Fox Misleads On Consumer Savings From Fuel Economy Standards
Research ››› ››› SHAUNA THEEL & MAX GREENBERG
Fox News is ignoring the gasoline savings that newly finalized fuel economy standards will provide for consumers in order to hype the cost of new fuel-efficient cars. The standards, which will substantially reduce our dependence on oil, are expected to provide consumers significant savings at the gas pump that will more than offset the sticker price increase.
Fox Ignores Gasoline Savings To Hype Cost Of Fuel Efficient Cars
Fox: Auto Dealers Say Fuel Economy Standards Will "Force Changes That Make Car Prices Soar By $3,000." Fox News did not mention gasoline savings expected from newly finalized fuel economy standards, even as it emphasized the National Automobile Dealers Association's claim that in 2025 the average price of a new car will increase by $3,000. Fox News did not mention the time frame of this increase, and characterized it as a "soar" in prices:
GRETCHEN CARLSON: It may cost you even more now the next time you decide to buy a new car. Auto dealers say new fuel standards just finalized by the Obama administration, will force changes that make car prices soar by $3,000. [Fox News, Fox and Friends, 8/29/12] [National Automobile Dealers Association, accessed 8/29/12]
But Consumers Will Enjoy Net Savings, According To Several Analyses
Consumer Advocates: Consumers Will Benefit From "Immediate And Substantial" Savings With Five Year Auto Loan. According to an independent analysis by the Consumer Federation of America, the monthly savings at the gas pump would more than offset the increase in monthly payments for a five year auto loan:
Consumer pocketbook savings, enumerated below, for the typical consumer, who purchases a new auto that complies with the 2025 standard, assuming a five year auto loan, will be immediate and substantial (see Exhibit 1).
- Higher fuel economy standards lower the cost of driving from the first month because the reduction in gasoline expenditures is greater than the increase in the monthly payment to cover the cost of fuel saving technology.
- At the end of the auto loan, the consumer will have saved an average of about $800 by purchasing a new car that meets the standard.
- By the tenth year, the vehicle will have generated an average of over $3,000 in savings.
- The resale value of the vehicle is also likely to be much higher. [Consumer Federation of America, January 2012]
UCS: Consumers Will "Save More Than $8,000 Over The Lifetime Of A New 2025 Vehicle." According to an independent analysis by the Union of Concerned Scientists, "When compared to a typical vehicle on the road today, a new car buyer will save more than $8,000 over the lifetime of a new 2025 vehicle even after paying for the more fuel-efficient technology." UCS took into account a 10 percent rebound effect, which the International Energy Agency has found to be reasonable based on a review of the economic literature. [Union of Concerned Scientists, August 2012] [IEA, August 2005]
EPA and NHTSA: Consumers' Fuel Savings Eclipse Increase In Sticker Cost Of Car. According to the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA), the final rule is projected to bring "significant private gains to consumers," mostly due to reduced fuel spending. The report added that these gains "appear to outweigh the costs of the standards, even without counting for externalities," including the health, environmental and energy security costs of oil dependence. From the report:
The National Program [to improve fuel economy] is projected to provide significant savings for consumers due to reduced fuel use. Although the agencies estimate that technologies used to meet the standards will add, on average, about $1,800 to the cost of a new light duty vehicle in MY 2025, consumers who drive their MY 2025 vehicle for its entire lifetime will save, on average, $5,700 to $7,400 (7 and 3 percent discount rates, respectively) in fuel, for a net lifetime savings of $3,400 to $5,000. This estimate assumes gasoline prices of $3.87 per gallon in 2025 with small increases most years throughout the vehicle's lifetime. [NHTSA, 8/28/12]
NRDC: Industry Groups And Regulators Tend To Overestimate The Costs Of Vehicle Pollution Controls. The chart below, compiled by the Natural Resources Defense Council, shows that regulators have previously overestimated the cost of motor vehicle pollution controls. NRDC said that regulators tend to overestimate costs because "unanticipated technological innovation," sometimes induced by the rules themselves, has "dramatically lowered the actual compliance costs in many instances.
