Fuel Standards in the US

The battle to raise fuel standards in the US

Over the last few years, the Obama administration has pushed ahead with its plan to raise fuel economy standards in the US, as it attempts to moderate the nation’s dependence on petroleum and save households thousands of dollars as oil prices continue to rise. The National Highway Traffic Safety Administration (NHTSA), which sets the fuel economy standards for cars and light trucks sold in the US, notes that reducing fuel consumptions will also “reduce the motor vehicle tailpipe emissions of carbon dioxide, which is the principal greenhouse gas emitted by motor vehicles.”

However, moves to increase Corporate Average Fuel Economy (CAFE) standards in the US have been met with widespread opposition from industry experts and politicians alike. Many have argued that while raising fuel efficiency requirements may save consumers money at the pump, they will offset this by driving more, effectively making no difference to the amount of pollution sourcing from US vehicles. The program has also been criticised historically for incentivising manufacturers to reduce vehicle weight to reduce the CAFE of each unit. “Some of these outcomes likely compromised vehicle safety…as smaller and lighter vehicles did not fare as well in crashes with larger and heavier vehicles,” admits NHTSA head David Strickland.

Therefore, the NHTSA moved from a flat fuel economy standard to an attribute-based standard, setting targets customised to specific vehicle footprints. Strickland said that as manufacturers’ compliance obligations are determined by averaging the targets of all its vehicles, the new rules encourage companies to adopt fuel-saving technologies across its entire line up “rather than trying to ‘average out’ sales of larger vehicles by producing more smaller vehicles”. The CAFE for all cars and light trucks with the model year (MY) 2011 stands at a combined 27.3 miles per gallon (mpg). This requirement will be raised to 35.5mpg forvehicles sold in MY 2012-2016, which is expected to save 61bn gallons of fuel over the vehicles’ lives. In July, President Barack Obama proposed to raise CAFE to 54.5mpg by 2025, which he said was “the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil”.

The initiative is looking to save a total of 12bn barrels of oil by 2025, by which time consumption should have fallen by 2.2m barrels a day, equal to almost half of the oil the US imports from the Organization of Petroleum Exporting Countries (OPEC)every day, the NHTSA said. However, some have argued that increasing efficiency by this much will result in higher vehicle costs and a reduced choice for consumers. “It appears that the administration is essentially substituting its bureaucratic judgment for the independent judgment of the marketplace," said Jim Jordan, an Ohio Republican and the chairman of the House Oversight and Government Reform subcommittee on regulatory affairs, stimulus oversight and government spending.

"When the government substitutes its judgment for the private market, the result is never good." "Most likely these standards will force the auto industry to limit consumer choice and manufacture products that Americans may not want, or simply cannot afford," he said. However, and as senior Democrat on the subcommittee, Maryland's Elijah Cummings, said: "Frankly, I have a hard time understanding what the majority's problem is with the fuel efficiency standards, or whose interests they are representing in opposing them…The new standards are critical to ensuring that consumers are getting the most for their money."