As Gulf Oil Gushes, Obama Increases Fuel Economy Standards

May 25, 2010

On Friday, the White House took another step towards increasing the efficiency of American vehicles and offering support for electric-drive vehicles. Is it a coincidence that this new drive for vehicle efficiency comes as the impact of the Gulf oil spill reaches disastrous proportions? No way.

“The disaster in the Gulf only underscores that even as we pursue domestic production to reduce our reliance on imported oil, our long-term security depends on the development of alternative sources of fuel and new transportation technologies,” the president said.

What specific actions did the President take? First, he signed a Presidential Memorandum to the EPA and Department of Transportation instructing them to draft a policy to increase fuel efficiency for medium and heavy-duty trucks. The standards would mark the first time that large commercial trucks will have to meet national fuel economy targets. Combine these new rules for trucks, with a 35.5 MPG fuel efficiency target for cars and trucks by 2016 already on the books—plus the President’s push for even higher standards from 2017 – 2025—and you can see small glimmers of a genuine effort by the Obama administration to make a dent in the nation’s addiction to oil.

Mixed Messages on Drilling

President Obama also called on the Energy Department to expand incentives for electric cars. Currently there is a tax credit of between $2,500 and $7,500 for buying an electric car, and $4,000 for converting a hybrid to a plug-in hybrid. These credits are scheduled to phase out after an automaker builds 200,000 battery-electric cars, and after Dec. 31, 2011 for plug-in hybrid conversions. Without these incentives in place for at least several years, the electric car movement would be slow and uncertain.

Forget for a moment that the Obama administration refuses to rule out the expansion of offshore drilling. Many have speculated that the President’s decision to open up most of the Eastern seaboard to petroleum exploration didn’t so much signify a change of heart on the issue as a concession to the oil industry and its supporters. That concession might be a politically expedient move to counterbalance the President’s push for automotive alternatives—especially when part of the blame is pointed at the administration for allowing the spill to continue day after day. The question is how far President Obama is willing to go to support a real change in energy policy.

Summer Plans

Not far enough, according to a number of pundits. David Roberts in Grist writes that Obama’s “flaccid response” has been “one of the most baffling things about the BP Gulf oil disaster.” Thomas Friedman in the New York Times is calling on Obama to use the oil spill as an opportunity for a “big strategy to end our oil addiction.” And Elizabeth Kobert, writing in the New Yorker, believes “Obama should return to the Gulf and, against the backdrop of the grotesque orange slick, explain to the public why he wants more ambitious legislation. Then he should spend the summer working to get an energy bill passed.”

If Obama follows this advice, then the day when consumers have a vast array of choices for affordable, practical and even stylish cars that run on little or no petroleum could be closer than ever.

And the devastation to the Gulf’s environment and economy will go down in history as the crisis that served as the catalyst for long overdue change.


Posted in Incentives and Laws, News, Oil Dependence
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  • AP

    Right goal, wrong tactic.

    Increasing fuel economy requirements, while fuel is cheap, pits customers’ wants (a low-priced car) against government goals. The only way to (somewhat) even things out then is government incentives (which we can’t afford) for the more expensive vehicles.

    CAFE promised to reduce fuel consumption, which it has not. It has not reduced our oil imports; people simply moved from cars to trucks (creating the SUV market).

    While fuel is cheap, increasing CAFE requirements will only reduce the purchase of new, fuel-efficient cars, and the number of miles driven (by both old and new cars) will remain high.

    Let’s be done with it, raise the fuel tax, divide the revenue evenly, and return the it on income tax returns. That will promote the new technologies, and reduce government spending.

  • ex-EV1 driver

    AP,
    - raise the fuel tax -
    Laudable goal but political suicide. I still hold that the solution is to develop and sell EVs at whatever price you can, in the market that bears the price (luxury if necessary) until mass production can bring the prices down. Once cars are on the road, they will sell themselves.
    I’m just hoping that Nissan and GM don’t dumb the Leaf and Volt down to where they are of no use to mainstream drivers.

  • Charles

    Nah, don’t return the fuel tax. Spend it on infrastructure, considering we’re about a trillion dollars behind on keeping our roads in good repair.

  • Samie

    I think the gasoline tax vs. CAFE policy debate is somewhat distorted by shielding the petroleum industry from passing on higher costs to consumers which can in turn (on a mass scale) determine the types of vehicles we buy.

    I ask why not let the oil industry self-regulate themselves and the government act only as a policing agency? We could open up all offshore drilling 50 miles or more. BUT unlike now, the industry would not be able to pass on safety or environmental costs onto government, ie taxpayers. You could also reduce the wasted money spent on incompetent regulators and influence from special interests. This means reduced government compliance costs but at the same time unlimited liability for the industry. If someone like BP fails to fully add safety costs into their final products, they could face the real threat of becoming insolvent and the industry as a whole could be liable for one of its group member’s poor decisions. Direct costs, hidden costs, and long-term costs would be factored into the price of domestic petroleum instead of passing it onto the federal government. Government would also stop subsidizing the petroleum industry ie. tax breaks and charge them diplomacy and military protection fees. Unfortunately, if we continue to find ways to keep hidden costs hidden, for the sake of laziness and fake political ideologies, our adoption to say long-term hydrogen, or near-term electric vehicles will be slow, including technological advances. Poor regulations, politicking, and short-term schemes (with locked distribution) will continue reduce the effectiveness of a higher gasoline tax or newer CAFE standards.

  • FamilyGuy

    I like the idea of increasing the tax on the cost of fuel. The government needs the money to repair the roads and bridges across the country. Those who are driving gas hogs that don’t really need to drive gas hogs will consider changing. Keep driving the gas hog and help pay for road repairs. The high cost of gas can drive the consumer demand for alternative forms of fuel. Probably too simple to be practical.

  • Kevin Brady

    i like the idea of raising the tax on gasoline in this country. we still have the cheapest oil in the world don’t we? I live in NJ, which doesn’t tax the gas very heavily at all. I’m doing a decent job on my car selection, but there’s not very good choices out there even still – 13 years after the Prius was introduce and how the heck long after GM’s first EV was introduced?

    samie has some good points though. i don’t know what the solution is, but for now, unfortunately, it’s on us to get those around us to make better decisions, and keep pressing for better choices from the companies!

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