Let’s Not Give Up On the Idea of a More Fuel Efficient Taxi Fleet in NYC

Last week, another element of Mayor Bloomberg’s plan for sustainable transportation was dealt a significant, but by no means fatal setback. A federal judge blocked implementation of the requirement that all of the City’s cabs be powered by hybrid engines. According to The New York Times‘ Sewell Chan: “In his ruling, Judge Crotty, who was the city’s corporation counsel from 1994 to 1997, under Mayor Rudolph W. Giuliani, agreed to block the city from enforcing the rule because the plaintiffs were likely to succeed in their key legal argument – that the new regulations were pre-empted under federal law, which reserve regulation of fuel economy and emissions standards to federal agencies.”

While the City has the right to regulate cabs through its system of licenses or medallions, and has been allowed to issue new medallions targeted at hybrid cabs, the blanket regulation requiring hybrids was thrown out. Although gasoline prices have recently dropped, most people expect them to rise again – and sooner rather than later. Why then would the fleet owners resist regulations requiring them to use more cost-efficient autos? The answer is simple and has a lot to do with the economics of the cab industry. For the most part, the people that own cabs don’t drive them and don’t pay for the gas. Drivers lease the cars from the fleet owners and the drivers pay for the gas. As anyone who prices a hybrid vehicle knows, there is a premium on hybrid engines. Hybrid cars and trucks cost more. The fleet owners, not the drivers, would incur the costs of upgrading to hybrid cabs. The drivers would save money on the gasoline.

Of course, the fleet owners could and would pass the increased costs of the hybrids along to the drivers in their lease charges, but apparently the fleet owners and their trade association just don’t like being told what to do by the big bad Bloomberg administration. Perhaps they think that drivers are incapable of doing the math. The extra fee in their lease for hybrids would be more than offset by savings in gasoline. It just makes sense. Given the distances taxis drive and the amount of gas they take to run, hybrid cabs would provide a return on their extra cost much faster than you or I would make back our extra investment.

The fleet owners’ arguments against hybrids are that the hybrids now on the market are too small and fragile to handle New York’s streets. Perhaps they have not been to Bogota, Colombia, or Mexico City, where most of the cabs are small micro compacts that bounce along streets that are much worse than New York’s. Perhaps no one has told them that the Chevy Malibu and Tahoe, Cadillac Escalade, Saturn Aura, and GMC Yukon are now all available with hybrid engines. And let’s not forget Ford, with its Escape hybrid or the hybrid Toyota Camry.

Fortunately for New York City, higher fuel efficiency standards will be coming from Washington in 2009. The American auto industry is closing its SUV plants and seems to be slowly figuring out what its Japanese and Korean competitors figured out a while ago. While Americans have a love affair with big, comfortable cars, they drive too much to afford all of the gasoline it takes to power them. The fleet owners may be preventing New York City from getting ahead of the federal rules, but it’s a temporary victory for them at best.

Meanwhile, instead of requiring hybrids, why not find a way to tax the fleet owners in a way that makes hybrid cabs more cost effective for them in the first place? Let’s encourage rather than require energy efficiency. Perhaps the city should charge an extra licensing fee for cabs that don’t have hybrid engines. If fleet owners insist on using gas-guzzlers, perhaps an annual charge of say, $1,000 might get them to rethink their priorities. If that doesn’t work, perhaps in the interest of reducing congestion (not regulating fuel efficiency), the surcharge might be based on the weight of the cab, rather than the engine type or gas mileage. That might encourage the use of smaller and more energy efficient cabs. Smaller cabs would take up less of the scarce space on our city’s congested streets. While mandating hybrids might be illegal, it seems to me that the City has a number of other powers that could be used to encourage a more fuel efficient cab fleet. I think it’s time to get creative.

Let’s Not Give Up On the Idea of a More Fuel Efficient Taxi Fleet in NYC