New Study Throws Water on Obama Fuel-Economy Goals

New Study Throws Water on Obama Fuel-Economy Goals

By Drew Winter, Jun 8, 2011 9:05 AM

A new report says the Obama Admin.’s proposed 62 mpg (3.8 L/100 km) fuel-economy target for 2025 could kill hundreds of thousands of jobs, put a $55,000 sticker on an ordinary family car and deliver only minor savings to consumers.

The study was produced by the Ann Arbor, MI-based Center for Automotive Research, which has been a darling of the White House in recent months.

The automotive think tank has supplied much of the data that support government claims the bailouts of General Motors and Chrysler saved 1.2 million jobs, billions in tax revenues and billions more in welfare and unemployment checks that never had to be paid out.

But it’s unlikely the White House will be touting CAR’s new study on proposed corporate average fuel economy standards. The paper, which forecasts what the U.S. vehicle market will look like in 2025, is expected to officially be released in the next few days.

“These mandates are so tough, why would (the White House) be interested in destroying an industry they just saved?” one of the study’s authors, Sean McAlinden, CAR chief economist and vice president of research, tells Ward’s.

Currently, auto makers must meet a U.S. fleet average fuel economy of 35.5 mpg (6.6 L/100 km) by 2016.

Beginning this year with ’12 vehicles, fleet-fuel economy will increase an average 4%.

Last year, the Obama Admin. proposed new CAFE rules beginning in 2017 that would require average increases of 3% to 6% per year, achieving 47 mpg (5 L/100 km) by 2025 at the low end and 62 mpg at the high end.

Obama has been favoring standards at the high end of the scale, and some environmental groups are pressing for faster increases of 7% or more annually beginning in 2017.

If gasoline prices are $6.00 per gallon in 2025, a case can be made for continued 3% annual improvements in fuel economy beginning in 2017.

But more dramatic increases would prove catastrophic to the U.S. auto industry, says Jay Baron, president and director-manufacturing systems at CAR and a co-author of the study.

“The changes are so radical for the vehicle to make these (2025) standards, we will have to completely and utterly redesign the body and chassis, supply chain and fabrication,” he says.

The new rules would require “huge changes” in powertrains, Baron says.

When you go to 4%, 5%, 6% and even 7% reductions, there will be hundreds of thousands of job losses per year. What we’re arguing against is extremism,” says McAlinden, pointing out a 62-mpg fleet average translates into a 71-mpg (3.3 L/100-km) average for cars and 41-mpg (5.7 L/100-km) average for trucks.

CAR says the study was completely self-funded.


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