54.5 Miles Per Gallon Is The New Standard

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The New York Times reports the Obama administration has issued new fuel efficiency requirements to automakers.

These rules, which were proposed last summer and “won support from most automakers,” will require car companies to raise the average efficiency of new cars and trucks to 54.5 miles per gallon by 2025. The higher standards are estimated to have the following benefits…

  • Save owners an estimated $8,200 on gas over a vehicle’s lifetime (versus 2010 models).
  • By 2025, save the country an estimated 2.2 million barrels of oil a day (and eventually 4 million a day) for a total of 12 billion barrels over the life of the program. That’s about four years’ worth of what consumer vehicles use up now.
  • Over the life of the program, reduce carbon dioxide pollution by over 6 billion metric tons, about a year’s worth of U.S. emissions.

But there are potential downsides, too. For instance, not mentioned in the NYT article was a Congressional Budget Office report from May that analyzes the policy’s effects. Because federal highways and mass transit are mostly funded by 18.4-cents-per-gallon gas taxes and we’ll be buying less gas under the new standards, we’ll have less money for those projects.

The CBO estimates those tax revenues would fall 21 percent by 2040. If the higher standards were already fully in effect now, the government would lose $57 billion over the next decade. The CBO says that money will have to be made up somewhere. The government will have to spend less on highways and transit, dip into another budget, or raise taxes on something else.

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