July 29, 2008 - Markey, Platts: Don

Lawmakers Introduce Bill Requiring Administration to Use Realistic Gas Price Assumptions When Setting Fuel Economy Standards
WASHINGTON, D.C. - Representatives Edward J. Markey (D-MA) and Todd Russell Platts (R-PA) will today introduce a bill, the Accuracy in Fuel Economy Standards Act, requiring the Department of Transportation to use realistic and rational gas price assumptions as it calculates the maximum feasible fuel economy standards for the coming years as required by the energy bill passed by Congress last year. Using realistic gas price assumptions will ensure that fuel economy standards will reduce gas prices and our dangerous dependence on foreign oil as much as possible.

Rep. Markey said, "The historic fuel economy increase passed by Congress last year is a critical tool in our fight against high gas prices and our dangerous dependence on foreign oil. The American people deserve, and the law requires, the maximum feasible fuel economy increase so we can save oil and money at the gasoline pump sooner. This bill will ensure that the Department of Transportation uses realistic gasoline prices to set these standards instead of the fantasy-land values it used in its proposal."

Rep. Platts said, "Fuel conservation must be a central component of any truly comprehensive approach to energy.  I was proud to join with Rep. Markey in pushing for the first increase in fuel economy standards in over 30 years.  The legislation being introduced today will ensure the intent of the new fuel efficiency law is followed and the maximum feasible gains made in this area."

Last December, Congress passed the Energy Independence and Security Act of 2007, which contained the first mandated increase in fuel economy standards since 1975. The new law directs the National Highway Traffic Safety Administration (NHTSA) to raise fuel economy standards for both cars and light trucks to a fleet wide average of at least 35 miles per gallon in 2020, starting with model year 2011 vehicles.  In each model year, NHTSA is additionally directed to require the maximum feasible fuel economy increase - even if the maximum feasible increases result in the 35 mpg standard being met earlier than 2020.

Reps. Markey and Platts were bipartisan leaders during the fight to raise fuel economy standards, introducing a House bill to reach 35 mpg that attracted 153 cosponsors.

On April 22, 2008, NHTSA issued proposed fuel economy standards for model years 2011-15 which are projected to result in a projected fleetwide average of 31.6 mpg.  However, NHTSA drafted its proposed regulations using Energy Information Administration (EIA) assumptions about gas prices that do not match up with current or projected prices. At a time when gasoline prices are regularly above $4 per gallon, NHTSA used EIA's 2008 forecast for gasoline prices that range from $2.42/gallon in 2016 to $2.51/gallon in 2030.

Using a more realistic, higher gas price assumption would greatly impact the fuel economy feasibility calculation, but NHTSA's reliance on unrealistic projections have the effect of artificially lowering the calculated "maximum feasible" fuel economy standards. If NHTSA used EIA's higher gasoline price scenario range of $3.14/gallon in 2016 to $3.74/gallon in 2030, its own analysis showed that technology is available to cost-effectively achieve a much higher fleet-wide fuel economy of nearly 35 mpg in 2015.  This would result in an extra oil savings of 300,000 barrels per day in 2020 compared to the amounts saved if the 35 mpg goal was reached five years later.

On June 11, 2008, EIA Administrator Guy Caruso testified before the Select Committee and agreed that NHTSA should use EIA's higher gas price scenario in setting fuel economy standards. Other witnesses at the hearing agreed with Caruso's statement, however, at a June 26 2008 hearing before the same committee, the Department of Transportation witness refused to commit to doing so.

A copy of the legislation is available HERE.


July 29, 2008

CONTACT: Jessica Schafer, 202.225.2836