Select Committee Report Details Fuel Economy Regret

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Contact: Select Committee, 202-225-4081

Select Committee Report Details Fuel Economy Regret

Analysis Shows Republican-blocked Standards Would Have Reduced Oil Imports 1.5 Million Barrels a Day, Saved Consumers Billions

WASHINGTON (July 29, 2008) – How much would American consumers be saving at the pump and how much less dependent on oil would America be if Congress had passed fuel economy standards years before the 2007 energy bill? Those are the questions a new report by the Select Committee on Energy Independence and Global Warming explored, and it serves as a lesson to stay aggressive on the recently-passed fuel economy standards and on fuel-saving policies.

The Select Committee staff report details the oil, consumer and national expenditure savings America would currently be enjoying had Republicans passed a 35 mile per gallon standard as the Democrats did in 2007. The report examines the years 1994, when the Clinton administration began to formulate a new fuel economy proposal, only to be blocked by a new Republican-led Congress from advancing the proposal; and 2001, when the Republican Congress first allowed a vote on a fuel economy proposal, authored by Rep. Edward J. Markey (D-Mass.), Chairman of the Select Committee.

“I’m proud that Congress finally passed fuel economy standards last December, putting us on a path to break our dependence on imported oil,” said Rep. Markey. “But it’s clear this should have happened much sooner, and Republicans should have serious regret over their years of blocking higher fuel economy standards.”

The full report is available on the Select Committee website HERE.

The report found that had Republicans allowed the same 35 mpg standard to be adopted in 1994 as the Democrats passed in 2007:

--By model year 2008, new cars and light trucks sold would have already had a fleet-wide average of 35 mpg for two years, instead of 2022, as would occur under the current standards.
--In 2008, America would be saving 1.5 million barrels of oil per day, or 547.5 million barrels of oil per year.
--American drivers would be saving $90 billion a year, and the American economy would avoid spending $71.2 billion per year buying oil.
--The average annual consumer savings at the pump per vehicle would be $391, a savings of almost 20 percent from what consumers are currently spending (about $2,375/vehicle).

And if the Republican Congress had adopted the 35 mpg standard in 2001:

--By 2008, we would be in year five of the standards, instead of 2015, as would occur under the current standards.
--America would already be saving 150,000 barrels of oil per day, or 54.75 million barrels of oil per year.
--American drivers would be saving $9 billion, and the American economy would avoid spending $7.12 billion per year buying oil.
--The average annual consumer savings at the pump per vehicle would be $39, with greater savings for new vehicles.

The report serves as a cautionary tale for current efforts to strengthen the path of the current standards by using higher, more realistic gas price assumptions. Under the standards passed last year, the National Highway Traffic Safety Administration (NHTSA) must require the maximum feasible fuel economy increase – even if the maximum feasible increases result in the 35 mpg standard being met earlier than 2020.

On April 22, 2008, NHTSA issued proposed fuel economy standards for model years 2011-15 which are projected to result in a projected fleetwide average of 31.6 mpg. However, NHTSA drafted its proposed regulations using Energy Information Administration (EIA) assumptions about gas prices that do not match up with current or projected prices. At a time when gasoline prices are at $4 per gallon, NHTSA used EIA’s 2008 forecast for gasoline prices that range from $2.42/gallon in 2016 to $2.51/gallon in 2030.

Using a more realistic, higher gas price assumption would greatly impact the fuel economy feasibility calculation, but NHTSA’s reliance on unrealistic projections have the effect of artificially lowering the calculated “maximum feasible” fuel economy standards. If NHTSA used EIA’s higher gasoline price scenario range of $3.14/gallon in 2016 to $3.74/gallon in 2030, its own analysis showed that technology is available to cost-effectively achieve a much higher fleet-wide fuel economy of nearly 35 mpg in 2015.

On June 11, 2008, EIA Administrator Guy Caruso testified before the Select Committee and agreed that NHTSA should use EIA’s higher gas price scenario in setting fuel economy standards. However, at a June 26, 2008 hearing before the Select Committee, a Department of Transportation witness refused to commit to doing so.

“If there is one lesson in all of this, it’s that when you have a chance to be aggressive on fuel-saving policies, you should be as aggressive as possible,” said Rep. Markey. “We can’t get back the years of inaction on this issue, but looking ahead, we must drive harder towards higher fuel efficiency.”

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