U.S. automakers failed to improve fuel economy as gas prices have advanced upward since 2000, according to a recent Consumer Federation of America (CFA) report.
The CFA held a news conference July 17 to release an analysis of automakers' response to rising gas prices over the last seven years. CFA also released a national survey of consumer attitudes over the same period.
The price of a gallon of gasoline was $1.12 in 1998, and except for a slight decline of 12 cents in 2000-2002, the price has risen steadily to $2.72 a gallon today (data originally from the Energy Information Administration.) During the last six years, the number of models sold increased, but the number of fuel efficient cars that achieve over 30 miles per gallon (mpg) decreased, according to Jack Gillis, CFA director of public affairs.
"The failure of the auto industry to keep their promise to improve fuel economy after the gasoline price escalation of 2000-2001, coupled with their opposition to a meaningful increase in fuel economy standards, has undermined their credibility with the public and members of Congress," said Dr. Mark Cooper, CFA Director of Research.
The car manufacturers have always opposed increases in Corporate Average Fuel Economy (CAFÉ) standards, which Congress enacted in 1979 following the Middle East oil crisis. In 2001, carmakers promised to produce more fuel efficient vehicles voluntarily, said Gillis. Now the Senate has stepped forward due to consumer dissatisfaction, says Gillis, and has passed a bill that would raise the CAFE regulation to 35 miles per gallon (MPG). The bill goes to the House where it awaits an uncertain future.
The bill that passed the Senate would raise CAFE standards to achieve a nationwide fleet average of 35 miles per gallon by the year 2020. Also, for the first time, fuel economy standards for medium-duty and heavy-duty trucks would be created if the bill becomes law.
Committee Chairman Daniel K. Inouye (D-Hawaii) explained the reason we need this bill is to conserve fuel and the environment. "The time is now to develop a comprehensive approach aimed at stopping the impacts of global warming and reducing our dependence on foreign oil. Adoption of [this bill] would be a first critical step in achieving these goals."
If the Senate bill becomes law and 35 mpg becomes the standard for autos, between 2 to 3 million barrels of oil a day will be saved in the year 2022, said Dr. Cooper. Other provisions in the bill concerning the increase of ethanol usage would increase savings still more.
"The fact that the Senate has passed a substantial increase in fuel economy standards for the first time in two decades, without an alternative from the auto industry even being put to a vote, indicates how dramatically the public policy terrain has shifted," said Cooper.
Here are the facts, according to CFA, for why the Senate has taken extreme action. During the period 1998 to 2007 when the price of a gallon of gasoline increased from $1.12 to 2.72,
- Number of models over or equal to 30 mpg fell from 61 to 46
- Number of models getting less than 30 mpg increased from 745 to 1,083
- Average fuel economy for the new vehicle fleet improved by an unimpressive one mpg (1997: 24.6 mpg; 2006: 25.4 mpg)
Asian Carmakers Compared to American Carmakers
CFA charges that Asian car companies improved fuel economy of a much higher percentage of their popular models than did the U.S. carmakers. Almost half (48%) of the popular models of U.S. manufacturers (GM, Ford and Chrysler) improved in fuel efficiency whereas two-thirds (68%) of the popular Asian models (Toyota, Honda, Nissan, and Hyundai) improved. For example, six of Toyota's nine models increased an average of 8.2 mpg while the other three models declined 1.1. mpg. In contrast, GM's 13 models were split about even: six improved, seven decreased or were the same mpg.
Public Concern on Fuel Economy Increasing
A national public opinion survey indicates that the issue of fuel economy has become more important. CFA commissioned the Opinion Research Corporation (ORC), which interviewed a representative sample of over 1,000 adult Americans in early July 2007. ORC had done this survey 9 months earlier in October 2006. Three questions they asked in both surveys were:
"Thinking about the next 5 years, how concerned, personally, are you about (1) gas prices, (2) U.S. dependency on Mid Eastern oil, and (3) global warming?"
As you might expect, large majorities are concerned about these issues. However, the survey this month shows that these concerns have grown in importance.
"In the past nine months, concern about prices rose from 64% to 82%; concern about oil import dependency rose from 67% to 74%; and concern about global warming rose from 51% to 61%.
These three factors, according to the CFA, explain the reason for the growing consumer demand for fuel efficient vehicles. This is indicated in the declining sales of the less fuel efficient vehicles. From 2004 to 2006, sales of SUVs and pickup trucks declined by 8%, says CFA. Sales of the mid-size SUVs—once one of the most profitable vehicles—went down 43%, from 1997 to 2007, according to CFA.
As a final thought on this subject: Wouldn't savings in money at the gas pump act as an incentive to drive more? The savings in fuel may evaporate by raising the CAFE standards. This question was put to Dr. Cooper by this reporter.
Dr. Cooper had given a lot of thought to this issue which is often raised. He said that assuming a utility model, people are rational and would not be driving just for the sake of driving. He used the example of the light trucks, where the greatest benefits are anticipated, and which under this legislation would improve from 16 to 30 mpg, a saving of $100 a month for an average person.
He acknowledged that there would be a "minor" increase in driving, less than 5% or about two gallons based on a "utility model." He concluded that most of the fuel savings would not be lost.
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