Fuel economy push by Feds to cost $157 billion over next 14 years

Fuel economy push by Feds to cost $157 billion over next 14 years

The Obama administration announced new fuel economy rules this week requiring automakers to double average fuel economy of vehicles to 54.5 miles per gallon by 2025. The agencies that will monitor compliance with those rules said it will cost $157 billion to meet the standards and add an average of $2,000 to the price of each new passenger vehicle sold by 2025.

However, the National Highway Traffic Safety Administration and Environmental Protection Agency said the benefits of the new rules would range from $419 billion to $515 billion in fuel savings. For automakers and franchise dealers, the new requirements created considerable concerns.

The proposed regulations present aggressive targets, and the administration must consider that technology break-throughs will be required and consumers will need to buy our most energy- efficient technologies in very large numbers to meet the goals, said Mitch Bainwol, chief executive officer of the Alliance of Automobile Manufacturers.

NADA president Phil Brady also weighed in saying that, This regulation gambles that millions of consumers will be able to afford thousands more for generally smaller, more expensive vehicles that may not meet their needs. This policy is contrary to what most consumers are actually buying today, despite the wide availability of more fuel efficient models. Brady went on to say that fuel economy policies that encourage the sale of fuel efficient vehicles, instead of risky mandates that frustrate consumer demand and depress fleet turnover, is whats required. How many people will be able to afford a new vehicle if the government raises the price of a new car by $3,000? asked Brady, who said he hoped Congress would ponder this question.

The White House said that by 2025, the fuel-economy standards and other fuel-efficiency moves will save 12 billion barrels of oil; reduce oil consumption by 2.2 million barrels a day, and save consumers more than $8,000 per vehicle in lifetime fuel costs.

The draft fuel economy rules are the same as those concluded in July between the Obama administration and automakers including Ford, Honda, Toyota, Hyundai and General Motors. Daimler AG and Volkswagen were among automakers that didnt sign on. The final rule is scheduled to be published next year after the agencies receive comments from the public.