Regulation: If President Trump wants to help autoworkers and car buyers, he doesn't need to attack imports. All he needs to do is junk the government's misguided 40-year campaign to force consumers into smaller cars. Trump took the first step in this direction by ordering the EPA to re-open Obama-era fuel economy mandates.
For those who don't know, the federal government first imposed the "Corporate Average Fuel Economy" standard in 1975, in response to the government-caused energy crisis. The standard requires automakers to meet annual fuel economy targets based on the fleet of cars they sell in a year, or pay stiff penalties.
By the time the standards started to bite in the early 1980s — which forced a radical (and deadly) downsizing of the domestic fleet of cars — President Reagan had deregulated the oil industry, thus ending the energy crisis. And now, with fracking, the country is awash in domestic oil supplies.
But the CAFE standards persisted, and President Obama hiked them in 2009 and again in 2011. If left in place, cars will have to get an average 54.5 mpg starting in 2025 — less than eight years from now.
This was a thinly disguised effort by the Obama administration to force electric cars onto the market, since not a single conventional vehicle comes close to that mileage standard today.
The little Honda Fit, for example, manages just 36 mpg. Even hybrids struggle to hit the 50-mpg mark.
The problem is that the vast majority of consumers don't want to buy these cars. Hybrids, which have been on the market for decades, and electric cars, which get huge taxpayer subsidies, still represent less than 3.5% of the market.
The only way to get 54.5 mpg is to vastly increase sales of these cars so automakers can keep selling regular midsize cars, vans, SUVs and pickup trucks.
That will cost consumers plenty. The EPA's lowball estimate puts the additional cost to car buyers at $200 billion. The independent nonprofit Center for Automotive Research calculates that achieving the 54.5-mpg goal could add as much as 14% to the cost of a car, even after accounting for fuel savings. The resulting slump in car sales, it reports, could destroy more than 1 million jobs.
Detroit signed on to this idiocy in 2011 in part because it reformed the existing CAFE regulations, but mainly on the promise that they'd have the chance to review and amend the standards in 2017. But just before leaving office, Obama's EPA regulators reneged on their end of the bargain, locking the 54.5 mpg mandate in place without even a cursory review.
In a recent letter to Pruitt, the Auto Alliance — which represents Ford (F), GM (GM), Fiat Chrysler (FCAU), Toyota, Volvo and other carmakers — pushed him to allow the 2017 review to go on as promised, so they at least can make their case on why the 2025 standard should be eased. Trump announced his plans to do so on Wednesday at an event in Detroit.
We'd go further and say that Trump should push to have the entire CAFE regime shipped off to the junkyard. Even if federal fuel economy mandates were justified in the mid-1970s, they serve no purpose today. Thanks to fracking, our troubling dependence on foreign oil is a thing of the past, and greenhouse gas emissions have been on the downtrend for years because of the newfound abundance of natural gas.
Besides, consumers already have an incredibly wide range of choices when it comes to fuel economy, which they can and do weigh against other needs. There is no reason for the government to force car buyers to spend more money for higher-mileage cars.
Note: This editorial, originally published on February 24, was updated to reflect this week's news.
RELATED:
Memo To Trump: Blame Obama, Not Ford, For Small Car Shift To Mexico
