to the EPA (which is just below the 21.5 mpg minimum mileage for trucks and SUVS under current CAFE rules).

The E85 Yukon and vehicles like it get even lower mileage when running on fuels containing large concentrations of ethanol -- since alcohol-based fuels contain less energy per gallon equivalent than straight gasoline.

What Do You Think?

As a result of this loophole, GM, Ford and other automakers have been given a strong incentive to build large numbers of E85-burning "flex-fuel" vehicles -- vehicles which might not make the CAFE cut otherwise and thus be less economic to produce because of "gas guzzler" taxes that jack up the price of a given vehicle by as much as $1,000 or more.

But the idea is to create market demand for the heavily-subsidized ethanol industry -- not produce more fuel-efficient vehicles. According to a NY Times piece by Thomas Friedman, the E85/CAFE loophole "increased U.S. oil consumption by 80,000 barrels per day in 2005 alone." GM has built some 2 million flex-fuel vehicles -- many of them large trucks and SUVs that would otherwise be subject to gas-guzzler fines, absent the clever accounting tricks.

The ethanol lobby has also been aggressively pushing its product on the supply end -- via a proposal that's been floated in Washington to require E85/ethanol pumps be installed at service stations -- in effect, forcing oil companies to subsidize the product of a direct competitor. (And of a product that is itself already heavily subsidized on multiple levels.) Stations would have to invest in new tanks/pumps and so on -- much if not all of it on their own nickel.

It would be the equivalent of mandating that McDonalds sell Wendy's burgers -- or that Ford dealers set aside a portion of their new car lot to sell GM vehicles. Pretty nutty, And that's at odds with basic principles of a free market. Why should gas stations (or anyone else) be compelled to sell a product they might not want to? In particular, one that is produced by a rival industry which already benefits from generous government protection?

Talk About It

Tell us what you think of the Fuel Loophole:

1. AOL Autos -- Message Boards

This, however, seems to be the only way the ethanol lobby can do business in this country -- a consequence of the fact that E85 costs a relative fortune to make, uses oil in its production (everything from the petroleum-sourced fertilizers used to grow the corn to the plants, trucks and other infrastructure involved) and contains less energy per gallon equivalent than still-cheaper regular unleaded. These factors have rendered it a tough sell on the free market.