Do Low Oil Prices Undermine US Passenger Vehicle Fuel Economy Standards?

DESCRIPTION: Fuel economy standards lie at the center of US efforts to reduce oil consumption and greenhouse-gas emissions. A new report published today by the Center on Global Energy Policy examines the effect low gasoline prices are having on this policy lever. Co-authored by Benjamin Leard, Joshua Linn, and Virginia McConnell of Resources for the Future, the report finds that, during the study period from June 2014 to August 2015, low fuel prices had only a modest effect on meeting the federally required level of fuel economy. If that finding continues beyond the study period, the authors conclude, then low fuel prices will not have a substantial effect on the average fuel economy of new light duty vehicles sales. However, the report cautions that low fuel prices may cause consumers to choose more powerful cars than if fuel prices were higher. Automakers would have to make up the difference if so, which raises the cost of complying with the regulations.