Fuel Economy Basics
Investing in technologies to increase the fuel economy of America's vehicle fleet will create domestic jobs, save consumers money at the pump, cut global warming pollution, and reduce our dependence on foreign oil. Increasing fuel economy—a measure of the average vehicle miles traveled per gallon of fuel (mpg)—is not a silver bullet. Yet, sound fuel economy policy and good engineering can deliver the cleaner and more fuel-efficient cars, trucks, and SUVs we need to help tackle our oil dependence and climate change problems.
History of U.S. Fuel Economy Standards
Benefits of Fuel Economy Standards
Technologies to Increase Fuel Economy
Fuel Economy Policy
History of U.S. Fuel Economy Standards
Congress established Corporate Average Fuel Economy (CAFE) standards in 1975, largely in response to the 1973 oil embargo. CAFE standards govern the composition of America's fleet of new passenger cars and light trucks and set the average fuel economy, as weighted by sales, that a manufacturer's fleet must achieve, with exceptions.
Through statute, Congress intended to roughly double the average fuel economy of the new car fleet to 27.5 mpg by model year (MY) 1985. The Department of Transportation set CAFE standards for light trucks (i.e., pickups, minivans, and SUVs) beginning with MY 1978. CAFE standards for light trucks were increased to 22.2 mpg for MY 2007 and scheduled to increase further, though no similar increases were made for passenger cars until legislation was passed in 2007. The historic energy legislation passed by Congress and signed by the President in that year raised the fuel economy standards of America's cars, light trucks, and SUVs to an average of at least 35 miles per gallon by 2020—a 10 mpg increase over 2007 levels.
Consecutive annual increases in the average fuel economy of new vehicles in 2005 and 2006 indicate a reversal in the long term declining trend in fuel efficiency since the mid-1980s. Still, the average fuel economy of today's U.S. car and truck fleet is 25.3 mpg, which is lower than the 25.9 mpg fleet average peak in 1987. This decline is attributable to the relative stagnation in CAFE standards prior to the passing of the 2007 energy bill, the doubling of annual vehicle miles traveled in the last 25 years and the increase in SUV and light truck sales. The recent increases in fuel economy standards will help reverse this downward trend and provide benefits to consumers and the environment.
Benefits of Fuel Economy Standards
CAFE standards were effective in increasing new car and truck fuel economy by 70 percent between 1975 and 1988. In 2000 alone, CAFE standards saved American consumers $92 billion, reduced oil use by 60 billion gallons of gasoline, and kept 720 million tons of global warming pollution out of our atmosphere.
- Dependence on Foreign Oil. American cars, trucks and SUVs account for approximately 40 percent of all U.S. oil consumption. Much of this oil is imported and our foreign oil reliance continues to grow. U.S. consumers currently spend $1 billion every day to import oil and other petroleum products. Achieving 35 mpg by 2020 as directed by the recently passed energy bill will save 1.1 million barrels of oil per day in 2020—over half the oil the U.S. currently imports from the Persian Gulf.
- Environment. For every gallon of gasoline that is consumed, approximately 24 pounds of global warming pollution are released into the air. Drilling, refining, and distributing gasoline account for about 5 pounds of global warming pollution per gallon of gasoline, and burning gasoline during vehicle operation produces another 19 pounds of global warming pollution per gallon. Increasing fuel economy standards to 35 mpg by 2020 can cut annual greenhouse gas emissions by 206 metric tons of carbon dioxide equivalent in 2020.
- Economy. A fleet of cars and light trucks that reaches 35 mpg will cost about $1,000 to $2,000 extra per vehicle. This additional cost will be more than offset by the fuel savings consumers will enjoy over the life of the vehicle. Consumer fuel savings along with automaker investment to produce a 35 mpg fleet by 2020 will help spur the creation of more than 170,800 new jobs in the year 2020.
Technologies to Increase Fuel Economy
Automakers already have the technology to make cars with better fuel economy. But for the past 20 years, they have used these tools to double power and increase vehicle weight by 25 percent.
Union of Concerned Scientists analysis of the results from a 2002 National Academy of Science (NAS) study indicates that it is both technically feasible and cost effective to raise the average fuel economy of new passenger cars and light trucks even if gas drops back to $2.50 a gallon. In fact, using continuously evolving conventional technologies, automakers could produce a fleet of cars and light trucks that achieve over 35 mpg by 2020. Hybrid, fuel cell, and other advanced technologies could be used to make vehicles even more efficient while maintaining, if not improving, vehicle safety and performance.
Automakers have a history of not incorporating cost-effective technologies that benefit consumer safety and the environment until they are required to do so. As a result, the government has had to step in to protect consumers by setting safety, fuel economy and emissions standards.
Although CAFE standards for cars and trucks had been mostly flat for the past twenty years, that changed with the passage of the 2007 Energy Independence and Security Act. The bill revised the structure of the fuel economy standards in several important ways, and increased the combined fleet fuel economy to 35 mpg by 2020, for all cars and trucks. The new standards will be attribute-based, meaning each manufacturer will have to make improvements based on the type of vehicles it sells, not the average of the entire fleet. While this offers manufacturers greater flexibility, it requires careful implementation and monitoring to insure that actual fuel economy is increasing as required by law.
Unfortunately, at least two regulatory loopholes remain that could limit fuel economy progress:
- Dual-Fuel Loophole. This loophole provides credits to manufacturers for selling dual-fuel vehicles, i.e., cars and trucks that can run on either gasoline or an alternative fuel. In reality, less than one percent of dual-fuel vehicles ever use alternative fuels. This regulatory loophole allows the automakers to produce, without penalty, fleets of vehicles that average as much as 1.2 mpg below required CAFE standards and has increased U.S. oil dependence by about 80,000 barrels per day in 2005. The energy legislation passed in 2007 will direct the gradual phase-out of this loophole starting in 2014. No manufacturer credits for dual-fuel vehicles will be given starting in 2020.
- Light Truck Loophole. The outdated distinction between passenger cars and light trucks has contributed to the erosion in US fuel economy as new light trucks have replaced older vehicles with higher fuel economy. In 2006, the National Highway Traffic Safety Administration (NHTSA) partially closed this loophole and for the first time, subjected SUVs and vans weighing between 8,500 and 10,000 pounds (so called, medium duty passenger vehicles like the Ford Excursion, GMC Yukon XL, and Hummer H2) to fuel economy rules. NHTSA was directed to revise the passenger car and light truck definition by the Federal Ninth Circuit Court of Appeals to more accurately reflect current vehicle use, but has not yet implemented any changes. Pickup trucks weighing between 8,500 and 10,000 pounds, such as the Ford F-350 and Chevrolet Silverado 3500, were exempt from any standard whatsoever, but under the 2007 energy bill NHTSA is directed to set a standard for these trucks. These large pickup trucks comprise a small but growing segment of the light truck market.
In addition, tax credits, like the federal hybrid tax credit, can help accelerate the emergence of advanced technology vehicles.
