The Morning Economic Report
9:44 pm
Tue March 4, 2014

Fuel Economy - 3/5/14

The federal government introduced ambitious fuel economy standards for passenger vehicles back in 2012.  The goal is to slash US oil consumption by two million barrels per day by 2025.  But the marketplace has other ideas. 

Gasoline prices have stabilized in recent years, inducing more Americans to move back toward larger vehicles.  The US auto industry recorded its best sales year since 2007 last year.  As reported by Mike Ramsey of the Wall Street Journal, US consumers have been quote trading old vehicles for new favored pricey pickup trucks, SUVs and luxury cars. Ford, for example, boosted sales of its F-150 pickup by 8.4 percent in December over a year ago, while sales of its subcompact Fiesta and compact Focus cars plunged 20 percent and 31 percent, respectively close quote.

Between 2008 and 2010, Americans had been moving away from larger, more powerful vehicles.  For instance, in 2008, the average new vehicle had 219 horsepower and recorded 21 miles per gallon.  One year later, power fell to 208 horsepower while mileage rose to 22.4 miles per gallon according to writer Joseph White.