And Fuel Economy Standards Reduce Our Vulnerability To Price Spikes
Retired Military Officers And Business Leaders: Fuel Economy Standards Are "The Most Important Energy Security Accomplishment In Decades." A report by the Energy Security Leadership Council, a group of retired senior military officers and prominent business leaders, explained that the only way to reduce our vulnerability to supply disruptions and price volatility is to use less oil:
Vehicle fuel-economy standards are the most important energy security accomplishment in decades. They must be supported and continuously improved. In 2010, the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) finalized light-duty fuel-economy rules for the period 2012-2016. In 2011, EPA and NHTSA finalized the nation's first-ever medium- and heavy-duty truck rules and proposed an additional rule for light-duty vehicles for the period 2017-2025. Taken together, the rules finalized and being considered by NHTSA and EPA will reduce U.S. demand for gasoline and diesel by 3.7 mbd in 2030 compared to baseline projections. This level of reduction in oil intensity will meaningfully enhance American energy security.
In order to craft an enduring strategy to achieve real and lasting energy security, it is important to understand the nature of the problem. The goal of self-sufficiency in energy supplies misdiagnoses the problem as one characterized largely by import levels. In fact, energy security is almost entirely a function of the importance of oil consumption in the domestic economy--oil dependence--and is not related to the original source of that oil. A nation cannot achieve energy security so long as it is economically beholden to oil, which is priced in a global market. [Energy Security Leadership Council, 2012]
Christian Science Monitor: "Energy-Security Hawks Favor Vehicles That Can Plug In" And Run On Alternate Fuels. The Christian Science Monitor reported that energy experts criticized presidential candidate Mitt Romney, who opposes fuel economy standards, for not including ways to reduce oil consumption in his energy plan:
[E]ven if Romney's plan were to dramatically increase US oil production, US energy-security experts say it would do little to lower domestic oil prices, which are set by a global oil market controlled by the Organization for Petroleum Exporting Countries (OPEC).
"Romney makes the same mistake nine previous presidents committed," says Gal Luft, a senior adviser to the United States Energy Security Council, an energy security think tank. "He assumes import reductions will translate into lower oil prices. This paradigm has collapsed. In the past seven years US oil imports dropped from 60 percent of consumption to 42 percent. Yet, over the same period the price of oil doubled and so did the burden of oil imports on the economy. The only thing that can bring down prices is fuel competition and cars that allow it."
Energy-security hawks favor vehicles that can plug in and can run on domestically produced electricity generated from coal, natural gas, wind, and solar power.
"There's some good elements in this plan related to jobs and balance of payments improvements," says R. James Woolsey, former energy adviser to John McCain during his presidential run and former director of the Central Intelligence Agency says. But "they could have curbed OPEC's power simply by requiring vehicles to be able to use more than one fuel."
Others similarly expressed reservations about the plan's claim of energy independence.
"This plan is all about increasing supply and not about reducing demand by eliminating energy waste and by shifting to more abundant fuels," says Reid Detchon, executive director of the Energy Future Coalition, a broad-based non-partisan public policy. [Christian Science Monitor, 8/23/12]
EPA Under Bush Administration: "Fuel Economy Is Directly Related To Energy Security." In a 2004 report on fuel economy trends since 1975, the EPA reported that fuel economy "is directly related to energy security because light-duty vehicles account for approximately 40 percent of all U.S. oil consumption, and much of this oil is imported." [EPA, July 2005]
Fuel Economy Standards Reduce The U.S. Economy's Vulnerability To Price Spikes. A 2002 report by the American Council for an Energy-Efficient Economy, U.S. Public Interest Research Group, and environmental groups concluded that "raising CAFE [Corporate Average Fuel Economy] standards is the single biggest step our country can take to curb global warming" and "the most effective way to reduce overall oil dependence." The report further outlined how dependence on oil makes the U.S. economy vulnerable to inevitable oil price spikes, a problem that increased drilling would not ameliorate:
- According to the U.S. Department of Energy, price spikes from 1979 to 1991 cost the U.S. economy about $4 trillion, almost as much as we spent on national defense over the same period. Each price spike in the last three decades was followed by an economic recession.
