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Obama Administration Makes History by Raising Fuel Standards to 54.5 MPG

Frances Beinecke

Posted August 28, 2012

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Click here to take actionToday ushers in a new era for American drivers. Soon we will save thousands of dollars every year at the gas pump. Car buyers will be able to choose from hundreds of models that combine fuel-efficiency, high performance, and safety. And workers will find half a million new jobs building the cars of future.

This isn’t some distant dream; it is a concrete reality that begins now. The Obama Administration issued clean car standards today that will raise automobile fuel efficiency to the equivalent of 54.5 miles per gallon—on average—by 2025. That’s roughly twice the mileage our cars get today.

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These standards will save consumers $1.7 trillion at the gas pump and cut our oil imports by one-third. They also represent the biggest step America has taken to reduce carbon pollution and combat climate change.  

Building cleaner cars is already helping regain something America lost over the last few decades. Detroit once led the world in auto design and engineering prowess, but innovations stalled and foreign competitors passed us by. Driving used to be a symbol of American freedom and mobility, but soaring gas prices resulted in costly commutes and staycations.

We can reignite America’s love affair with the open road and our patriotic pride in American ingenuity. If U.S. engineers made it possible for every new car to include a computer more powerful than the one that sent a man to the moon, then surely they can produce cars that go farther on a gallon of gas.

They can, and they are.

In 2009, the Obama administration raised fuel economy standards to 35.5 miles per gallon by 2016, unleashing a wave of innovation. There are now 57 fuel-efficient models available in showrooms today—up from 27 models in 2009. In addition to offering hybrids, car makers have retooled some of their most popular models to boost efficiency. The improvements keep coming: the first half of 2012 already set the record for highest-ever fuel efficiency for new vehicles, according to analysis by market analyst Alan Baum of Baum and Associates.

Consumers are rewarding these breakthroughs. A May 2012 Consumer Reports survey found that fuel efficiency is the top concern for auto buyers by far. The reasons are obvious. Trading in an SUV that gets 15 miles per gallon for one that gets 20 miles per gallon can save $1000 each year at $4 per gallon. Imagine the savings from an SUV that gets 30 or 40 miles to the gallon.

Still, standards provide something consumer trends cannot: long-term certainty. Automakers try to guess the price of gas and respond accordingly, but tracking the volatile rollercoaster of the world oil market does not lend itself to smart planning. Strong standards, in contrast, tell car manufacturers exactly what goal they need to reach by when, so they can invest in innovation and deploy cleaner technology on a steady basis.

And they hire more workers to do the job. More than 150,000 Americans have jobs making parts for and assembling clean cars—hybrids, electric cars, and other advanced vehicles that weren’t even available 10 years ago. Since the auto industry hit rock bottom in June 2009, the sector has grown by 236,600 jobs.  NRDC analysis shows that many of the new investments—and new hires—car companies are making center around fuel-efficient technologies. Watch this video about how one plant’s innovations are creating ripple benefits throughout Saginaw, Michigan and beyond.

Because the domestic market for efficient cars and components is expanding, companies have an incentive to build cars here in America. My colleague Roland Hwang calls this the “onshoring” of American jobs. With U.S. hybrid sales up 63 percent this year, for instance, Toyota and Honda are moving production to our shores. Honda recently announced plans to invest $40 million and move all global Civic Hybrid manufacturing to its Greensburg, Indiana manufacturing plant from Japan, creating 300 jobs by the end of the year.

Everybody wins when cleaner cars hit the road: workers, drivers, and automakers. But the benefits don’t stop there. Using less oil reduces toxic pollution, which means all of us will breathe healthier air and enjoy a more stable climate.

These standards demonstrate the best of America: how opponents can become allies, how creating jobs goes hand in hand with protecting health, and how the American auto industry can compete with any country in the world.

That is why we celebrate today’s historic milestone. These new clean car standards will help restore America’s leadership, prosperity, and well-being.

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AlexAug 28 2012 01:46 PM

So gearheads were thrown under the bus over the altar of political correctness. What happens when nobody buys these PC-mobiles? Will the government come after what we drive and take them away? You may try to legislate the fun out of driving, but as long as there's magazines like Hot Rod, shows like Top Gear, and video games like Forza Motorsport, greenies will fail. You can't legislate the passion out of driving, it didn't work in the '70s, and it won't work now.

For the last time, leave us alone. We will not be silenced.

And please spare us the Tesla argument. They have cash flow problems. Let's see if they survive in a couple of years.

FWAug 28 2012 02:37 PM

Comment removed. Please keep the conversation civil. – Ian @ NRDC.

Roland HwangAug 28 2012 03:48 PM

Thanks to better technology, enthusiasts do not have to choose between high performance and fuel efficiency. In fact, a Toyota Camry of today has more horsepower and better acceleration than a Ferrari 308 from 25 years ago. For more evidence that performance and fuel efficiency is a false choice, see Peter Lehner's blog here.

ChrisAug 28 2012 04:06 PM

The new standards will save $$$ at the pump and help reduce global warming. Hopefully, these standards also will encourage manufacturers to increase the fleet of electric cars sold.

peterdubAug 28 2012 05:14 PM

As for the opposite view...

"Environmental savings from new car standards negligible":

Overriding Consumer Preferences with Energy Regulations by By Drs. Ted Gayer and W. Kip Viscusi, Mercatus Center, George Mason University, Arlington, Virginia, July 2012

peterdubAug 28 2012 05:25 PM

Re the last comment and link,

The direct link to the research and documentation on it was too long to be allowed posted here
However search say "Viscusi"
on the link given and it comes up straight away.

RE Roland Hwang
If the new cars were so much better than the alternatives - why the need for standards then ? :-)
People are simply seen as Too Stupid by the Gov Bureaucrats who sit and set these arbitrary standards on cars, clothes washers, light bulbs and much else.

As the linked research thoroughly discusses,
there is always a Reason why consumers make their choices.
Assuming their stupidity is wrong and demeaning - and if they are badly informed,then better information should be the policy, rather than reducing their alternative choice.

If the alternatives had no advantages, noone would buy them,
and there would be no "need" for these standards.

AlexAug 28 2012 07:18 PM

Roland, you may be saying that now, but 13 years down the road, when nobody's buying these wussmobiles, what's going to stop the government from taking away our pride and joy?

SaskaAug 29 2012 02:29 PM

Did NRDC play a role in this victory?

peterdubAug 29 2012 05:41 PM

Further to the above comments,

one might add that even if a policy targeting the cars was needed, then taxation would make more sense than regulations.

Look at bankrupt California.
Taxation gives Government income, is easier to apply and adapt to new market conditions than crude permanent cut-off standards, and keeps consumer choice.

"Hey Buddy, Noone wants to be Hit by Taxes"
Well, if politicians used their brains, they could also use some of the tax income to reduce price on energy saving alternatives, equilibrating the market - so much for "market failure" (yawn).
Clearly there are ways of presenting policies
- especially in California, where increased taxation is deemed necessary anyway.
This surely hits less than most other taxes.

No, taxation is not ideal - what is - but is better than regulation, albeit that stimulated market competition is best of all:
Products helped to market, but not continuously subsidised.

The funny thing about USA is how people are so entrenched in their views.
Liberals and Conservatives glaring at each other across a big moat.

Alternative American Car Policies:

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