Under a plan announced last week, President Obama plans to cut fuel usage in vehicles. The plan sets a national fuel-efficiency standard starting in model year 2012. That number would eventually reach 35.5 miles per gallon in model year 2016. The standard today is about 25 mpg. But how will the nation respond to the new rules? 1. People may start driving more. We see it every time gas prices go down -- people hit the roads because it's cheaper to drive than to fly. Because cars will get better mileage, the cost of driving will decrease. A 2007 analysis by University of California-Irvine researchers estimated that U.S. fuel efficiency improvements from 2000-2004 led Americans to drive 6% more miles. 2. People may hang on to their old jallopies longer. The new plan estimates that new cars and trucks will cost an average of $1,300 more. Older cars are more likely to cause emissions, defeating part of the purpose of the new fuel plan. 3. Car companies the Obama administration is trying to save may have a hard time adapting to the new rules. GM and Chrysler in particular have businesses focused on relatively fuel-hungry vehicles, and they need to sell off those models before the new rules come into play. Long-term, the new fuel rules could bring about greater fuel-efficiency in the U.S., but the road to adaption will be a long one.
Recommended Reading
Segrist: The Keystone for Trump?
2024-12-23 - President-elect Donald Trump talks about reviving the famously controversial Keystone XL Pipeline while threatening tariffs on the nation where it originates
Glass Lewis Backs Martin Midstream in Ongoing Merger Fight
2024-12-23 - Martin Resource Management Corp. is proposing to buy Martin Midstream Partners for $4.02 per common unit, with a vote scheduled for Dec. 30.
Kinder Morgan Reaches FID for $1.4B Mississippi NatGas Pipeline
2024-12-19 - Kinder Morgan plans to keep boosting its capacity to the Southeast and is moving forward with a 206-mile pipeline with an initial capacity of 1.5 Bcf/d.
East Daley: New Pipelines Could Open Permian Floodgates
2024-12-18 - Led by the opening of the Matterhorn Express, a slew of projects is set to battle regional bottlenecks in the Permian Basin region but power generation may be the catalyst for newly announced pipelines.
Delek to Buy Permian's Gravity Water Midstream for $285MM
2024-12-13 - Delek Logistics' purchase of Permian-focused Gravity Water Midstream adds more than 200 miles of permanent pipeline and 46 saltwater disposal facilities.