Our editorial: Hit brakes on EPA mileage rules
The Trump administration has announced it will reset the Corporate Average Fuel Economy standards put in place by the Obama administration. The Obama-era standards were poorly designed — and executed — and no longer reflect the market realities of the auto industry.
The guidelines would have required automakers to produce car fleets that averaged more than 50 miles per gallon. But the current fleet average was 24.7 miles per gallon in 2016, and was expected to rise to just 25.2 miles per gallon in 2017.
That’s less than half what the CAFE rules would have mandated.
Consumers shouldn’t be forced to buy cars they don’t want because of an arcane policy left over from the 1970s gas shortage. And they shouldn’t be forced to subsidize small cars and electric vehicles so automakers and politicians can feel as if they’re being environmentally friendly.
Passenger cars made up approximately half of U.S. sales in 2012. Last year they were down to one third of sales, and that number continues to decline. With that trajectory, the standards would have become increasingly harder to meet.
Large SUVs and trucks are dominating the market right now in most places except California, the state which is taking the most issue with the EPA’s reversal. And since automakers need to turn a profit, they’re not going to discourage interest in their most profitable vehicles, which are selling like hotcakes everywhere but the coasts.
Additionally, American crude oil production is at record highs. In November it broke a 47-year output record. After desiring more affordable energy for decades, American consumers shouldn’t have to pay higher prices for cars because of artificial outside forces like CAFE standards.
Automakers, including Detroit’s Big Three, have argued the technology isn’t ready to keep up with such stringent mandates and have carefully lobbied for them to be revisited.
The original rules were drafted when gas prices were $4 per gallon on average. Consumers were looking for more fuel-efficient vehicles, and with a push from California and the hope of correcting climate change and conserving energy resources, the rules were established.
Automakers would have been fined $5.50 for each one-tenth of a mile-per-gallon their average fuel economy falls short of the standard for a model year, multiplied by the total volume of vehicles sold. Automakers could purchase credits to cover deficits in emissions.
In 2016 automakers tried to comply with standards by using the credits to cover sales of their trucks and SUVs.
But the cost is always passed on somewhere, and that scheme amounts to truck and SUV buyers subsidizing small car buyers, an unfair proposition that would only get worse as the standards became more stringent.
The Trump administration faces backlash from green groups, and California has vowed to sue under power of the special waiver it receives under the Clean Air Act to enforce more stringent air pollution standards. Twelve other states, including New York and Pennsylvania, typically follow California’s lead on standards.
Those states combined would represent about one-third of the domestic auto market. If California wins, there could be two different standards enforced throughout the country, which would be a challenge for automakers. Or the federal government could try to revoke the state’s waiver.
For now, EPA administrator Scott Pruitt made the right call pausing the rules for the 2022-25 model years. Now a formal rule-making process can take place to instill more realistic targets that take into account concerns of automakers and consumers.