Broad Support For Obama's MPG Target, But Dealers Still Wary
Auto industry insiders, environmentalists, consumer advocates reach same conclusion
The hearings concluded Tuesday in San Francisco, where eco-friendly residents have been pushing for a more fuel-efficient U.S. fleet for the past decade.
Like at hearings last week in Detroit and Philadelphia, approximately 100 people testified in front of a joint panel of Environmental Protection Agency and National Highway Traffic Safety Administration officials at the Hyatt hotel on Fisherman's Wharf.
"The best place to drill for oil is under the hoods of our cars," said Larry Schweiger, one-time auto worker and current CEO of the National Wildlife Federation, while testifying at an earlier hearing. "We can take real steps to roll back climate change and save consumers half a trillion dollars that can be spent at home building jobs instead of being sent overseas for oil."
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 on gas savings, even with a higher upfront sticker price for new models.
The rule is expected to be finalized this summer.
In conjunction with the San Francisco hearing, former Michigan governor and now-California resident Jennifer Granholm voiced her support for the new Corporate Average Fuel Economy standard in an op-ed that appeared Tuesday in the San Jose Mercury News.
Noting that 13 auto manufacturers support the current proposal, she wrote, "this hasn't always been the case in Detroit, where carmakers historically have resisted raising CAFE standards, arguing it was too expensive and would put people out of work."
But, she said, "action to blunt the effects of high gasoline prices cannot come quickly enough. Federal agencies need to finalize the strong new fuel efficiency rules."
Automakers have supported the Obama administration's proposal, but cautioned at all three hearings the 13-year timeline may be too aggressive. Representatives of Detroit's Big Three have also said their support is contingent upon a "midterm review" of the rule that examines its effectiveness and consumer response to eco-friendly vehicles.
At the recent North American International Auto Show, Chrysler-Fiat chief executive officer Sergio Marchionne said he had no doubt that his company could muster the technical know-how to meet the challenge. "The question will be whether the public will buy the vehicles we build." Added Marchionne, "Even before we get into hybrids and electrics, we are adding a lot of fuel economy just by continuing to innovate the internal combustion engine."
Members of the National Association of Automobile Dealers were the most pointed critics of the rule throughout the three hearings. They said the regulations would increase the cost of new cars by approximately $3,200, enough to price some 7 million customers with marginal credit out of the financing market.
"We need to know better what the ramifications will be," said Don Chalmers, a dealer from Santa Fe, New Mexico. "We can't dictate what the consumers will buy. If the customers don't purchase these products, we all lose."
But the bulk of those testifying, which included auto representatives, national defense experts, students, religious leaders, nurses, environmentalists and professors, thought the 54.5 mpg standard would be a win, specifically for consumers.
"This is a wonderful consumer program," said Dr. Mark Cooper, director of research for the Consumer Federation of America. He says the new rule will reduce gasoline consumption by 4 billion barrels, thereby keeping $350 billion in the U.S. economy.
"You've heard consumers, environmentalists, automakers and others support this program," he said. "It may be the most important energy program in the past quarter-century."
There is a certain comfort level on the part of automakers with agreeing to the new rule. If, at the proposed mid-term review of the rule and how the technology and marketplace is reacting, automakers will have another crack at making a new case or moving the target with a new White House.
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