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Fuel Economy and Emissions Standards - 8/8/16

The U.S. government continues to indicate that the nation’s cars and trucks are well on their way to meeting fuel economy and emissions standards established for twenty twenty five.  Recently, the U.S. Environmental Protection Agency, the U.S. Department of Transportation, and the California Air Resources Board issued a report on standards. 

Under standards set in twenty twelve, automakers’ fleets are expected to generate an average of more than fifty four miles per gallon by twenty twenty five.  As pointed out by the Associated Press, that’s not the real world mileage that vehicles will supply; it includes credits for things like more efficient air conditioning systems. 

The real world mileage is probably closer to forty miles per gallon, but that’s still impressive.  Technology is certainly cooperating, with hybrids and electric vehicles now delivering previously unimaginable levels of efficiency.  But as is often the case, economics intervenes. 

As gas prices have declined, truck and SUV sales have blossomed.  So far in twenty sixteen, sales of the Toyota Prius hybrid are down twenty five percent while sales of SUVs and other light trucks are up nine percent according to Autodata.  That has rendered meeting the twenty twenty five standard less likely.   

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.