The Trump administration proposal to slow the increases in auto fuel economy standards is a step in the right direction, both for the cost-conscious car-buying public and for the auto companies.
In a nutshell, the proposal would freeze standards at the 2020 target of 37 mpg.
The Obama EPA wanted a much higher standard: More than 50 mpg by 2025. But this was based on predictions that oil prices would be much higher than they are today. Not only have oil prices stayed lower than expected, but U.S. oil production has increased substantially via shale hydraulic fracturing.
The Obama standards also assumed many more sales of electric cars and hybrids. While all the major companies are working to bring these cars to market, their slower-than-expected sales rate has reminded many of the uncertainty always lurking in the auto business.
The only way companies could have met the Obama standards would have been through use of the more gimmicky provisions of the rules: extra credits for the production of advanced technology vehicles, use of credits banked by exceeding the standards when they were less aggressive, buying credits from companies that don't sell larger vehicles and, finally, paying fines when other options were no longer available.
Americans have always preferred larger vehicles, something for which they shouldn't have to apologize. This has frequently made it difficult for U.S. car companies to meet higher fuel economy standards. U.S. highways tend to be long and straight, and American families frequently number four or more people. So why not have a vehicle large enough to transport them safely and in comfort?
Today, SUVs, crossovers and pickups make up about two-thirds of total U.S. sales.
In making the announcement, the Trump people made the point that ever-higher fuel economy standards were causing sticker prices to rise, thus encouraging people to hang on to their older, less safe cars longer. The Department of Transportation reckons that so many older cars on the road would represent a safety concern and could account for as many as 1,000 highway fatalities per year. If that estimate is anywhere near accurate, it would be difficult to take issue with the new proposal.
Predictably, the environmental community flew into a tizzy over the Trump proposal, shouting out their objections in carefully coordinated talking points. But what the green groups fail to acknowledge is how mandates — particularly those that require technology changes — put upward pressure on prices while encouraging the development of products consumers might not want.
The Trump administration also seems fed up with California's special emissions rules and its zero-emission vehicle mandate. Its special status was hammered out by Congress in the late 1970s due to extreme air-quality problems that existed at the time in the southern part of the state. Congress also held that any state could sign up for California's standards, as long as those standards remained identical to California's. So far, nine states have jumped in on the ZEV mandate.
The technology-forcing ZEV mandate, authored by California's Air Resources Board, requires that 15 percent of all cars sold in California (and in the participating states) by 2025 be essentially electric vehicles or plug-in hybrids. Last year, only about 1 percent of all cars sold in the entire U.S. were ZEV-qualifying.
While some in the environmental community have threatened legal action if the California program is terminated, it makes little sense for our nation to have anything other than one set of national auto regulations.
The California program is a vestige of a bygone era and ought to be scrapped.
Rules that force manufacturers to build certain kinds of vehicles will only drive up prices and, in the end, cost auto industry jobs. For any consumer determined to buy a ZEV model, there are many available. According to the Alliance of Automobile Manufacturers, 53 ZEVs are available for sale this year, and by 2021, more than 80 will be on the market.
The Trump plan — with a standard of 37 mpg — is a more realistic approach to auto fuel economy. It's a sensible proposal that will preserve consumer choice while protecting a vibrant auto economy.