MPG myths are made to be busted.

Time to read the tea leaves. Amid the chaos in Washington, D.C. this past week-and-a-half there's been some hints at the future of the auto industry. CEOs from major automakers are talking to President Trump. Ford is saying it can't make green cars and keep jobs. And the nominee to lead the EPA is saying that he may take another look at the federal fuel economy standards.

So, what does this all mean? Well, no one know for sure, but Jack Gillis, the director of public affairs for the Consumer Federation of America (CFA), has some ideas. He's written 71 books, according to his bio, and has been in his position at the CFA since 1983, so he's not new at this. The CFA recently put out a list of ten MPG myths, which you can read in the press release below. We talked to him about his thoughts on what the Trump administration might do with its power over the fuel economy. The highlights include Gillis' reasoning why it's in Trump's populist and economic interest to leave the CAFE standards along, and why what Ford is saying could be bad ... for Ford.

gas station pump at sunset


Motor1:
What does the future look like to you right now, especially when it comes to fuel economy regulations?

Gillis: If you look at what the administration has been doing over the last week to 10 days, it's become clear that what they can and can't do, either technically of by law, may not necessarily be what they try to do. As a practical matter, the record and the effort that the EPA put into justifying the standards is going to make it extraordinarily difficult to reverse on the merits. We've looked at a variety of things, including probably the most important one, and that's a cost benefit analysis, and it's clear that [the regulations] really do pass all reasonable tests for legitimacy. I think that, if anything, the car companies are going to make the case to the administration that possibly, and I underscore the word possibly, not meeting the standard is a function of consumer purchase behavior and not their ability to comply. It would indeed be unfortunate for car companies to blame the consumers for their inability to comply with the standard.

In addition to the massive record, the car companies, are doing a very good job of compliance. The reason for that is because this is one of the most elegant standards ever conceived. The fact that it considers both diversity in consumer purchase behavior as well as diversity in various manufacturer's vehicle mix, it protects those companies that happen to be top-heavy with heavier, more-challenging-to-make-more-fuel-efficient vehicle than those that have lighter-weight and easier-to-comply vehicles because of the footprint element in the standard. A manufacturer could literally make all SUVs and still comply with the standard as long as they met that footprint requirement for the SUV. Originally, the concept was that each manufacturer had to meet some predicted MPG rating, so it would be much easier for, say an Asian manufacturer with lots of small cars to comply than it would be for an American manufacturer with a lot of pick-up trucks and SUVs. The EPA took that into consideration and developed this footprint concept which really obviates the need to roll back this standard.

There were record sales last year. And it appears, with a slight decline, those record sales are going to continue. Well, guess what? There was also record high fuel economy ratings. Last year was the most fuel efficient model year in history. Consumers like these vehicles, they are buying these vehicles. And from a purely cost-benefit position, while the investment in fuel efficient technology doesn't cost money, the payback for consumers far outweighs the additional cost.

100 dollar bill cut up


So you don't see the CAFE standards as particularly threatened right now?

It appears that the EPA is going to be focused on broader aspects of the Clean Air Act, mainly coal-burning factory output and coal production. While those are important issues, we are hoping that the fuel economy situation will take a back seat and stay in place because the very folks who put Trump in office will be the first one who pay the price when fuel economy standards get rolled back. Most Americans are living paycheck to paycheck, so saving money at the gas pump becomes a very important factor. It's quite in line with President Trump's promise to reach back and improve the economics of the American household.

Are there any signs that worry you?

The rather aggressive statements that Ford has been making. This is a company that has prided itself as the green automobile manufacturer. It's rather shocking to see a company like that start to backslide, especially when it has established itself as a company who was going to be out front in terms of green vehicles, fuel-efficient vehicles, and reducing our dependence on foreign oil. That's something that needs to be noted. In addition, it's a company that invested enormously in one of the most popular vehicles on the market, the F-150, to make lightweight it and make it more fuel efficient. So, for that company to even suggest rolling back the standards is a bit scary for the company because it's clear that the Asian manufacturers don't need to have the standards rolled back.

 

When you see this kind of approach, it's the put-your-head-in-the-sand management that could lead big companies like Ford and General Motors back to the day to when their lots were overflowing with fuel-inefficient, heavy vehicles. Because we all know, at some point in time, the price of gasoline is going to go back up.

 

Photos: Flickr / Still Vision; Flickr / Vincent LockTaxCredits.net

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Auto Fuel Economy Myth Busters: TEN facts about the current mpg targets
Ahead of the Washington Auto Show, Auto Lobbyists Attempt to Roll Back Money Saving Fuel Economy Standards Using False Assumptions
 
Washington, D.C. – As policymakers and auto industry leaders attend public policy events ahead of the Washington Auto Show, the Consumer Federation of America (CFA) busts 10 myths perpetuated by auto lobbying groups and pundits who want to see a rollback of fuel-economy standards that protect consumer pocket books.
 
“In today's post-truth, fact-free environment, these myths completely fail to meet any standard of truth,” said Mark Cooper, CFA’s Director of Research. “Political, economic and legal myths have plagued fuel economy standards for years. CFA is to finally put these false assumptions to rest.”
 
