President Obama Says New CAFE Standards Will Save Average Driver $8,000 a Year.
Last week in a speech at Daimler owned Freightliner truck plant, President Obama said that the new 55mpg CAFE standards will save a typical American family $8,000 a year on gasoline. That would be great news to most American drivers if it were true but the president took political science and law courses in college, not math. Or maybe his math isn’t off.
“When I ran for office, I went to Detroit and I gave a speech to automakers where I promised that I was going to raise fuel standards on our cars, so that they’d go further on a gallon of gas. I said we should do the same thing on trucks. I have to tell you, when I said it, I didn’t get a lot of applause in the room, because there was a time when automakers were resisting higher fuel standards — because change isn’t easy. But you know what, after three decades of not doing anything, we got together with the oil companies, we got together with the unions, we got together with folks who usually do not see eye to eye, and we negotiated new fuel economy standards that are going to make sure our cars average nearly 55 miles per gallon by the middle of the next decade. That’s nearly double what they get today — nearly double. (Applause.)
Now, because of these new standards for cars and trucks, they’re going to — all going to be able to go further and use less fuel every year. And that means pretty soon you’ll be able to fill up your car every two weeks instead of every week -– and, over time, that saves you, a typical family, about $8,000 a year.”
A typical American family can’t save $8,000 a year on gas because a typical family in American doesn’t spend that much on gas a year in the first place. Using the president’s math, the average car gets 55/2=27.5mpg. The average driver drives about 12,000 miles per year, which works out to 436 gallons @ 27.5 mpg. Even at $4/gallon, that’s still only $1745/year. Cutting that hypothetical typical American driver’s gasoline bill in half will save $872.72 a year, not $8,000.
Reading over the transcript of the president’s remarks it’s possible the he simply misspoke. According to estimates, the new CAFE standards will save about $8,200 over the life of the vehicle, not in one year. Earlier in the speech Obama praised Freightliner’s participation in the federal “SuperTruck” initiative, whose target is saving $15,000/year per large truck. A big over the road truck travels so many miles in a year that a significant improvement in fuel economy could save that much. A typical American family, though, doesn’t drive their car 100,000 miles a year. So maybe the president confused savings per year with savings over the life of the vehicle and didn’t just make a bad math error.
On the other hand, there is one way that the president’s math works out. His recent press conference remarks about rising gas prices not being good for him politically are true. However, the president is talking about the savings that will take place in “the middle of the next decade”, meaning 2025, thirteen years hence, when he’ll be long out of office and earning six figure honoraria for his speeches. An average family could indeed save $8,000 a year if gasoline rises to $37/gal by 2025. While I believe that the president’s policies are aimed at making traditional energy more expensive in order to make alternative energy more financially viable, I sincerely doubt that even he would want a nine fold increase in the price of gasoline over the next decade.
Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading– RJS
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As much as President Obama can be accused of using hyperbole (when it was likely that he misspoke), his Republican opponents are even worse - promising low gas prices that are completely outside the free-market reality that they so frequently defend.
One thing in the president's favor is that the typical American family drives more than one car. So, as a family, they may drive 30k mi/yr. That has a big effect on the calcs. Also, we all know that no car gets CAFE mpg in the real world. A 55 CAFE car will get around 45 hwy, so let's assume it gets 40 combined (that's generous, IMO). The most recent US efficiency average is just over 23, but let's make that 21 so that the new one is "nearly double." With those assumptions, gas only needs to cost $11.79/gal. But we're still not done. If we assume that those $8000 are in future dollars, then the inflation that our deficit will generate would explain a lot of it because each dollar will buy a lot less: so, 13 yrs at 5% inflation turns $4/gal gas into $7.54/gal. Then, because supplies will be tight (being past peak oil) & we'll have a carbon tax, the actual cost of the gas only has to increase 56%, or 3.5% each year. (This also assumes that the price of the car doesn't go up at all. We'll give him this one because I'm sure he's assuming that people already own the cars, thus it's $8k in op-ex.) All snark aside, it actually could happen. But if it does, we'll have bigger problems to deal with.