Washington, D.C. – Increasing federal fuel economy standards for cars and light duty trucks, to 42 MPG by 2025, is supported by 79 percent of Americans (68 percent of Republicans), and opposed by only 18 percent, according to a recent national survey commissioned by the Consumer Federation of America (CFA). The Administration and Congress are considering weakening these standards.
One reason for the widespread support of higher standards is that a large majority (79%) of those intending to purchase a motor vehicle in the future, think that the vehicle’s fuel economy is important in the purchase of their next vehicle. In part, this concern may reflect the belief that gas prices will rise in the future. When asked to guess the price of gasoline in five years, the average price given by all respondents was $3.90. Today’s average price is only $2.27.
The survey was conducted for CFA by ORC International, which interviewed a representative sample of 1,008 American adults by landline or phone on July 13-16. The margin of error for the survey is plus or minus three percentage points.
Fuel Efficiency Doesn’t Cost More—It Saves Money and Sells Vehicles
Congress and the Administration are receiving pressure from the car companies to roll back the nation’s fuel economy standards which they, the unions, consumer groups and environmental organizations agreed to in 2012. The reason: They say it costs too much to comply and increased costs won’t be accepted by consumers and sales will drop.
Today, the Consumer Federation of America is releasing an analysis of actual fuel efficiency and increases in miles per gallon (MPGs) among newly introduced vehicles. It shows that, for consumers, improvements in MPGs more than pay for themselves and that consumers value fuel efficiency. The analysis looks only at “all-new” 2017 vehicles – those of which manufacturers have had a chance to make fuel economy improvements. (Only about 10% of each model year represents these “all-new” vehicles.) CFA compared the price and fuel efficiency of these vehicles with their 2011 counterparts, the year before the new standards were implemented. In 2017, there were 27 “all-new” vehicles of which 19 had direct 2011 counterparts. These 19 models had 79 different versions with EPA mileage ratings.
Consumers save money because of these improvements in fuel efficiency:
- 27% (21) of the “all-new” vehicles introduced in 2017 actually cost less than their 2011 version and got 1-10 MPG better fuel economy.
- When calculating 5 years of fuel costs, nearly half of these 2017 vehicles cost less to buy and fuel than their 2011 counterparts.
- 58 of the 79 vehicles increased in price, however;
- 15% (12 of 79) had fuel savings that offset the entire price increase;
- 52% (41 of 79) had fuel savings that offset the increased cost of fuel economy technology;
- 6% (5 of 79) were more expensive in 2017 but their fuel economy stayed the same or decreased from 2011.
- Looking at the cost/benefit average for these 79 all-new models—the added cost of fuel economy averaged $320 per vehicle and will save the buyer an average of $946, putting $626 back into consumer pocketbooks.
Auto manufacturers are making good progress in complying with the law:
- 70 percent of the “all-new” 2017 vehicles had a CAFE-compliant trim, compared to 41 percent of the “all-new” 2015 vehicles.
- A record breaking 6 vehicles are compliant all the way to MY 2025.
- In looking at all of the 2017 models, “gas guzzlers” getting below 14 MPG are a miniscule 0.4% in 2017, down from 8.5% in 2011.
- A record 78% of the “all-new” light duty trucks had a CAFE compliant trim for 2017. Percentage-wise, trucks beat cars for CAFE compliance in 2017.
- 15 of the 17 manufacturers improved their CAFE compliance rate from 2015 to 2017.
Consumers are Buying the More Fuel Efficient Vehicles
Comparing the sales figures for 2016 SUVs and light duty trucks with the 2011 models, those that increased the fuel efficiency by over 10% sold nearly 20% more vehicles than those with a less than 10% increase in fuel efficiency.
“Our analysis clearly indicates that the car companies are fully capable of meeting the CAFE standards and they are able to do so with great savings for consumers,” said Jack Gillis, CFA’s Director of Public Affairs and author of The Car Book. “Rolling back the standards at this point would not only hurt America’s already financially beleaguered consumers, but they would hamper vehicle sales and put U.S. car companies at a distinct competitive disadvantage to the Asian car companies who will meet the standards,” he added.
Fuel Economy Standards Have Saved Trillions
Comments and an accompanying report filed today by the Consumer Federation of America in response to the Department of Transportation’s (DOT) request for input regarding reducing regulation show that fuel economy standards have saved consumers trillions of dollars and helped grow the economy. These benefits could be undermined if the DOT abandons the principles of sound benefit-cost analysis in the rush to deregulate.
“Fuel economy standards are one of the biggest consumer pocketbook issues the Trump Administration faces,” said Dr. Mark Cooper, Senior Fellow for the Consumer Federation of America and author of the report.
The report entitled, Pocketbook Savings, Macroeconomic Growth and Other Public Benefits of Fuel Economy Standards, points out that gasoline and diesel fuel oil, the two sources of energy most directly affected by Department of Transportation regulations are a major consumer expense, representing over 3 percent of total household expenditures. Typically, it is about the 6th largest household expense.
Fuel economy standards adopted prior to 2008 have resulted in extremely large consumer savings and benefits:
- Consumer pocketbook savings of $2.1 trillion; and,
- macroeconomic benefits of $1.3 trillion.
- With costs of less than $500 billion, the benefit-cost ratio for consumer pocketbook savings over 4-to-1 and for the macroeconomic benefit it is close to 3–to-1.
- The total benefit cost ratio, without environmental, public health and other benefits, is close to 7-to-1.
The report notes that 2008-2016, a particularly active period of standards writing resulted in:
- Consumer pocketbook savings of close to $500 billion; and ,
- Macroeconomic benefits of over $300 billion, with light duty vehicles accounting for seven-eighths of those gains.
- Environmental, public health and other benefits are about $120 billion.
- With costs are just under $120 billion, the overall benefit of about $900 billion are over eight times the cost.
“Combining benefits of past and present standards, has provided over $4 trillion in savings, with approximately $600 billion in costs, for an overall benefit cost ratio of about 7-to-1,” said Cooper.
Future benefits expected under the current law and administrative approach that appear to be at risk of a rollback, or not being adopted have been estimated to be:
- Over $400 billion in pocketbook savings: and,
- $260 billion in macroeconomic benefits, for a total of close to $700 billion.
- Environmental, public health benefits and other benefits would add almost $200 billion for a total close to $900 billion.
- The projected cost is just over $125 billion, for a benefit cost ratio over 7-to-1.
Future benefits expected under the current law and administrative approach have been estimated to be over $400 billion in consumer pocketbook savings and another $300 billion in macroeconomic benefits, at a cost of less than $130 billion.
“Against the background of the remarkable success of these standards, we believe that the Department of Transportation’s efforts, in response to President Trump’s executive orders, to reform regulation and reduce regulatory burdens are, thankfully, constrained by laws” stated Cooper.
Contact: Jack Gillis, 202-737-0766; Christina Heartquist, 415-453-0430
The Consumer Federation of America is a nonprofit association of more than 250 consumer groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education.