How Trump's plan to roll back fuel emissions could affect your wallet

  • The Trump administration is proposing a rollback on CAFE (corporate average fuel economy) standards that will produce a $2,340 reduction in overall average vehicle ownership costs for new vehicles and save $500 billion in societal costs over the next 50 years.
  • Auto industry experts warn the rollback could add thousands to consumers' fuel bills over the lifetime of a car.
  • Others argue that if the rollbacks are approved, car manufacturers will produce new vehicles with doddering technology, specifically for the U.S. market.
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As questions swirl about whether President Donald Trump's rollbacks will harm the environment, one crucial factor looms large over the fate of emission standards: consumers' wallets.

The Trump administration proposes that a rollback on CAFE (corporate average fuel economy) standards will produce a $2,340 reduction in overall average vehicle ownership costs for new vehicles and save $500 billion in societal costs over the next 50 years. Yet, auto industry experts warn that the rollback could add thousands to consumers' fuel bills over the lifetime of a car.

"Consumers are going to lose," said David Friedman, vice president of advocacy for Consumer Reports. "Consumers are going to end up with cars that they're spending $3,000 more over the lifetime of a car and $5,000 more for the lifetime of an SUV, " he added, referring to greater fuel costs.

In 2012 the Obama administration initiated the gradual increase of federal fuel economy standards with the goal of reaching 54.5 mpg for new vehicles by model year 2025. Obama pushed for greater fuel efficiency to combat climate change and to "save consumers more than $1.7 trillion at the gas pump." Instead, the Trump administration is attempting to freeze the standards to 37 mpg by the 2026 model year. Trump contends that the price of new vehicles will quickly become "out of reach for many American families" if CAFE standards continue to rise.

President Donald Trump talks with auto industry leaders, including General Motors CEO Mary Barra (L) and United Auto Workers (UAW) President Dennis Williams (R) at the American Center for Mobility in Ypsilanti Township, Michigan, U.S. March 15, 2017.
Jonathan Ernst | Reuters
President Donald Trump talks with auto industry leaders, including General Motors CEO Mary Barra (L) and United Auto Workers (UAW) President Dennis Williams (R) at the American Center for Mobility in Ypsilanti Township, Michigan, U.S. March 15, 2017.

The auto industry cheered on Trump's proposal. Car manufacturers long argued that adding fuel-saving technology on every single vehicle is overtly expensive and will skyrocket car prices. In May, CEOs and other executives from 10 U.S. and foreign carmakers met with Trump at the White House to push their defense. The administration agreed, saying the Obama-era standards could cause consumers to keep their old cars rather than upgrading to a new model with better fuel economy and pollution control.

Those claims are disputed by some industry experts. Experts believe that automakers have the capacity to create new vehicles with greater efficiency without exorbitantly raising the price, but are begrudged to do so.

"Anyone who tries to downplay the engineering innovation of the auto industry is selling them short," said Friedman.

A recent report by the Consumer Federation of America found that nearly a fourth of "all new 2017 models" were less expensive than their counterparts in 2011, yet all vehicles saw a 1 mpg to 10 mpg increase. It also suggests what experts are arguing today: Even if the costs are greater, the savings in fuel will offset higher prices. The study concludes that rolling back the standards would not only "cause great harm" to consumers but also weaken auto sales because of consumer demand for greater efficiency.

Carla Bailo, president and CEO of the Center for Automotive Research, also suggested that the administration's figures are "inflated" and "highly doubtful," because car manufacturers are investing in technology for greater fuel efficiency around the world. The Obama-era standards are actually less stringent than those set by the European Union and South Korea — requiring a fuel economy of 56 mpg in the same time period. Bailo explained that "volume will of course help mitigate" the costs that have carmakers concerned.

If the rollbacks are approved, car manufacturers will produce new vehicles with doddering technology, specifically for the U.S. market, she said. The result would save automakers vast amounts of money necessary to fund for redesigning light and more aerodynamic models to meet 2012 standards.

"They want to stretch those investments as long as possible, and American consumers are paying the price," said Friedman.

"Consumers are going to end up with cars that they're spending $3,000 more over the lifetime of a car and $5,000 more for the lifetime of an SUV." -David Friedman, vice president of Consumer Reports

Researchers also argue that costs from past government regulation have not passed on in the form of price. Since the mid-1950s, carmakers have tried to evade government regulation to invest on passenger safety, air pollution and fuel economy. Yet once the policies are implemented, car companies have managed to meet federal regulations with innovations that have ultimately improved their products and benefited consumers.

"It galls them to have to spend money on things that are different than things that would tangibly please the customer, said John DeCicco, a research professor at the University of Michigan Energy Institute. "They'd rather spend their money on just tangible, basic consumer wants," he added.

Even if the Trump administration's figures are accurate, a new study from Consumer Reports shows that consumers are willing to pay more for greater efficiency. When participants were asked "How much would you pay to get a better fuel economy?" they found that the majority of participants would pay about $1,000 up front in order to save $100 a year on fuel. In other words, consumers are willing to pay $700 for each additional mile per gallon of efficiency — much more than the Trump administration's projected price uptick of $2,340.

"Consumers want this and need it for their pocketbooks. The Trump administration is taking this away and undermining what consumers want," said Friedman of Consumer Reports.

The Trump administration's proposal is still open on a 60-day review, and the agency is taking public comments. The EPA and DOT will hold three public hearings on the revisions. Dates for the sessions have yet to be announced.