The Obama administration's fuel-economy standards, finalized today, highlight the stark choice voters face this November about the path of U.S. energy policy.
Both Barack Obama and presumptive Republican nominee Mitt Romney say they want to reduce U.S. dependence on foreign oil, an important goal that will make the nation less beholden to the Middle East and will create jobs, increase wages and reduce the trade deficit. Their strategies for getting us there, however, differ vastly.
Obama's approach, encompassed in today's fuel-economy rule, includes making cars more fuel-efficient so consumers fill up less often and the U.S. reduces its consumption of oil. Automakers are required to more than double fuel efficiency in vehicles by 2025, so that new cars average 54.5 miles per gallon. The administration says the policy will reduce oil consumption by more than 2 million barrels a day by 2025 -- as much as half of what the U.S. currently imports each day.
Romney, meanwhile, has said he'll consider rolling back the standards if elected, telling the Detroit News earlier this year he'd look for "a better way of encouraging fuel economy." However, his plan to achieve energy independence by 2020, released last week, relies largely on harvesting more carbon-based energy from domestic sources rather than on conservation. He calls for expanded oil and gas drilling on federal lands and for relaxing regulations his campaign says are "destroying" the coal industry. As the Bloomberg View editors wrote last week, this is a curious approach to a problem that has other less-polluting solutions.
Who knows what a President Romney would do once in office, but if he's looking to sway voters he should reconsider his opposition to the fuel-economy standards before November. It's a matter of economics, not environmentalism.
Most Americans don't enjoy watching the meter run up as they fill their gas tanks -- particularly ahead of Labor Day weekend. Even with increased domestic production, gas prices in the U.S. have been ticking up, and the U.S. Energy Information Administration expects prices to rise 5 cents to 10 cents a gallon by the holiday weekend. Gas at the pump has increased to its highest level since May 7, up 0.6 cents to $3.756 a gallon according to AAA.
Romney has criticized the fuel-economy rule as government overreach, saying customers -- not regulators -- should dictate the types of vehicles automakers build. Yet, most consumers say they prefer fuel-efficient cars and trucks -- More than 50 percent of new vehicle shoppers indicated gas prices affected their car choice, according to AutoTrader.com. It's not hard to see why: The Environmental Protection Agency projects the fuel rule will save families more than $1.7 trillion in fuel costs, with an average savings of $8,000 by 2025 over the lifetime of the vehicle. True, the cost of purchasing a vehicle may increase (the administration projects an increase of as much as $1,800), but that will be blunted by lowering fuel costs by an average $1 per gallon.
What's more, the fuel-economy standards are expected to increase jobs, as automakers add workers to build cars meeting the new standards. Ceres, an advocacy group for sustainability, estimates 484,000 new jobs created, with the biggest benefit in electorally important states like Indiana, Michigan, Ohio and New York.
Perhaps most importantly, the auto industry itself supports the rules and helped the White House craft them. One overwhelming reason is the lesson the companies learned from the auto bailout: To survive, automakers need to make cars people want to buy.
The car companies are on to something. Romney ought to listen.
Read more breaking commentary from Bloomberg View at the Ticker.