Cheap Gas Means US Should Ease Auto Efficiency Lawmakers Say

Cheap Gas Means US Should Ease Auto Efficiency, Lawmakers Say

Sept. 22, 2016
The Center for Automotive Research estimates more than 1.1 million U.S. workers could lose their jobs because of the fuel-economy standards.

The U.S. auto industry got strong backing from Republicans in Congress as it petitions the federal government for an easing of fuel-economy rules that carmakers say they cannot meet with low gasoline prices.

Leaders on the House Energy and Commerce Committee on Sept. 22 echoed industry calls for relief on fuel-economy regulations, citing concern that cheap gas will make it less likely that consumers will buy hybrids and electric cars while making pickup trucks and SUVs more attractive. The cost of new technologies could also push sticker prices beyond the means of most consumers, said Representative Fred Upton, a Michigan Republican.

“These provisions, if done wrong, could hurt car owners as well as carmakers,” Upton said. “The good news is that these 2012 standards wisely included a ‘do-over’ provision” to account for new circumstances.

Automakers and President Barack Obama agreed in 2012 to double fuel economy standards from 2012 to 2025, with a projected $200 billion cost to the industry that would be made up in fuel savings to car buyers. Since 2012, fuel prices in America have plunged and consumers have returned to buying less efficient sport utility vehicles and trucks.

Cheaper Gas

Auto companies and consumer groups have been skirmishing over whether the industry is on track, and what effect cheaper gas is having on the roll out of new fuel-saving technology. The Environmental Protection Agency, National Highway Traffic Safety Administration and California Air Resources Board are considering the pleas of automakers to make adjustments in fuel-economy rules next year.

The government shouldn’t be in the business of telling consumers what kinds of cars they can and cannot purchase, said Representative Michael Burgess, a Texas Republican and chairman of the Subcommittee on Commerce, Manufacturing and Trade.

“I believe in fuel efficiency and energy independence,” Burgess said at a hearing in Washington on Sept. 22. “I also believe in policy that’s based on real-world data and consumer choice. In Texas, we have big spaces, and we like to get around in those big spaces in our big cars with big air conditioners.”

1970s Beginnings

Fuel-economy standards started in the 1970s as a response to the energy crisis, said Representative Jan Schakowsky, an Illinois Democrat. Now there’s an even greater threat due to global climate change, she said. While addressing the need to reduce carbon emissions, the fuel-economy rules have already driven huge advances in technology, saving consumers hundreds of dollars a year, she said.

“I’ve heard the arguments that the standards are ambitious, that they push us toward the limits of technology,” Schakowsky said. “That’s a good thing. Strong standards push the auto industry toward greater efficiency and innovation.”

The industry’s main U.S. trade groups, the Alliance for Automobile Manufacturers and the Association of Global Automakers, said they’re already straining to meet U.S. fuel economy targets in this low gas-price environment.

The Center for Automotive Research, an Ann Arbor, Mich.-based group that analyzes economic trends for the car companies, published a study on Sept. 21 that estimates more than 1.1 million U.S. workers could lose their jobs because of the fuel-economy standards.

By Jeff Plungis

About the Author


Licensed content from Bloomberg, copyright 2016.

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!