54.5 mpg Fuel Economy Standard Hearings

A panel of federal officials from the Environmental Protection Agency and National Highway Traffic Safety Administration held a public hearing Tuesday in Detroit to address the proposed new standards for automakers to increase the average, fuel-economy rating of their vehicles to 54.5 miles per gallon by 2025, up from about 27 miles per gallon today. The hearing included about 100 people who spoke and generally agreed that the stricter fuel economy requirements would create jobs, reduce oil consumption, create cleaner air and save drivers money, all while helping automakers increase their profits. Because of the way testing is done, the 2025 requirement correlates to a window-sticker rating of about 36 miles per gallon.

The National Automobile Dealers Association (NADA), however, did speak out against the idea of setting requirements for vehicles made more than a decade from now until more is known about the strength of consumer demand for more fuel-efficient vehicles. They are worried that vehicles would become too expensive for some consumers to afford. “

Additional hearings on the standards will take place Thursday in Philadelphia and Jan. 24 in San Francisco. The Obama administration this month extended the public comment period for the proposal by two weeks, to Feb. 13, and expects to finalize the regulations this summer.

The administration says the higher standards will cause vehicle prices to increase about $2,000 but that owners will save an average of $6,600 over the life of the vehicle by using less fuel. The rules also will create 484,000 jobs and cut oil consumption in the United States by 1.5 million barrels a day by 2030, according to the Go60mpg coalition, an association of environmental advocacy groups that support the proposal.

NADA believes the government’s analysis greatly underestimates how much the rules will cause vehicle prices to rise. He said the actual increase could be up to $5,000, causing an average buyer’s monthly payments to go up by $60 or $70 and potentially locking out shoppers who would not be able to obtain financing for the higher price, regardless of their fuel savings later on.

G.M., the Ford Motor Company, Chrysler, and other automakers agreed last summer to support the framework of the higher standards.

The Alliance of Automobile Manufacturers, a trade group, said all of its members supported the standards through 2016, when they would be required to achieve 36 miles per gallon. The German carmakers Volkswagen and Daimler have not endorsed the requirements past that point.

The United Automobile Workers supports increasing the fuel economy of vehicles because it would create jobs and better protect the jobs of current workers by helping the industry thrive.  (New York Times, 1/17/2012)