Fuel Economy in the United States August 2008
Fuel Economy Standards were first established in 1975 with Congress’ passage of the Energy Policy Conservation Act. This law was in direct response to the Arab Oil Embargo of 1973/74 and its main goal was to reduce foreign oil dependency by doubling Passenger Car fuel economy in 10 years. In order to meet this objective, Passenger Car fuel economy had to increase from 1978’s 18 mile per gallon (mpg) level to 27.5 mpg by 1985*.
The ins & outs of Fuel Economy in the United States. The current system, its history, the agencies involved, vehicles covered, compliance calculation and next steps.
The agencies responsible for setting and regulating fuel economy in the United States are the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) respectively. Today’s regulations apply differently to specific vehicle categories, with Passenger Cars having to abide with the 27.5 mpg standard (unchanged since 1985) and Light Trucks, with 22.2 mpg (2007)*; it should be noted that vehicles weighing over 8,500 lbs** (most SUVs and bigger trucks) are exempt from fuel economy regulations (see definitions).
It is critical to understand that these standards do not apply to individual vehicles but to fleet averages. In other words, manufacturers can produce Passenger Cars that get less than 27.5 mpg and still be in compliance with current regulations. Compliance is calculated on fleet averages; meaning that manufacturers must produce Passenger Car or Light Truck Fleets that meet the 27.5 and 22.2 mpg standards. Fleet averages are calculated by dividing the total vehicles manufactured in a category by each model’s production divided by its mpg (see Example of the compliance calculation).
This calculation method combined with the weight exemption for SUVs and bigger trucks gives manufacturers plenty of room to maneuver around fuel economy regulations. This wiggle room has allowed the birth and exponential growth of SUVs, which represented 50% of new cars sold by the end of the 1990’sªª. In fact, this leniency in compliance standards has put the United States in the tail end of international fuel economy standards, with a fleet-wide average of 24 mpg compared to 40 mpg in Europe and Japanªª.
The current U.S. fuel economy reality gives us ample opportunities for improvement and, in this sense; the newly passed increase in standards is a step in the right direction. In December 2007, for the first time in over two decades, fuel economy standards were increased to a fleet-wide average of 35 mpg for 2020 (45% above current levels). This new legislation not only increase standards, it also closes the SUV loophole (raising weight exemptions to 10,000 lbs**) as well as unifying standards for Passenger Cars and Light Trucks°.
Although praiseworthy, this new standard puts the U.S. on pace to reach China’s 2008 standards in more than 10 years and still lags far behind the E.U.’s 2012 objective of 50 mpgªª. We have grown accustomed to expecting more from the United States, especially considering the sheer size of the U.S. car market and the nation’s position as one of the world’s main contributors to Green House Gas emissions. It is time for Congress to step up to the plate, ignore the oil and car lobbies, and enact a real fuel economy law, one that would place the U.S. back in its role as a global leader.
