The theme for this year's New York Auto Show could well be: "40 and fabulous." Just a few years ago gasoline-powered vehicles that achieve 40 miles-per-gallon (mpg) or better like the 2012 Honda Civic HF and the new Hyundai Accent sedan -- both of which are featured at the show -- could have been considered concept cars. Although impressive, these ratings cannot even approach the levels the new electrics, like the Chevy Volt (60mpg rating) and the Nissan Leaf (99 mpg rating) are achieving. Automaker's sharper focus on efficiency is no accident -- consumers who have been hit hard by high gas prices have long been clamoring for cars that go further on a tank of gas.
With gas prices increasing 28 percent in the past year, it may come as no surprise that a new nationwide survey from the Consumer Federation of America (CFA) finds that 90 percent of respondents are concerned about gasoline prices and 89 percent are concerned about Mid-East oil dependence. Middle and low income Americans are on track to see average yearly household spending on gasoline exceed $2800 in 2011, a historic high when it comes to household expenditures on gasoline. For many families, gasoline will put a larger dent in their bank account this year than even their monthly car payment.
These price spikes -- which drive up the cost of everything from doing business to buying groceries -- invariably elicit calls for policymakers to do something. Seven presidents have talked about our country's urgent need to reduce our oil dependence. Even President George W. Bush, an oilman from Texas, spoke of our dangerous oil addiction. None of these presidents, however, succeeded in solving the problem.
Today, the United States has a better opportunity than we have had in decades to lower our country's gasoline consumption, cut consumer expenses, reduce our dependence on oil and enhance national security. In 2007, after almost two decades of stagnation, Congress passed a law requiring an increase in fuel economy of new cars to 35 miles per gallon by 2020. Last year the Obama administration followed the lead of over a dozen "clean cars" states and accelerated the target to 35 miles per gallon by 2016. Now the federal government is considering raising the level by a steady 6 percent per year to reach 60-mpg by 2025.
Even with such a standard, the gasoline engine still has many miles left in it. A rigorous assessment shows that the technologies are available now to reach 60-mpg by 2025. Even though 60-mpg vehicles cost more to build, the savings on gasoline are so large that consumers end up with over $2,000 in their pockets when the auto loans are paid off.
It is no wonder that consumers heavily favor a high standard. Our survey found that 63% of all respondents and 70% middle-income respondents want the federal government to increase fuel economy standards to 60 miles per gallon by the year 2025. General Motors and Toyota have said they can reach the goal -- we should not stand in their way.
This is the first time any administration has taken a long-term approach, which fosters and supports a long-term perspective for automakers and the public. It reduces the marketplace risk of investing in new energy saving technologies and gives the automakers time to re-orient their thinking and retool their plants. It gives the automakers the time and incentive to educate the public about fuel economy.
Consumer support and automaker confidence that much higher standards can be achieved reflects the fact that the major automakers are adding a full line of plug in and hybrid electric vehicles to the models that consumers prefer -- mid-size cars and SUVs. Gasoline powered vehicles already deliver as much mileage as some of the hybrids and improvements in engine efficiency, transmissions, body design, materials, and reductions in rolling resistance can dramatically increase the efficiency of gasoline engines.
The new approach to standards sets separate, technology neutral mileage standards for cars and trucks according to their size, so there is no incentive to downsize vehicles. Under these standards, automakers will have the incentive to compete to create more fuel-efficient vehicles of all shapes and sizes, while consumers will enjoy the full range of vehicle options. These rules won't force car buyers into smaller vehicles. Rather, they will ensure that consumers who want or need SUVs or trucks will have plenty of options -- and those options will be more fuel efficient to boot.
The most important short-term action that policymakers can take to solve the oil addiction problem is to make a long-term commitment to higher fuel economy standards. Quick fixes and political grandstanding will simply delay the day of reckoning and make it exponentially more painful when it inevitably comes.
Consumers should not have to go to an auto show to see a 60-mpg vehicle. These cars should be in our driveways sooner rather than later. Higher fuel economy is good for consumers, national security and the environment. Forty is fabulous -- but 60 is even better.
Mark Cooper is Director of Research at the Consumer Federation of America.