This [image-nocss] would surpass the Corporate Average Fuel Economy (CAFE) law passed by Congress in 2007 required an average fuel economy of 35 mpg in 2020.
The plan will cut deeply into U.S. gasoline demand and dealing another blow to a refining sector hard hit by recession and bracing for looming climate regulation. "If you're a refiner right now, this is a gut-check," Kevin Book, analyst at ClearView Energy Partners, told Reuters. "These are enormous changes."
Book said he expects the proposal would cut some 2.3 billion gallons per year from U.S. gasoline demand in 2016, a 1.6% drop.
The outlook could lead refiners to cut more deeply into their investment plans, already sharply reduced since the economic downturn hit profits and darkened the outlook for world energy demand, analysts said.
"It's not a time I would necessarily be building big new refineries," Sarah Emerson, director of consultancy Energy Security Analysis Inc., told the news agency.
And the stricter regulations will speed up changes already occurring in the retail fuel business, "forever changing who we buy our gas from," reported BNET Energy, which pointed to the recent "exodus" of Major Oil from the retail end of the petroleum industry. It cited Exxon Mobil Corp., which in its annual report referred to an increase in fuel-efficient cars and trucks as one of the primary drivers of decreasing U.S. gasoline consumption. Exxon is among several majors, including Shell, BP and ConocoPhillips, that have been selling off retail locations.
"Now, with a new national tailpipe emissions standard on the horizon, Big Oil's divestiture of its retail fuel locations will go into overdrive. Exxon is already convinced that fuel-efficiency will drive down gasoline consumption in developed countries. The rest of Big Oil will be close behind.As a result, the number of franchises will rise; discounters Sam's Club and Costco will add to its retail gas inventory; and the [big] convenience store operators will take advantage of the coming glut and buy locations at a bargain," BNET Energy said.
"A clear and uniform national policy is not only good news for consumers who will save money at the pump, but this policy is also good news for the auto industry which will no longer be subject to a costly patchwork of differing rules and regulations," said Carol M. Browner, Assistant to the President for Energy & Climate Change. "This an incredible step forward for our country and another way for Americans to become more energy independent and reduce air pollution."
The proposed national autos program adopts uniform federal standards to regulate both fuel economy and greenhouse gas emissions while preserving the legal authorities of the Department of Transportation (DOT), the Environmental Protection Agency (EPA) and the state of California. The program covers model year 2012 to model year 2016 and ultimately requires an average fuel economy standard of 35.5 mpg in 2016. The result is a projected reduction in oil consumption of approximately 1.8 billion barrels over the life of the program and a projected total reduction in greenhouse gas emissions of approximately 900 million metric tons.
According the president, the benefits include:
For consumers: Consumer Savings: This will save American consumers money over the long term in increased fuel efficiency. Consumer Choice: The proposed new national policy will preserve consumer choice. The new rules will not dictate the size of cars, trucks and SUVs that manufacturers can produce; rather it will require that all sizes of vehicles become more energy efficient. A Cleaner Environment: New policy will produce environmental benefits that will reduce air pollution from the reduction of greenhouse gas emissions and other conventional pollutants.
For the economy:
Clear Rules: One national policy for all automakers, instead of a DOT standard, an EPA standard and a California standard that would apply to 13 other states. Lower Costs: This national policy has the potential to lower compliance costs for automakers by avoiding a patchwork of fuel efficiency and pollution rules. Flexibility: The new national policy provides the industry what any business wants: clarity, predictability and certainty concerning the rules. It gives them flexibility on how to meet the expected outcomes and the lead time they need to innovate. For the country:
Energy Independence: The new policy will result in yearly 5% increases in efficiency from 2012 through 2016. The end product--cleaner cars and reduced dependence on oil and significant reductions in greenhouse gas emissions (savings equivalent to taking 177 million of today's cars off the road). Effective Government: Historic collaboration between agencies; breaking down silos and working towards a common goal and outcomes. Bringing People Together: The national policy has the support of CEOs, governors, the United Auto Workers, the environmental community and others around this first, comprehensive national policy.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.