The Real Politics of Fuel Economy

By Warren Brown
Sunday, April 27, 2008

Politics involves the art of turning necessity into virtue, of transforming the inevitable into noble action, all the while concealing darker and more troubling truths.

Consider last week's announcement by the Bush administration that it will push car companies to accelerate implementation of new federal fuel efficiency standards approved by Congress last year.

Under what might be called the administration's "Urge Program," car companies now are being asked to increase the average maximum feasible fuel efficiency of all new cars and trucks sold in the United States by 25 percent by 2015. That works out to an improvement of 4.5 percent annually during the targeted 2011-2015 model-year cycle.

Put another way, that means light trucks -- vans, minivans, pickups, sport-utility vehicles -- must average 28.6 miles per gallon by 2015, up from a mandated average of 22.5 mpg today. It means cars must get 35.7 mpg, up from a current standard of 27.5 mpg.

Left in place is the 2007 energy legislation's mandate for a combined car/truck average of 35 mpg by 2020, a 40 percent increase over today's average.

The cynic in me perks up whenever industry, politicians and consumer groups all agree on a proposal that normally would have sparked controversy, as they agreed on this one. There is something just too sweet to be real about such a deal, especially one presented to the world's media with fanfare during Earth Week.

Here's the real deal:

Both the car companies and the politicians are worried about the rapid rise in U.S. fuel prices. The car companies are looking at decreased sales, especially of big trucks. The politicians, especially the Republicans who were in power when the national economy went south and gasoline prices went north, are worried about lost votes.

The car companies and the politicians, especially the Republican politicians, have had many private chats lately. And from those conversations, both sides concluded that there was something to be gained from doing something seemingly bold and meaningful.

For the car companies, it was a no-brainer. It costs hundreds of millions of dollars to get the smallest increases in fuel-efficiency and to do so in vehicles that also meet federal safety standards. Any company spending that kind of money wants to spend it only once, as opposed to spending it several times to meet competing state fuel-economy and clean-air rules.

According to industry sources, who naturally requested anonymity, the Bush administration assured the car companies that it would continue opposing the California-inspired, state-by-state approach to fuel-economy and clean-air regulation in return for industry support of a more aggressive implementation of the new federal fuel economy standards.

The administration needed to look like it actually was doing something to combat higher fuel prices, a strategy thwarted by its recently failed attempts to get the Organization of the Petroleum Exporting Countries to increase oil production to help offset rapidly growing global demand. Getting the car companies to accelerate the development of fuel-saving technology, which they were doing anyway in response to changing market conditions, gave the administration something to brag about.

Left publicly unsaid in all of that behind-the-scenes dealing is something the car companies, politicians and consumer advocates all know to be true: It will cost a heck of a lot more for vehicle owners in America to operate their cars and trucks in the future. Someone is going to have to pay for all of those improvements in fuel economy. And gasoline prices in the United States, now as high as $4 per gallon for regular unleaded in some parts of the country, are likely to rise even without the imposition of higher federal fuel taxes.

The laws of supply and demand are pushing up prices. Politicians and others might believe that they can find a villain manipulating fuel pricing structures to corporate advantage. They might find one or two.

But the real reason for the price hikes can be found in the rapid growth of automobile markets in places such as Russia, China, India and Kazakhstan. Most of those new Ford Focus models running around the streets of St. Petersburg operate on gasoline or diesel.

Car companies doing business in the United States are willing to accelerate implementation of fuel-saving technology because they have no choice, just as they had no choice other than to put such technology in their European, Asian, African and South American markets. When it comes to cars and fuel price and availability, the United States, slowly but surely, is becoming like the rest of the world.

© 2008 The Washington Post Company