Now that the U.S. Environmental Protection Agency (EPA) has determined that the fuel efficiency standards set for cars and trucks in 2012, and agreed to by the car companies, consumer groups, unions and environmental groups, should remain in effect, the auto industry wants to renege on the agreement and roll back the requirements.
 
“The day after Trump was elected, the same lobbyists that fought seat belts, air bags, crash tests and other requirements called on the new administration to roll back money saving, fuel saving mileage standards,” said Jack Gillis, Director of Public Affairs and author of The Car Book. “What is particularly ironic is this action comes after several years of record breaking sales with car makers offering the most fuel efficient vehicles in U.S. history.”
 
Economic Myths
Myth 1: The standards raise consumer costs. Fact: The standards lower the cost of driving because the reduction in gasoline consumption exceeds the increase in cost of the vehicle with fuel saving technology. The 70 percent of consumers, who finance their vehicle purchase with an auto loan, will have positive cash flow in the first year. Those who buy the vehicle with cash will save over $160 per year over the life of the vehicle.
 
Myth 2: The standards deny consumer choice by forcing auto makers to push small cars. Fact: The Energy Independence and Security Act, signed by President Bush eliminated the small car bias. Each model has separate standards, based on its size. An automaker could sell, for example, only large SUVs and still comply with the standard, as long as each model delivers the MPG required of its footprint. Furthermore, the standards for larger vehicles are lower than those for smaller vehicles—respecting both different automaker vehicle mixes and different consumer preferences.
 
Myth 3: The standards are particularly hard on low-income consumers who are priced out of the market. Fact: Low-income households actually enjoy greater benefits as a larger percentage of their income goes toward driving costs, so the bite out of their overall budget is smaller with lower driving costs. Generally speaking, low-income households drive primarily used cars, and driving costs, which are what the standards lower most, are likely to be more important to them. Many of the used cars being returned to market are ones that met the annually increasing standards that took effect in 2012.
 
Myth 4: The standards will lower auto sales and reduce employment. Fact: Historical evidence and current analysis prove just the opposite – these standards will increase employment and sales. Because the standards lower the cost of driving, they make auto ownership more attractive. Developing the new technology increases employment. Increasing the disposable income of households increases economic growth because consumer spending on other goods has a big multiplier effect and more cars are demanded in a bigger economy. Again, last year’s record auto sales included the most fuel efficient fleet in history.
 
Myth 5: Gas prices are going to stay low. Fact: Gas prices have always been volatile; fuel economy standards protect consumers from wild swings in gas prices like those in 2000, 2006, 2008, 2011, and 2012. Consumers remember these swings, so should the car companies as some caused huge inventories of unsold SUVs and trucks, which put the companies in severe financial jeopardy.
 
Political Myths
Myth 6: The standards simply represent political liberals exerting their influence on the free market. Fact: Republican presidents signed the legislation that created the fuel economy program in 1976 and then reformed it in 2007. The laws passed both houses of Congress with large majorities. In fact, eight of the nine major pieces of legislation that effect the energy efficiency of consumer durables were signed by Republican presidents. Both the House and the Senate have voted overwhelmingly in favor of these laws (14 times in all) with over 85 percent voting in favor. In a recent, national independent poll, two-thirds of those who voted for Donald Trump and two-thirds of those who declared themselves Republicans, or independents who lean Republican, support the standards.
 
Myth 7: These regulations are very unpopular. Fact: Fuel economy standards enjoy overwhelming public support today, as they always have. Three-quarters of the respondents to CFA’s most recent, independent, national public opinion poll supported the current standard. Over the past decade of annual polling, the public has never wavered from the need for fuel economy standards.
 
Myth 8: The standards hurt business. Fact: Over 90 percent of the automakers and a large and varied group of suppliers, transportation companies and other industries supported the standard. With the exception of the current car company back-peddling, the standards still enjoy support from those who supply the advanced technology, companies that rely significantly on transportation services, and businesses who thrive when consumers have more disposable income to spend.
 
Legal Myths
Myth 9: The new administration can quickly get rid of the EPA standards. Fact: The U.S. democracy is a based on laws, not governments. The laws favor the EPA and the well-reasoned and thoughtful cost-benefit analysis that went into the development of the standards, not those who oppose the standards. To quickly overturn the rule, the EPA would have to violate the Administrative Procedures Act. The auto industry would have to show that the standard is “arbitrary and capricious” or not based on the hearing record, much of which they contributed. The EPA’s action was within the time limits set by the legislation and there’s a massive record of evidence supporting its action. The fact that the automakers simply want to delay its implementation is not a justification for overturning the rule. The massive record of evidence developed over the past five years strongly supports the rule. The fact that the automakers don’t like it is not grounds to overturn it.
 
Myth 10: The new administration can get rid of the EPA standard by having the National Highway Traffic Safety Administration (NHTSA) refuse to write a similar rule. Fact: The EPA and NHTSA regulate vehicles under totally different laws. Nevertheless, the standards confirmed by the EPA also pass the tests laid out by the Clean Air Act and tests laid out in the Energy Policy Conservation Act, under which NHTSA regulates auto fuel economy. However, even if NHTSA concluded otherwise, such a decision would not overturn the Clean Air Act requirements.
 
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The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.