Monday, July 16, 2012

Two-Thirds of Americans in Favor of CAFE Mandates

Published July 16, 2012

By Jeff Cobb

According to a Consumer Federation of America study released today, 66 percent of 1,000 Americans surveyed support the Obama administration’s push toward a “54.5” mpg fleet-wide standard by 2025.

These respondents said so despite the acknowledgment that Corporate Average Fuel Economy (CAFE) mandates will mean higher sticker prices and fully 74 percent said the efficiency rules are a good idea.

In speaking to WardsAuto, Washington-based CFA’s public affairs director, Jack Gillis, said the phone survey is a register of current sentiment in response to rapidly increasing fuel prices.

Citing data from the U.S. Energy Information Administration, Gillis said last year the average household shelled out a record-high $2,850 for gasoline.

The CAFE mandates for decreased emissions and "54.5" mpg – which would actually work out to around 40 mpg on window stickers – are expected to be fully ratified this summer.

They have been generally supported by automakers and the United Autoworkers Union, not to mention environmentalists, and others.

The CAFE rules have been opposed however by other groups who've made studies of their own, including the National Automobile Dealers Association (NADA) and the Center for Automotive Research (CAR). In short, critical arguments have included the contention that sticker price estimates will be much higher than projected by proponents, jobs will be lost as the industry loses its competitiveness, and consumers may wind up holding onto older vehicles due to sticker shock, thus negating potential benefits.

The CFA study factored future gas prices at a conservative $3.50 per gallon, as did the U.S. Environmental Protection Agency when figuring out the cost-benefit scenario that would result when automakers spent extra on technology to make it happen.

The CAR group figured $6 per gallon by 2025 and has said new technologies would mean average prices for cars would be $5,270 higher by then, meaning consumers would lose a minimum of $3,000 per purchase, and the industry would shed tens if not hundreds of thousands of jobs.

Gillis countered that job health is dependent upon many more macroeconomic factors than just fuel prices and support by the automakers and union is a strong determinant that CAFE is financially feasible when weighing costs passed onto consumers in the overall equation.

He admitted also that a phone survey is not the same as having to write a larger check, but said that sticker price upticks from now until 2025 and beyond will be incremental year after year, not one lump sum increase.

He said there will be not massive sticker shock, and the jury is out as to decimation of the industry – but we can see even experts studying the situation are coming down on opposite sides of the fence. And this is to be expected, as we are venturing into the future with many variables at play.

But while people disagree, at this juncture it looks like the present CAFE compromise is still supported – most recently by the CFA phone survey – and moving forward.



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