How will Citizens Ever Afford 54.5 MPG?

Remember the old days when the auto manufacturers would line up in lockstep opposition to any fuel economy (CAFE) standards? Even the unions would oppose it, concerned about job losses. And lord knows...there was probably a gushing river of oil industry money flowing through the halls of congress to prevent America from moving in sustainable direction. By the time the three groups were done with their anti-environmental PR campaign, good legislation was inevitably shot down. Well-intentioned Americans would once again be left footing the bill for more oil, and somehow, they'd even feel like they'd dodged a bullet by getting the government monkey off their backs.

Times...they certainly are a-changing.
Just last week, President Obama announced the "single most important step we've ever taken as a nation to reduce our dependence on foreign oil," an agreement to increase the fuel economy for cars and light trucks to an astounding 54.5 miles per gallon by 2025. As with most things governmental, the CAFE standards have tended to move at a glacial pace.

Consider the passenger car. When the embargo and high energy costs of the late 1970s finally kicked our butts in gear, fuel economy standards started rising. Reaganomics and deregulation put an end to that, and CAFE standards stopped their ascent at 27 MPG in 1984. President Obama came in in 2008, and CAFE standards for passenger cars? They were still at 27 MPG.

So how was President Obama able to pull this dramatic shift off? What he has done in this case is nothing short of extraordinary. He's brought together a coalition of 13 auto makers, together accounting for 90% of vehicle sales in the U.S., as well as the United Auto Workers and the State of California. Mr. Obama had already managed to increase fuel efficiency standards to 35.5 MPG for model years 2012-2016 cars and light trucks, but this agreement signals the continued awareness (perhaps urgency is a better word) that has taken hold in recent years around the fragility of our oil-dependent economy.

In the old days, some politician who probably received an extraordinary campaign contribution from the oil industry would inevitably lead the charge against raising CAFE standards, working with exactly the same coalition (minus the State of California) to create public hysteria about job-killing legislation and regulations.

But the awareness (urgency) today is simply different - and it doesn't hurt when green politicians finally learn to speak to the American middle. "These standards wil help spur economic growth, protect the environment, and strengthen our national security by reducing America's dependence on foreign oil," said Ray LaHood, US Transportation Secretary. Well said, sir.

These standards will save American families $1.7 trillion in annual fuel costs, and by 2025 save about $8,000 per vehicle. That's for the American middle. Now the hippy stuff: it will also reduce our imports by about 12 billion barrels of oil--and about half of the oil we import from OPEC on a daily basis, by 2025.

Let's give credit where it's due. Obama has pushed for this, but the automakers and the United Auto Workers deserve a large share of the credit for stepping up to the plate with a can-do (must do?) attitude. They've seen the writing on the wall, too, and know where the future must be. By banding together like this, industry, government, and labor are also creating a level playing field for everyone to play on.

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Scott Cooney is the author of Build a Green Small Business (McGraw-Hill), and covers green business strategy on GreenBusinessOwner.com.

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Photo credit: bhoecht on Flickr Creative Commons