2017 Us Average Fuel Mileage Continues to Drop
The stage is set for a possible rollback in fuel-economy standards as President Trump ordered his administration to review stiffer requirements implemented by former President Barack Obama.
Here's a look at the implications of lower gas-mileage requirements, known as corporate average fuel economy (CAFE):
The environment: Lower fuel economy translates into higher carbon emissions. That contributes directly to climate change, which scientists blame for rising sea levels, extreme weather, harsher agricultural conditions, biodiversity loss and health concerns.
Obama cited concerns about climate change as one of the key reasons why higher fuel economy standards are necessary.
Higher gas mileage means lower petroleum consumption. To be sure, there is ample evidence that people drive more when gas is less expensive.
Miles driven in the U.S. increased for a sixth consecutive year in 2016, topping 3.2 trillion miles, according to the Federal Highway Administration. In 2016, the average price of gasoline declined for a fourth consecutive year, plunging to $2.13 per gallon nationwide, according to GasBuddy.
But the Union of Concerned Scientists, which advocates for policies to combat climate change, estimated that the U.S. would save 3 million barrels of oil per day by 2030 if current fuel-economy standards remained in place.
Trump to call for review of fuel economy rules
Vehicle design: Vehicles are getting bigger, in part because more drivers are embracing crossovers, sport-utility vehicles and pickup trucks. Expect this trend to continue. Technological improvements have also made these vehicles more fuel-efficient, narrowing the gap with cars and removing the incentive for choosing a smaller vehicle to save on gas.
One key question is whether automakers will still pursue vehicles such as hybrids and electric cars if fuel economy standards are rolled back.
If sales of those products remain sluggish, they may fade from view. But that's not inevitable for multiple reasons. One factor to keep in mind is the impact of foreign markets on U.S. products. No one expects foreign markets to lessen fuel economy standards — and since vehicles are often designed for global distribution, it's unlikely automakers will suddenly abandon alternative powertrain vehicles for the American market.
Plus, there's a competitive factor. Automakers don't want to be caught empty-handed if and when consumers eventually demand electric cars and hydrogen vehicles.
"Our industry is committed to producing even safer and more energy-efficient vehicles in the future and that's what this process is all about," said Mitch Bainwol, CEO of the Auto Alliance, which lobbies in Washington on behalf of automakers and supports Trump's review of CAFE standards.
California: Because it's such a large market that cannot be ignored, California has a significant influence on automakers.
The state has imposed regulations requiring automakers to sell fuel-efficient and alternative-powertrain vehicles, setting a higher environmental benchmark for the industry than the Environmental Protection Agency.
A White House official said the EPA's new review of fuel economy standards won't challenge the waivers held by California and other states that allow them to impose tougher emission-cutting requirements on vehicles than those required under the federal regulations.
But Trump could reverse course and attempt to undermine those regulations, potentially weakening the state's outsize impact on the auto industry.
Still, "California can effectively counter a move to roll back the federal standards by retaining and even strengthening its own standards, creating dueling systems of emission control that would be unworkable for the industry," former Obama EPA official Bob Sussman wrote in February for the Brookings Institution.
Profits: The automakers are pursuing looser fuel economy restrictions because they're concerned that Obama's planned escalation would require them to manufacture fuel-efficient small cars that consumers don't want to buy.
What's more, bigger, less-fuel-efficient vehicles are generally more profitable. The more automakers sell, the better it is for the bottom line.
Eighteen automotive manufacturers wrote a letter to Trump in February asking him to review Obama's EPA standards.
"Any reversal of the existing status would be positive for" automakers, Evercore ISI analyst Arndt Ellinghorst said Tuesday in a research note.
Vehicle prices: Industry experts generally agree that average vehicle prices will increase if current fuel economy standards remain in place through 2025.
That's because higher CAFE standards will require automakers to adopt technologies that are more expensive for car buyers, such as electric vehicles that, despite their promise, are still expensive for the average shopper.
David Cole, chairman emeritus of the Center for Automotive Research, said that automakers have exhausted most of the cost-effective ways to improve fuel economy, including weight reduction, tire improvements and aerodynamic design.
"The economics are a big deal and this is what really concerns the industry," Cole said in an interview. "You add too much to the cost of a vehicle, they're hard to sell."
Fuel costs: It's indisputable that higher fuel economy requirements would save consumers money at the pump.
The Consumers Union, the policy arm of Consumer Reports, said in a recent report that the average buyer of a 2015 model-year vehicle spent $523 less on gasoline than for a 2005 vehicle.
The question is whether those savings would offset potentially higher prices.
"Weakening the standard now would mean consumers would lose out on some of those savings," Consumers Union policy counsel Shannon Baker-Branstetter said in a statement. "For middle-class families struggling to pay bills, raising costs at the pump is a bad deal."
Jobs: Here's where it gets particularly tricky.
The Center for Automotive Research concluded in a September report that in eight out of nine scenarios, the U.S. economy would lose auto manufacturing jobs if current standards stay in place. The researchers analyzed three price levels for gasoline, based on U.S. Energy Information Administration projections — $2.44, $3 and $4.64. They matched that with three different estimates for the average cost per vehicle required to meet the CAFE mandates — $2,000, $4,000 and $6,000.
The Center for Automotive Research has historically received some funding from the auto industry but said this study was independently funded,
But the BlueGreen Alliance, which represents union and environmental interests, warned Tuesday that the U.S. has more than 1,200 facilities in 48 states manufacturing "key technologies that go into meeting fuel-economy standards."
"Effective, long-term standards are critical to maintaining robust advanced technology investment, innovation, and job growth, as well as to continuing to position the domestic industry as a global leader," the organization said in a December report.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
Source: https://www.usatoday.com/story/money/cars/2017/03/15/donald-trump-epa-fuel-economy-standards-cafe/99210330/
0 Response to "2017 Us Average Fuel Mileage Continues to Drop"
Post a Comment