One of the major campaign promises made by Barack Obama during the 2008 electoral cycle is that he would get to work not only on resolving America”s dependence on foreign oil, but also on insisting that vehicles sold in this country are more fuel efficient. He used his victory that year, combined with a strongly Democratic congress, to push for increased fuel efficiency standards (known as the “CAFE” standards), and a bill was drafted to boost America”s average fuel economy to 55 miles per gallon by 2025. That bill is still winding its way through the halls of Capitol Hill.
On the Brink of Passage, Increased Fuel Efficiency Gets a Boost
There”s plenty of room for consumers to take a step back and reevaluate whether they truly support increased fuel economy nationwide on new vehicles sold between now and the deadline of 2025. One of the major reasons for consumers to be concerned is that the passage of such a bill would increase the average price of a vehicle by as much as $2,200 at the time it is purchased brand new. That”s a significant price hike, and many consumers might feel that this negates the savings they”ll enjoy with higher fuel efficiency standard in every car.
That”s actually not true, however, as the Congressional Budget Office estimates that the $2,200 price increase will be offset by a savings of $6,600 in fuel costs over the life of the vehicle, based on six years of ownership. That means that buyers will actually recoup their investment in just the first two years of ownership and, from that point forward, will enjoy pure savings as they pay less money for fuel on a regular basis.
Consumers Know Savings When they See it: Support for Regulatory Changes is Strong
This might seem like nitpicking, but a surprising amount of consumers are already aware of the difference in price that will be commonplace once increased fuel efficiency regulations are passed by the United States Congress. In a recent telephone poll, a whopping 75 percent of those surveyed indicated support for increased fuel efficiency regulations in American automobiles. That was without informing them of the costs.
When the interviewer changed the format of their question to include the estimated $2,200 increase in the average price of a new vehicle after the passage of such regulation, support among typical Americans did decline. But the decline was not major or precipitous; instead of the 75 percent support level enjoyed by the measure in the less specific question, Americans supported the new regulatory standards by a significant margin. A sizable 63 percent of American drivers indicated that they would support higher vehicle prices if it meant lower fuel costs for the duration of the time they owned that car.
A Change in Attitudes and an Incremental Shift in Fuel Economy Realities
Americans are typically cost-averse, preferring lower prices, no inflation, and lower taxes. But when it comes to vehicle purchases, this trend seems to be changing in an entirely different way. Americans have changed the way they view vehicle purchases themselves. When fuel was relatively cheap, Americans considered the sticker price of any vehicle to be the primary “cost factor” when choosing a new model. With higher fuel prices, it is now the reverse. Americans are choosing vehicles based on fuel mileage and the cost of ownership, rather than the cost of purchase. That means increased fuel economy standards can remain relatively popular even as prices go up.
And those prices, while expected to increase, will not go up all at once in just a few short weeks or months. The phase-in of new regulation will take roughly twelve years, allowing for slow and steady increases in both price and fuel economy. And experts allow for the possibility that new, more fuel efficient technology may go down in price more quickly than expected. That would make a price increase unnecessary, according to most industry experts.
A Rare Thing: Popular Regulation
New regulations in the auto industry, or any other industry, are typically greeted in a hostile manner by the American public. That is refreshingly not the case with higher fuel economy regulations imposed by the government. With broad support from the driving and voting public, even despite a potential vehicle price hike, these regulations look to be both easily passed and readily adopted in a relatively short period of time.