Back in August, the Obama administration announced strict new fuel economy standards for cars and light trucks. By 2025, passenger vehicles sold in the United States are supposed to get, on average, 54.5 miles per gallon. So how does these rules stack up internationally?
What makes these comparisons tricky, however, is that the official targets don't always do a good job telling us what sort of mileage cars are actually getting on the road. One large recent study, for instance, found that the average German passenger car is about 21 percent less fuel-efficient than the dealer's brochure claims.
This is a problem in the United States, as well. All the new cars and light trucks sold in 2025 won't actually average 54.5 miles per gallon. They'll almost certainly get far less than that. That's because the tests used to measure official fuel economy standards—which basically involve running cars on a giant treadmill—don't always do a great job of replicating real-world conditions. The Union of Concerned Scientists has a more detailed brief (pdf) on this, noting that the actual fuel economy for new U.S. vehicles in 2025 will probably be around 35.4 miles per gallon.
So how will U.S. automakers meet these stricter standards, anyway? A recent report from the Energy Information Administration (EIA) predicted that car manufacturers will largely get there by ramping up the number of microhybrids, "which utilize start-stop technology to allow the battery to power accessories while the vehicle is stopped, enabling the engine to be automatically shut down." Plug-in electric cars will also get more popular, but EIA doesn't expect them to dominate. For the near term, microhybrids are the future.
The big, overarching rationale for the fuel-economy standards is that they'll reduce U.S. oil consumption and curb greenhouse gases. The EIA expects that the new fuel economy standards will save the United States 2.2 million barrels of oil per day by 2035. Indeed, as Citigroup and other analysts have noted, it would be nearly impossible to reach Mitt Romney's dream of North American energy independence by 2020 without these rules in place. (Romney, for his part, has criticized the stricter standards as "extreme.")
Yet not everyone thinks that far-reaching government regulations are the best way to reach that goal. In Wednesday's New York Times, Eduardo Porter argues that simply raising the gas tax would be a much more economically elegant way of reducing our oil consumption. Other analysts, including the Congressional Budget Office, have basically agreed with that assessment.
The usual counter to this argument is that it's much more difficult, politically, to raise the gas tax than it is to ratchet up fuel-economy standards. So inefficient regulations win out. But Felix Salmon actually goes a step further and offers a defense of fuel-economy rules on the merits. For one, he notes, U.S. automakers will have to figure out improvements in fuel economy no matter what if they want to be competitive internationally, given that Europe and Japan are ratcheting up their standards. Second, he notes, "Fuel-efficiency standards are a way of preventing car companies from being forced to hedge their bets by working on gas guzzlers as well as efficient runabouts. As a result, those companies can take the money they’d otherwise spend on developing six-ton monsters, and invest it instead in the efficient cars of the future." So, he argues, standards are a useful complement to the gas tax.
*Update: Corrected the credit for the graph