Cheaper cars, costlier commutes
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Illustration: Sarah Grillo/Axios
The Trump administration picked an awkward moment to relax America's fuel-economy rules: just as gasoline prices are reminding drivers why fuel economy matters.
Why it matters: Trump is pitching its rollback as an affordability measure, saying he's knocking about $1,300 off the price of a new car. The question is how much of that drivers will hand back at the gas station.
Driving the news: The federal government this week finalized fuel-economy standards that would result in an estimated fleetwide average of 34.9 mpg in 2031, down from 50.4 mpg under the Biden-era rules.
- Cars will be cheaper, the administration argues, because they won't need costly fuel-saving technology.
- Automakers welcomed the change, saying the previous rules effectively forced them to sell more EVs than consumers wanted.
Yes, but: What consumers save at the dealership could be offset by what they spend at the pump.
- The Department of Transportation's analysis estimated the weaker standards would increase gasoline consumption by 4.6% through 2050 compared to the Biden rules.
- So while DOT said the regulation will reduce manufacturers' average cost per vehicle by $1,289, it would increase fuel costs by more than $1,600 in present value over the life of a vehicle, compared with keeping the Biden standards.
- That tradeoff is especially conspicuous now, with gasoline prices sharply higher as the Iran war drags on.
Zoom in: Axios Future of Energy co-author Ben Geman bookmarked Table 8-3 here and Table 722 here if you want to see granular estimates of various costs and benefits.
- (And the NYT reports that some economists have challenged the savings projections.)
Flashback: There's a historical irony here. Congress created federal fuel-economy standards in 1975 after the Arab oil embargo sent gasoline prices soaring and exposed America's vulnerability to foreign oil shocks.
The bottom line: Half a century later, another Middle East oil shock is providing a real-time reminder of why fuel economy has value — just as Washington is dialing back the rules designed to promote it.
