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Feb. 22, 2017

Lobbying by Automobile Companies to Weaken Fuel Economy Standards Threatens Higher Prices

Statement of Tyson Slocum, Director, Public Citizen’s Energy Program

The Wall Street Journal reports that two lobbying groups for the automobile industry, the Alliance of Automobile Manufacturers and the Association of Global Automakers, are urging Scott Pruitt, the new U.S. Environmental Protection Agency (EPA) administrator, to weaken stronger fuel economy standards established by the Obama administration. The U.S. Chamber of Commerce – the largest U.S. corporate lobbying association, which gained clout with the GOP takeover of Congress and the White House – also has lobbied for years to weaken fuel economy standards. If the corporate lobbyists get their way, relaxing the mandate would undermine progress the U.S. has made in keeping a lid on both gasoline demand and prices, exposing more of the U.S. economy to volatile and expensive oil and gasoline prices.

By pushing to ease commonsense fuel economy standards, the automakers risk repeating their disastrous past mistakes of prioritizing gas-guzzling vehicles during temporary gas price lulls, only to see the strategy backfire once consumers rush to cleaner vehicles when gas prices rise. It would be another example of the corporate takeover of the federal government at the expense of everyday consumers.

While President Donald Trump has fixated on increasing fossil fuel production as a foundation of national energy policy, he has ignored the important role energy efficiency plays in holding down oil and gasoline prices. Oil markets are influenced by supply and demand; right now, flat demand is keeping global oil and gasoline prices low. If U.S. vehicles are more fuel-efficient, there is less demand for gasoline, so prices can remain lower.

Because of already implemented fuel economy increases triggered by a 2007 law signed by President George W. Bush, the actual fuel economy of all new cars, pickups and SUVs sold in 2016 was 23.7 miles per gallon — up from 19.9 miles per gallon in 2005. This rising fuel economy makes the U.S. fleet more efficient, so it uses less gasoline. In fact, while U.S. vehicle miles traveled breaks records (now at 8.8 billion miles per day), this increased driving has been more than offset by improved fuel economy standards, keeping total gasoline demand flat and putting more money in consumers’ pockets.

In January 2017, the outgoing EPA administrator issued a final regulation seeking to build on this success, requiring automakers to achieve automobile fleet fuel economy of 54.5 miles per gallon, which translates to about 40 miles per gallon in real-world driving, by 2025. These targets are essential to reducing the U.S. economy’s exposure to the inevitable oil price spikes that will occur sooner rather than later.

The key to a successful energy and climate policy is to ensure that people have access to transportation that minimizes exposure to global oil prices. Strong fuel economy standards are the proven tool to help.

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