Regulation

Special Report: Obama’s 2025 Plan: 54.5 MPG

The Obama Administration has set CAFE standards for 2025, setting the bar at 54.5mpg.

Last Friday evening, President Barack Obama announced the new Corporate Average Fuel Economy (CAFE) standards for 2025. The standards will cover cars and light trucks produced with model years 2017-2025. The new CAFE program is expected to ease America's dependence on oil, as the White House believes the plan will save 12 billion barrels of oil over the course of the program.

The new standards mean range-wide models must meet at least a fuel efficiency of 54.5mpg (up from the current of 27.3mpg) and reduce greenhouse gas emissions to a sparse 163g per mile. Bill Vlasic told the New York Times last Thursday when the 54.5mpg figure was released "while the American carmakers, as well as their Asian rivals, once argued against even minimal increases in government fuel rules, they are acquiescing without protest to an increase to 54.5 miles per gallon by 2025, from the current 27 miles per gallon." That is at least mostly true. The plan was initially met with hesitation and distrust from automakers.

After much political maneuvering and debate, new standards have been drawn up to help clean up and lower the costs of the automotive business in regards to oil and fuel. The plan was developed in conjunction with the United Auto Workers, the State of California, automakers both domestic and foreign and the usual hodge-podge of lawmakers. The original number set was a hefty 62mpg. Volkswagen and Daimler are still relatively unhappy with the agreement because the rule seems to favor SUVs and pickups. The standards call for passenger cars to improve fuel economy by 5 percent a year, while light trucks will only be held to a 3.5 percent increase.

Toyota Motor Co. quickly released a statement by their President of Sales James Lentz following the announcement, embracing the new standards saying that not only was the plan "very ambitious," but that "we realize our shared environmental goals in the most economically-effective and consumer-friendly ways possible." President Obama's plan is estimated by the White House to eliminate 6 billion metric tons of carbon dioxide pollution, a huge boost to those concerned about global warming and the negative effects of burning fossil fuels such as oil.

Fiscally speaking, the Obama Administration contends that as much as $1.7 trillion dollars will be saved by Americans spending on fuel over the duration of the program. Individually, Americans can expect to save as much as $8,200 in fuel costs in 2025 versus today's prices. On the other hand, a new study by the American Road and Transportation Builders Association (who admittedly have a vested interest in fuel taxes) read that $65 billion was at risk to lose due to the decrease in taxes brought in from refueling stations. That means less money is on the table for those that build and maintain our roadways.

As with all legislation, there will always be winners and losers decided by the outcome. The Obama Administration contends that the pros of this program far outweigh the cons. Some automakers and public works commissions argue the opposite. Tell us your thoughts in the comments section as to whether you think the new CAFE standards will help ease the burden on the average American or whether you think it will only serve to hamper further development of automakers and other industries and in turn risking jobs in production.

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