The Obama administration recently released its Corporate Average Fuel Economy (CAFE) goal for the year 2025. The White House was originally shooting for passenger vehicles and light trucks in America to average 56.2 miles per gallon (mpg) by 2025—this desired level would have diminish the nation’s oil consumption and added about $2,375 to the cost of each vehicle. After the events of last Friday things have changed.
Under the original White House CAFE plan the 56.2 mpg standards would be about a 5% improvement over today’s standards. Auto makers had been pushing for an average of 47 mpg by 2025, roughly a 3% improvement over today’s standards. When news broke that the White House was going with the 56.2 mpg standards the Detroit Three sprung into action in mid July.
The Detroit Three claimed that such a sudden increase in mpg standards is economic suicide for car manufactures who manufacture large trucks and SUVs that sit on dealership lots for an extended period of time. The Detroit Three fear a repeat of 2008 when gas prices quickly shot up leaving a large inventory of expensive SUVs that would not sell, only to have gas prices fall and large vehicle sales rise again.
In response to the fears of the Detroit Three, government regulators considered a proposal that would allow for the fuel economy rating for large, gas guzzling, vehicles to improve at a lesser pace than that required of other vehicles. Of course, this idea was lambasted as well:
Mark Cooper, Consumer Federation of America director of research, states:
… the auto industry’s ‘slow-lane, off-ramp’ proposal will totally undermine the essential benefit of a slow but steady climb to 56 mpg by 2025. The industry’s ‘slow-lane’ proposal will lower consumers savings by up to $50 billion, increase gasoline consumption and oil imports by hundreds of millions of barrels, and reduce employment in the auto sector by at least 50,000 jobs.
Once the dust had settled a sit down meeting was agreed to with automakers, the Obama administration, and California regulators. This group reached a framework deal that set an overall fleet average of 54 mpg by 2025. This new joint agreement between the auto makers and Washington is down from the 56.2 mpg the White House initially sought and up significantly from the 47 mpg originally sought after by the auto companies.
Most significantly was the acceptance by Washington regulators to set much lower requirements for light trucks compared to cars until at least 2021. Light trucks would only have to meet a 3.5% annual increase from 2017 until 2021; compared to cars which would face 5% annual increases. As for large work trucks, gas guzzlers, they too received special treatment in the form of a reduced pace to meet requirements for new fuel economy standards. So far, the Detroit Three along with foreign automakers such as Toyota, Honda and Hyundai have expressed their complete agreement and satisfaction with the final deal.
This has been an interesting and somewhat troubling chain of events. On one side the Obama administration is pushing the American auto industry to evolve and build vehicles that get better mpg. The Obama administration sets a goal, 56.2 mpg, for all vehicles large and small and established a time line for auto manufactures to meet this goal, the year 2025.
On the other side, certain car manufactures are agreeing to the standards in some of their model vehicles, yet opposing the CAFE standards on other models. Interestingly enough, the opposition is centered on vehicle models that, commonly, sell at very high prices ans guzzle the most gas. Americans still love SUVs and pickup trucks it seems.
Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail.