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Consumer Benefits of Improved Fuel Economy Unknown?

03/19/2010

In about two weeks, the National Highway Traffic Safety Administration and Environmental Protection Agency will release final standards on fuel economy and greenhouse gas emissions. This comes just under a year after the President announced in a Rose Garden ceremony the final agreement between the federal agencies, state regulators and representatives from the auto industry.

But buried in the mire of text – 337 pages – is language that could undermine future efforts to regulate greenhouse gases from motor vehicles, as well as other energy efficiency standards. In the Notice of Proposed Rulemaking, published in Sept. 2009, there is a paragraph that questions the value of consumer benefits from improved fuel efficiency:

“The likely impacts of adopting higher CAFE standards on consumer welfare remain unknown. Because changes in consumer welfare are an important component of the total private costs and benefits resulting from higher standards, the magnitude and even the direction of net private economic impact of adopting stricter CAFE standards remains unknown.”

Stop and think about that for a second. For the fuel economy rule and many other efficiency programs, one major benefit is realized in savings from using less energy. A more fuel efficient car burns fewer gallons of gas – saving money as well as helping to reduce emissions. A more efficient water heater requires less natural gas or electricity – again saving money while cutting use of a limited resource. Statements like this in an energy efficiency regulation are misleading and harmful.

This concept was inserted as a result of exchanges between the agencies and the Office of Information and Regulatory Affairs (OIRA). This office reviews regulations before they are published, and can make changes.

Public Citizen along with other consumer and environmental groups sent a letter to several Obama administration officials on Mar. 19 expressing concern about this approach to consumer benefits. We will continue to watch OIRA in its review of energy efficiency rules.

Update: See Juliet Eilperin’s post at the Washington Post’s Post Carbon Blog.

Lena Pons is a transportation policy analyst for Public Citizen.

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