A Real Solution To High Gas Prices: New Fuel Economy Standards Will Save Consumers Billions Of Dollars Per Year

Everyone’s looking for a solution to high gas prices. Well, here’s a novel concept: we could just use less fuel.

According to a new analysis from the Natural Resources Defense Council, increasing our average vehicle fleet efficiency to 54.5 miles per gallon would save consumers $68 billion per year after 2030 when new mileage standards have been fully met.

By bumping up the fuel efficiency of our nation’s vehicles to that target, NRDC estimates that the amount of oil saved per day in 2030 would equal today’s combined imports from Saudi Arabia and Iraq. The emissions reductions would also be substantial — cutting enough carbon dioxide to equal the shut-down of 76 coal-fired power plants.

Last July, the White House announced a plan to increase fuel efficiency from 21 mpg today to 54.5 mpg by 2025. The targets, which would spur new manufacturing activity in America’s auto sector, had strong support from labor unions and most major auto manufacturers. Over the life of the program, the cumulative savings would be more than a trillion and a half dollars, according to the Obama Administration.

To date, these fuel efficiency standards are one of the most credible policy solutions to addressing high gas prices.

The “drill baby drill” crowd falsely believes that more fossil fuel extraction is the answer. But as numerous analyses have pointed out, including one from the Associated Press, more domestic drilling simply does not correlate with lower prices at the pump.

Excessive speculation is also a key target for many lawmakers. While some economists say speculation in the oil markets has raised oil prices by 15% in the last decade, any short term efforts to crack down on the problem don’t really address the real issue: Investors believe that oil prices will continue to go up, largely because of booming global demand, finite supply, and continued conflict around the world.

Alternatives to petroleum like electric vehicles and advanced biofuels are extraordinarily important and will be a major piece of the solution. However, these two sectors are facing a number of financial, technical and consumer-demand challenges, making the extent of their role still uncertain.

Increasing fuel efficiency standards is a proven, tangible solution that can help us reduce petroleum use and help save consumers money. Although such targets may increase the cost of a vehicle by as much as $2,000, NRDC estimates that the savings in gas use would be as high as $6,400 — netting consumers roughly $4,400 over the lifetime of a vehicle.

And Americans say they’d make the investment. Last year, Consumer Reports issued a poll showing that 58% of Americans were willing to pay more up front for an increase in fuel efficiency. Around the same time last year, the Consumer Federation of America released a survey showing that three quarters of Americans supported an increase in fuel economy standards, with a 65% wanting aggressive targets of 60 mpg by 2025.

With manufacturers, labor unions, and consumers all throwing their support behind fuel efficiency, this should be a policy solution that our nation’s policymakers should be able to agree on.

7 Responses to A Real Solution To High Gas Prices: New Fuel Economy Standards Will Save Consumers Billions Of Dollars Per Year

  1. Ken Barrows says:

    That will work. Fewer (do I hear less than 50%) new cars will be produced, people will have to live closer to work, and mass transit will skyrocket.

    If somehow the same number of cars or even more are produced with the new standard, then it’s game over.

  2. Sasparilla says:

    Definitely nice to see these standards move forward. This is something Obama can be proud of and something only his administration (and not a Romney administration) would do.

    Its funny about plug-in vehicles and how the newsies (WSJ just recently) look at their generation 1 prices and write them off. If batteries were a mature technology with little prospect for significant advances in price and capacity it would be a logical assumption – but that’s not the case.

    As detailed in the article below vehicle battery costs have declined by over 30% since 2009 (and 14% last year alone) with these cost improvements expected to continue and compound throughout this decade and beyond. Capacity increases are expected by the DOE to be at least 70% (compared to the Gen 1 Volt and Leaf batteries) by 2015 with expectations that that will increase significantly in the years thereafter. Basically because of the Leaf and Volt large amounts of money are now being invested on improving batts for vehicles (which wasn’t happening before) and its paying off.

    By around 2020 plug-in vehicles will be no-brainer choices to many consumers (not the $16k vehicle but definitely the $23k vehicle) and will suck the wind out of large chunks of ICE vehicle market purchases purely on economics alone even without a carbon price. We’re going to witness a disruptive technology take hold in the automotive market over this decade, it’ll be very gratifying to watch.

  3. Me says:

    54.5 miles per gallon, for fleet vehicles? Dream on. That will never happen.

    2030 is also highly problematic, since the world is expected to be in serious oil decline by 2030. Whatever we’re still burning (and it will be a lot less) will be extremely expensive (at least 4 time today’s prices), in short supply and probably designated for ‘official use only’.

    I simply cannot put much stock into all these proposals that are not based upon the here and now. The future looks far grimmer then what these optimists are shoveling.

  4. A.J. says:

    The fuel economy standards may be something to be proud of, and “one of the most credible” solutions from the administration, depending on the status of any potential loopholes:

    I haven’t followed this closely enough to be sure of how it will turn out, but at least one auto industry group, the NADA, has been making rumblings about the extra cost of these fuel economy measures. Who can assure me that the standard won’t be further watered down after the “mid-course review”?

  5. Lynne says:

    I decided not to wait until 2025 for car makers to act. I just bought a lovely 2-door Honda Insight (2001) that will give me over 60 mpg. I used to have a Honda Civic VX that got 48 mpg. I’m still waiting for an explanation as to why they discontinued that little non-hybrid number. There were three models of Civic in the 90’s that had better gas mileage than their hybrids do now.

  6. David B. Benson says:

    Somewhere I read about the idea of using ammonium as a tranport fuel. I have no clear idea how that would work.

  7. MPGomatic says:

    Folks have to want to plunk down their hard-earned dollars on that new ride … and when you get down to it, fuel economy is the rational side of the equation … most folks are primarily concerned with how their new vehicle makes them feel. Whether they’re willing to admit it or not.

    Week-after-week, I’m here to share that it’s possible to burn rubber without burning gasoline. A fun-to-drive car needn’t use a single drop of imported petroleum.

    The only way to win this is with an “all of the above” policy that takes into account the regional advantages of specific fuels, whether that’s CNG, renewable biofuel, electricity, or good old American petroleum.

    Fuel efficiency is just part of the equation …