- Reducing overall oil dependence would minimize the economic impact of price spikes while continuing to save consumers money when prices are stable. Consumers could invest this money in the economy instead of sending it overseas to buy oil. [Alliance to Save Energy, February 2002]
Fuel Economy Standards Enjoy Wide Support From Voters, Automakers, Consumers
Washington Post Poll: Fuel Economy Standards Supported By Majority Of Every Group Except Tea Party Members. The Washington Post's Greg Sargent noted that a Washington Post/Kaiser poll found 73 percent responded that they supported regulating emissions of greenhouse gases from cars and other sources when asked, "Do you think the federal government should or should not regulate the release of greenhouse gases from sources like power plants, cars and factories in an effort to reduce global warming?" Sargent wrote:
Independents favor regulation by 73-22; even Republicans favor it, 61-35. This gets even more interesting when you break this down into what the Post calls "political party clusters," a more fine-grained way to look at opinion than the usual party I.D. breakdown offers. (This was possible because of the study's unusually large sample size.)
It turns out that literally every ideological group, even within the GOP, favors this sort of regulation in large numbers, except for one: Tea Partyers. [Washington Post, 8/28/12, emphasis added]
Makers Of Over 90% Of U.S.-Sold Vehicles Support The New Standards. ABC News reported: "The standards are also supported by 13 major automakers, which account for more than 90 percent of all vehicles sold in the United States. The Alliance of Automobile Manufacturers, though, said it had 'mixed emotions' about the new standards." The Alliance of Automobile Manufacturers released a statement on the day the standards were finalized in support of a "single, national program because conflicting requirements from several regulatory bodies raise costs," but called for a "midterm review" of the standards. [ABC News, 8/28/12] [Auto Alliance, 8/28/12]
Global Automakers And United Autoworkers Also Announced Support For The Standards. In a 2011 statement after the White House announced forthcoming 54.5 mpg fuel standards, the Association of Global Automakers, whose members include Honda, Hyundai, Isuzu, Nissan, Subaru, and Toyota, pledged its support. President and CEO Michael J. Stanton said the Association's member companies "accept[ed] the challenge":
"Our members have always endorsed a comprehensive and harmonized national approach to reducing GHG [greenhouse gas] emissions while improving fuel economy standards for cars and light trucks [...] [t]hese standards will be tough to meet but our members accept the challenge." [Global Automakers, 7/29/11]
In a 2012 public hearing before the NHTSA and EPA, United Auto Workers International Union (UAW) President Bob King voiced the group's "full and strong support for the proposed rules" and called them "sensible, achievable and needed." [EPA, 1/17/12]
Poll: 79 Percent Of Americans Support Requiring Automakers To Increase Average Fuel Economy To At Least 55 MPG. Consumer Reports further found that most potential car-buyers supported the standards even given a higher upfront cost:
With the federal government expected to finalize new fuel efficiency standards later this year that would require manufacturer's average fuel economy to reach 54.5 miles-per-gallon by 2025, some 90 percent of respondents agreed or strongly agreed with the statements "Auto manufacturers should offer a greater variety of cleaner, more fuel-efficient vehicles in the near future." Almost 80 percent felt the same about the statements "Fuel economy standards should require auto manufacturers to increase the overall fleet average to at least 55 miles per gallon," (79%) and "I am willing to pay extra for a more fuel efficient vehicle if I can recover the additional cost through lower fuel costs" (81%). [Consumer Reports, 5/22/12]
Automotive News Reported That New Fuel Efficient Cars Are Outselling Less Efficient Models. In June, Automotive News reported that more fuel-efficient cars were "cleaning up against older, less fuel-stingy competition":
The changeover to high-mpg models, in all segments, is the key market driver this year. Dealers say it has been the release valve on pent-up demand as fuel prices soared.
"Fuel efficiency continues to be a top purchaser driver," said Ken Czubay, Ford's U.S. sales boss. [Automotive News, 6/11/12]
Poll: Fuel Economy Is Consumers' Primary Consideration When Buying A Car. A 2012 Consumer Reports survey found that the leading consideration among American consumers when shopping for a new car was fuel economy, with 'quality' a distant second. [Consumer Reports, 5/22/12]