Is Obama's Hope For Better Fuel Economy Sputtering Out? | WGLT

Is Obama's Hope For Better Fuel Economy Sputtering Out?

Jan 8, 2016
Originally published on January 10, 2016 2:54 pm

There were high-fives this week from Detroit to Washington, D.C., as carmakers celebrated record auto sales.

Americans bought 17.5 million cars and trucks in 2015. That's a huge turnaround from 2009, and the Obama administration cheered the rebound as vindication of the president's decision to rescue General Motors and Chrysler from bankruptcy.

"Because of the policy decisions that were made by this administration to place a bet on those workers, America has won, and our economy has been better for it," White House spokesman Josh Earnest told reporters Wednesday.

There's another element of the president's auto agenda, though, that's not looking so good: the drive for better fuel economy. In 2011, Obama struck a deal with automakers to sharply increase their vehicles' efficiency. The move was designed to save money for consumers. It was also a key ingredient in the president's recipe for reducing heat-trapping carbon pollution linked to climate change.

"By the middle of the next decade, the cars and trucks we buy will go twice as far on a gallon of gas," Obama promised in 2013. "That means you'll have to fill up half as often; we'll all reduce carbon pollution."

For a while, it worked. Automakers invested in fuel-saving technology, and consumers — burned by high gasoline prices — paid greater attention to miles per gallon. The average fuel economy of new vehicles rose from 22.6 miles per gallon in late 2011 to 25.8 mpg in mid-2014. But those improvements have now stalled.

Analysts at the University of Michigan's Transportation Research Institute say the average fuel economy of a new car sold in 2015 was lower than the year before. Last month, the average dipped below 25 miles per gallon.

What's behind the decrease? Cheap gas.

"When gasoline is cheap, the motivation just isn't there for consumers to pay a whole lot of attention to fuel economy," says Brandon Schoettle, who compiles the University of Michigan figures with his colleague Michael Sivak.

As gas prices tumbled through 2015, car buyers increasingly turned to less fuel efficient trucks and SUVs. And while those models go farther on a gallon of gas than they used to, they're no match for gas-sipping compacts.

"There's kind of two competing forces here," Schoettle says. "The automakers are doing what they can to improve the technology and the vehicles and make the fuel economy for these better and better each year. But on the other hand, you've also got the consumer behavior and what drivers want to purchase and drive around."

Automakers aren't likely to discourage consumers from switching, since trucks and SUVs are typically more profitable than cars. And if the trend continues, the U.S. will have a tough time meeting its climate goal of doubling fuel economy by 2025.

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RENEE MONTAGNE, HOST:

There were high fives this week from Detroit to Washington, D.C. as carmakers celebrated record auto sales. Americans bought 17-and-a-half million cars and trucks last year. That's a big turnaround from 2009, and the Obama administration cheered the rebound as vindication of the president's decision that year to rescue General Motors and Chrysler from bankruptcy. There is, however, another element of the president's auto agenda that's not looking so good, and NPR's Scott Horsley joins us to talk about that. Good morning.

SCOTT HORSLEY, BYLINE: Good morning.

MONTAGNE: What's the problem with all these new car sales? What's the downside?

HORSLEY: Well, Renee, just to give the high-fivers their due, it is encouraging that people have been flocking to auto dealerships. It means they've got money in their pockets, they're feeling good about the economy. It's certainly good for the 640,000 people who got jobs in the auto industry in the last five or six years. But the drawback is in 2011, the president struck a deal with automakers that was supposed to more than double the average fuel economy by 2025. That would help consumers go twice as far on every gallon of gas, and it was also a key ingredient in the president's recipe for battling climate change. Now, for a couple of years after that deal was struck, we did see gains in the average miles per gallon, but those improvements, Renee, have now stalled. Brandon Schoettle and Michael Sivak track this every month at the University of Michigan's Transportation Research Institute. And this week, they reported that the average miles per gallon of new vehicles sold in 2015 was down from the year before. In fact, it's been falling month by month, and in December, the average fell below 25 miles to the gallon.

MONTAGNE: And why are the numbers slumping?

HORSLEY: Two words - cheap gasoline. As gas prices have tumbled this year, more and more consumers are opting for bigger, less fuel-efficient trucks and SUVs. And the University of Michigan's Brandon Schoettle says even though the typical pickup gets better mileage today than it did a few years ago, that changing mix - away from cars, towards light trucks - is pulling the overall average fuel economy down.

BRANDON SCHOETTLE: There's kind of two competing forces here. The automakers are doing what they can to improve the technology in the vehicles and make the fuel economy for these better and better each year. And they really have been doing that. But on the other hand, you've also got the consumer behavior - what drivers want to purchase and drive around.

HORSLEY: Now, automakers aren't too bothered by this, since they generally make more money on the bigger, heavier vehicles. But it does mean we're a long way from that goal of more than doubling fuel economy by 2025.

MONTAGNE: And what does this then mean for the president's climate agenda?

HORSLEY: Well, fuel economy standards were just one part of the broader climate plan - not as significant, for example, as the rules governing power plants pollution. But what this does illustrate is just how important price signals are in getting consumers to knock down their carbon footprint. And it looks like we're going to have cheap gas with us for a little while, at least. The price of crude oil continues to slump. One thing, though, I know, Renee, from following the energy markets for a long time - they are volatile. What goes down does go up. And it's worth keeping in mind that the average car on the road today is 11 years old. So before you head out to the dealership, you might want to think not only about where gas prices are now, but just how confident are you that we're going to have two-dollar-a-gallon gas two years, five years, 10 years down the road?

MONTAGNE: Scott, thanks so much.

HORSLEY: My pleasure.

MONTAGNE: NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.