Drop 2025 fuel economy standards
It appears that the Trump administration is going to roll back President Barack Obama’s environmental agenda.
One of the first measures likely to go is Obama’s lofty fuel economy standards that call for 54.5 miles per gallon for new cars built in 2025.
Fuel economy standards are a legacy of the oil crises of the 1970s. While these standards have become conflated with environmental goals — namely carbon reduction — they were foremost designed to strengthen U.S. energy security in the face of growing dependence on imported oil.
Even when President George W. Bush signed into place new energy legislation that included raising fuel economy to at least 35 miles per gallon by 2035, the driving force behind the effort was energy security.
But we remain beholden to energy policies that reflect a different time.
U.S. energy security, so long the driving force behind fuel economy standards, is not the Achilles’ heel it had once been and should not be used as justification for a federal mandate that is wildly out-of-touch with reality.
The Obama administration’s proposed 54.5 miles per gallon standard for 2025 was based on an assumption that the automobile market would be 67 percent cars and just 33 percent trucks and SUVs in 2025.
But that doesn’t reflect the actual makeup of the fleet, which is currently 50 percent cars — and declining, and 50 percent trucks and SUVs, and growing.
With a 50/50 vehicle fleet, it may not even be technically possible to achieve a 54.5-mile-per-gallon standard by 2025.
American consumers already have voted with their wallets and concern for safety: They want trucks and SUVs. Thanks to low oil prices, the assumed shift in consumer preference to hybrids and electric vehicles has not materialized.
We’ve already bailed out the U.S. auto industry once. Forcing the industry to defy consumer preferences and make cars nobody wants is a predictable recipe for trouble.
The right way to spur innovation for emerging technologies is not to tilt the playing field in their favor but to force new model vehicles to hold their own in a competitive market.
Fuel economy standards aren’t the answer. With the U.S. more energy secure than it has been in generations and consumers’ preference so clear, the Trump Administration would be wise to drop the 2025 fuel economy standards.
There are better ways to enhance U.S. energy security and achieve environmental goals than to force auto manufacturers to make and sell cars consumers don’t want.
Mark Perry is a professor of economics and finance in the School of Management at the University of Michigan–Flint.