As Gas Prices Soar, Administration Undermining New Fuel Economy Law

WASHINGTON — At the same time Americans are demanding relief from soaring gas prices, the Bush administration is quietly undermining improvements in fuel economy standards as mandated by Congress late last year, according to the Union of Concerned Scientists (UCS). In comments submitted today, UCS pointed to several flaws in the administration’s proposal to implement those standards. Chief among them is the use of a gasoline price estimate that falls about $1.50 per gallon below current prices.

The energy bill enacted in December directed the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) to set standards requiring consistent progress toward a 35-mile-per-gallon (mpg) minimum fleet average for new cars and light trucks by 2020. It also directed NHTSA to require automakers to go beyond 35 mpg if they can achieve a higher, “maximum feasible” fuel economy.

When NHTSA sets fuel economy standards, it balances the cost to consumers for fuel-saving technology in new vehicles with the savings from reduced gasoline consumption (as well as benefits to society, including reducing global warming pollution and strengthening energy security.) Thus, the fuel economy standards NHTSA establishes will depend on the gasoline price the agency uses in its calculations. The higher the price of gasoline, the more cost-effective the fuel-economy technology will be.

But the gas price estimates NHTSA is using to make its calculations fall far short of today’s gas prices and, as a result, will rob Americans of the fuel economy they deserve.

NHTSA’s draft rule proposes using one of several gas and oil price projections from the Department of Energy’s Energy Information Administration (EIA). The one it used in the draft rule assumes a cost of gasoline around $2.50 per gallon between 2011 and 2030 (in 2007 dollars). Today’s current average price for a gallon of regular is $4.09, or $3.97 in 2007 dollars.

UCS recommends that at a minimum, NHTSA should use the most recent EIA “high oil price” projection, which ranges from $2.96 to $3.63 in 2007 dollars between 2011 and 2030. According to NHTSA’s own analysis, if they used that slightly more realistic estimate from EIA, required fuel economy standards would jump 3 to 4 miles per gallon.

UCS is not alone in its criticism of how NHTSA is estimating gas prices. The EIA administrator, Guy Caruso, has recommended that NHTSA use a higher gas price estimate in setting fuel economy standards. At a House Select Committee on Energy Independence and Global Warming hearing, Caruso testified, in direct reference to NHTSA’s rulemaking process, “.we’re on the higher price path right now. If you were to ask me today what I would use, I would use the higher price.”

The proposed rule NHTSA announced in April calls for fleet average fuel economy to improve to 27.8 mpg in 2011, 29.2 mpg in 2012, and 30.5 mpg in 2013. Those improvements represent an average increase of 1.5 mpg per year. But in 2014 and 2015, fuel economy improvements under the proposal would slip to an average of 0.55 mpg per year, increasing to only 31 mpg and then 31.6 mpg. If fuel economy improvements continue at the pace the proposal sets for 2014 and 2015, the U.S. fleet would achieve slightly more than a 34.5 mpg average by 2020, short of the 35 mpg minimum Congress set.

According to a recent UCS report, NHTSA could set cost-effective fleet average fuel economy standards approaching 40 mpg by 2020, a target achievable even without hybrid technology. With a modest 25 percent hybrid market share in 2020, a fleet average fuel economy of 42 mpg could be achieved, while increased sales of fuel-efficient hybrids could push the average even higher. The UCS report also assumes a carbon price of approximately $41 per ton of CO2, equivalent to $0.49 per gallon, and a conservative estimate for the benefit of increasing oil security of $0.35 per gallon. Both figures are in 2006 dollars.

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One Response

  1. I’m in the same boat as you, I see the change in weather happening all around and know that global warming is gaining faster than scientists can predict. I agree with these new green trends, we can’t keep pumping out dirt into the air or other things bad for the environment and not expect it to change.

    It’s great to see more green choices out there.

    I wrote about a couple of new green choices out there, please check it out and comment with your ideas as well. I look forward to hear from you. Thanks.

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