Gas War Update, Choose a Side Edition

Matt Posky
by Matt Posky
gas war update choose a side edition

According to recent reports, there’s trouble with the White House’s fuel economy rollback. The Trump administration is said to have been meeting with automakers, asking them to stand behind its proposal to freeze economy standards at about 37 mpg until 2026. The New York Times indicates it was an act of desperation, spurred by claims that Mercedes-Benz was on the cusp of supporting the California compromise. Based on existing standards, which would raise the average fuel economy of new cars and trucks to 54.5 miles per gallon by 2025, the deal would delay its targets by one year.

Honda, Ford, Volkswagen, and BMW previously agreed to support California’s proposal in July. However, the deal is non-binding if the White House decides to push through a rollback, and most of the rhetoric being used by the industry seems more focused on a joint standard.

“A 50-state solution has always been our preferred path forward and we understand that any deal involves compromise,” read the automakers’ joint statement.”These terms will provide our companies much-needed regulatory certainty by allowing us to meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions.”

Good luck finding the straight scoop on the matter, however. The media has been terrible at framing this. Even Jalopnik went so far as to claim a letter signed by 17 automakers that asked the White House to seek compromise with California was tantamount to a public protest of the rollback proposal.

In our estimation, automakers simply don’t want to be caught with their pants down. Since they already had to adhere to existing regulations, it makes sense many would already be compliant with California’s very minor compromise. But a willingness to adhere to it is not officially a rebuff of the rollback. We’d assume most automakers would actually prefer softer standards ⁠— they did ask for them ⁠— assuming they were adopted nationwide. The key is avoiding surprises. Automakers want a clear regulatory framework they can work with above all else.

As for Mercedes-Benz, The Times article only said it expected the company to agree to California’s terms. But the manufacturer hasn’t confirmed anything officially. There’s also a mystery firm that’s yet to reveal itself.

From The New York Times:

In addition to Mercedes-Benz, a sixth prominent automaker — one of the three summoned last month to the White House — also intends to disregard the Trump proposal and stick to the current, stricter federal emissions standards for at least the next four years, according to executives at the company.

Together, the six manufacturers who so far plan not to adhere to the new Trump rules account for more than 40 percent of all cars sold in the United States.

“You get to a point where, if enough companies are with California, then what the Trump administration is doing is moot,” said Alan Krupnick, an economist with Resources for the Future, a nonpartisan energy and environment research organization.

Which side is the correct one to support? We don’t actually know. The rollback is being framed as a way to keep aggressive energy standards from disrupting the market like they have in Europe and China. It’s also supposed to keep the price of new cars down by neutralizing the need to implement expensive battery technologies and ensure a steady stream of vehicles Americans are more likely to purchase. Due to the complex footprint rule found under CAFE, a rollback would go a long way to preserving small, cheap, fuel efficient cars.

However, those opposed to it claim it will cost consumers more by effectively forcing them to buy more fuel. Consumer Reports estimated that the rollback rollback would cost consumers $460 billion between vehicle model years 2021 and 2035, an average of $3,300 more per vehicle when combining car prices and gasoline purchases. But that assumes people won’t be buying hyper-efficient cars by choice in a few years and that hybrid/battery technologies are truly the best path forward to saving the environment. Considering people can buy an economy car already (but often don’t) and battery production/disposal creates its own ecological problems, we’re hesitant to proclaim either side as truly superior.

That said, the White House’s plan is practically guaranteed to result in more oil consumption overall. It would also strip California of its ability to self-regulate. And, if that’s all you care about, then the choice on who to back is relatively easy.

We’re not going to pretend that a portion of the automotive industry offering California lip service in a bid to promote a national fuel standard inside the U.S. means outright support for stricter standards. But we also can’t say the sector is standing behind the White House. Of course, its inability to support the rollback doesn’t mean there won’t be one. Even if the current administration were to agree to California’s terms today, it would have still achieved a minor victory by deferring Obama-era standards by one year. But we’ve a long way to go before all of this is settled.

President Trump has already taken to Twitter to chastise the automaker’s willingness to court California. “My proposal to the politically correct Automobile Companies would lower the average price of a car to consumers by more than $3000, while at the same time making the cars substantially safer,” he wrote on Wednesday. “Engines would run smoother. Very little impact on the environment! Foolish executives!”

Meanwhile, the Alliance of Automobile Manufacturers said it was eager to see a final draft of the rollback proposal. “We support increases to standards that optimize all the priorities, including affordability so more Americans can buy a new car, plus preserving jobs and safety at the same time,” it said while remaining as noncommittal as possible.

[Image: Nithid Memanee/Shutterstock]

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  • Daniel J Daniel J on Aug 23, 2019

    Maybe someone can set me straight on this. Everything I've read regarding the issue is stating that these automakers are supporting CAFE/California. But all the quotes in said articles don't support this claim. Most of the quotes in these articles are on the lines of supporting a cooperation between the state and the Federal government or quotes in regards to increased fuel economy standards that can be realistically met. I have yet to see a direct quote from these auto companies in direct support of the CAFE standards as they are now, but every article I've seen written in the last few months on the issue indicate otherwise, even though there aren't direct quotes backing it up. Am I wrong?

  • Jeff S Jeff S on Aug 24, 2019

    The automobile companies signed a letter of intent to support the California standards no direct quote.

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