- Jan 18, 2012
First hearing on 54.5 mpg proposal reveals widespread support
They came from as close as the General Motors headquarters across the street and as far away as Santa Fe, New Mexico.
They represented groups as diverse as automakers and the military, steel manufacturers and religious organizations.
And nearly all of the 90 or so people who testified on a proposal to raise the nation's fuel economy standard to 54.5 miles per gallon by 2025 offered support for the plan before a joint government panel in downtown Detroit.
Noting that the Obama administration's proposal had won the diverse support of auto industry insiders, labor unions, consumer watchdogs and environmental groups, Congressman John Dingell said, "this is an event that ranks with the loaves and fishes."
Tuesday's hearing, held by the Environmental Protection Agency and National Highway Traffic Safety Administration, was the first of three that will give members of the public opportunity to comment on the joint-proposed Corporate Average Fuel Economy rules. Further hearings are set for Thursday in Philadelphia and Tuesday, January 24, in San Francisco.
But it was in downtown Detroit, the heart of the nation's auto industry, that government leaders were offered widespread support for the 54.5 mpg standard Tuesday. Proponents said the U.S. would benefit in the form of increased automotive jobs, consumer savings and enhanced national security.
"The auto industry is coming back strong, and one of the reasons we are so confident about the industry's future is green technology," said UAW president Bob King. "The drive to bring fuel efficient cars to the market is transforming existing jobs and creating new ones. ... These are the automotive jobs of the future."
The EPA estimates the 54.5 mpg standard will save more than 4 billion barrels of oil between 2017 and 2025 and cut carbon emissions by more than 2 billion metric tons. Based on an average fuel price of $3.53 per gallon, it estimates consumers will save a net of $4,400, even with a higher upfront sticker price for new models.
While stating that they supported the proposal, that was the top source of reluctance among automakers and dealers.
More than worrying about meeting what they saw as aggressive deadlines, executives representing U.S. domestic automakers were more concerned with whether enough mainstream customers had the desire and financial means to purchase new cars.
Even as carmakers unveiled more than a dozen new electric vehicles and hybrids at the North American International Auto Show taking place down the street at the Cobo Center, they feared trying to peer at consumer purchasing trends more than a decade into the future left too much leeway for error.
"We must not lose sight of the most important question, and that is, 'Are they buying the product,'" said Jay Wilton, Chrysler's vice president of engineering and regulatory compliance. "Measuring even next year is challenging. Speculating 13 years into the future brings risk."
Because of that, the U.S. automakers said their support for the 54.5-mpg proposal was contingent upon the EPA and NHTSA agreeing to a midterm review that would assess whether early estimates on government figures were accurate, whether they could develop fuel-saving technology in time and, primarily, whether customers were buying fuel-efficient cars.
A November survey conducted by Consumer Reports revealed 80 percent of consumers said they supported the 54.5-mpg target and that 83 percent said they would be willing to pay more for a car that offered better fuel economy.
That may not necessarily mean they can afford a more fuel-efficient car. While several car dealers testified Tuesday they supported the CAFE proposal outright, other dealers were concerned about the costs fuel technologies would add to new vehicles.
Don Chalmers, speaking on behalf of the National Automobile Dealers Association, said the new standards would limit financing options for some customers, potentially decreasing new car sales and shifting borderline customers into used cars instead.
Although the EPA estimated that fuel savings of $6,600 over a decade would pay for the $2,200 increase in upfront vehicle cost, he said that financing departments would not factor the long-term savings into a customer's loan application.
"I can't quite get around the affordability from a finance standpoint and whether you can get qualified for a loan in the first place," said Chalmers, who said he would have lost several sales this fall had the proposal been in place.
"The bankers don't get a chart and compare fuel savings. They're looking at payments versus disposable income, and that's the reality of vehicle financing today."
Chalmers was the most tepid of supporters in Detroit. Overall, the increased regulation enjoyed wide support. In the afternoon, a group of women broke out in song while supporting the new rule. Nurses hoped the new standard would decrease asthma and NCAAP officials said it would create jobs for black workers.
And if the CAFE proposal brought together groups more disparate than auto industry insiders and environmentalists, it was pacifists and Marines nodding in agreement.
Alex Cornell Du Houx, a Marine and Iraq War veteran, said the Department of Defense was the nation's single-largest purchaser of gasoline and is attempting to reduce carbon emissions by 20 percent within the next eight years. The Air Force, he said, will use as much as 50 percent biofuels by 2016.
"This is the single best step we can take right now to curb our dangerous addiction to oil," said Du Houx. "This will have a tremendous impact, and make us less vulnerable to unfriendly and unstable regimes.
The Rev. Peggy Garrigues, a pastor from Clawson United Methodist Church in suburban Detroit, agreed.
"War is incompatible with Christian teaching," she said. "The less we depend on foreign oil, the less incentive we have to go to war. These proposed standards will help people of faith live out their values and create a better world for God's children."