Obama Administration Set to Finalize Historic Fuel Efficiency Standards, Saving Consumers $1.7 Trillion

It's been a long, hot, and largely unproductive summer in Washington. Members of Congress head home this month, leaving behind plenty of unfinished business and an ideological divide that remains as wide as the Potomac. The Obama administration, however, is about to pull off a major feat of governance, based on the sort of constructive compromise that seems to have eluded this Congress. In the next few weeks, President Obama will sign off on stronger fuel efficiency standards, created in conjunction with U.S. automakers and environmental groups, that will save consumers big money at the gas pump, create half a million American jobs and dramatically improve our environment.

The administration is finalizing the details of a program that will raise the average fuel efficiency of our new passenger vehicle fleet to the equivalent of 54.5 miles per gallon by 2025. On average, our new cars will go nearly twice as far on a gallon of gas than ever before, providing drivers with much-needed relief from pain at the pump and protection from the volatility of gas prices. In total, the new fuel efficiency standards, when combined with the first phase of higher standards implemented in 2012, will put $1.7 trillion back into consumers' pockets over the life of the program.

We're already seeing results from the first phase of improved fuel efficiency standards issued under this administration, and their benefits have exceeded expectations. In the three years since the standards were announced, automakers have doubled the number of gas-sipping models on the market, according to automotive analysts Baum & Associates, giving car buyers twice as many fuel efficient cars to choose from. And according to Consumer Reports, this is exactly what consumers want: a May 2012 survey found that fuel efficiency--traditionally not a strength of American cars--is by far the top concern for car buyers. According to Automotive News, carmakers are better prepared to meet this demand now, thanks to the certainty provided by fuel-efficiency rules, which has encouraged automakers to make the long-term investments necessary to bring new technologies to market. The article states: “Many automakers believe that the work they've done since the last big price surge, and in anticipation of higher government fuel-economy standards, leaves them better prepared this time, with stables of more competitive small cars and crossovers."

The standards set an average; not every car will have to attain 54.5 mpg.  Minivans, pickups, sports cars and other vehicle classes will still be on the market, delivering the same features as earlier models, but with significant improvements in fuel efficiency. Consumers will still have plenty of choice, and get more bang for their bucks.

In addition to delivering consumer choice, the standards, just as we've seen with environmental safeguards in the past, can have a powerful and beneficial effect on the market by driving innovation and creating new opportunities for American workers and companies. Auto sales and profits are up this year, while the first half of 2012 has set the record for the highest-ever fuel efficiency for new vehicles in American automotive history. Auto industry jobs have grown by 24 percent since 2009, adding 150,000 jobs in motor vehicle and parts manufacturing, according to official Bureau of Labor Statistics data.

Finalizing the 54.5 mpg standards will lead to even more jobs, as the auto industry, encouraged by the certainty provided by the new standards, continues its push to develop innovative technologies and manufacture new, efficient products. As my colleague Roland Hwang points out, “America no longer has to cede fuel-sipping technological manufacturing to the European and Japanese markets.” Car companies are even moving production of hybrids, battery packs, and components like start/stop engine starters back to the United States in a remarkable "onshoring" trend.

Last, and certainly not least, the environmental benefits of this rule are impressive. The gas savings we will achieve as a nation by 2030 will allow us to cut oil imports by one-third, and reduce carbon pollution equal to the emissions from 90 million cars.

Compare this striking accomplishment with what the House Republicans have done this week, in the same arena. The House just passed a sweeping, radical bill that would block mileage standards from going forward for years. The bill would impose a moratorium on new standards of any kind -- even if they will create jobs and are supported by industry. Fortunately, that bill won’t become law, but its passage provides a telling contrast in approaches to governance: rather than forging agreements that result in widespread benefits to the nation as a whole, members of the House appear to be working toward a goal of shutting down the government's ability to accomplish anything.  

By embracing fuel efficiency, the administration has found common ground between many disparate groups. About a year ago, I attended a White House ceremony announcing the new standards, where the president spoke alongside members of United Auto Workers, the heads of Detroit's Big Three, EPA officials, state legislators and members of Congress. All these groups put their shoulders to the wheel and decided to do what's best for the country, now and for the future. The results of this historic agreement are already proving to be a win for consumers, for the auto industry, for American workers and for the environment. We will be seeing the benefits of this historic rule for decades to come.