Myths on Obama’s Fuel Efficiency SPeech

Fact Checking President Obama’s Fuel Efficiency Standards Speech
From Christopher Prandoni
Americans for Tax Reform

Recently, President Obama gathered union leaders, Members of Congress, and business owners in the Rose Garden for a forum on vehicle fuel efficiency standards (FES). However, many of the Presidents claims do not hold up to closer scrutiny and explain why the country and industry has not embraced his fuel efficiency plans.

Myth: “The typical driver will save roughly $3,000 over the life of the vehicle.”

FACT: Mandating higher miles per gallon (mpg) will raise the sticker price for vehicles as car makers need to install newer, more expensive technology. The price tag for a “compact car will go up $1,800 to $2,000. The price of a mid-sized car is likely to increase $4,500 to $6,000… Outfitting a full-sized pickup with a diesel, rather than a gasoline-powered V-8, and other new equipment could cost $9,000,” says Sandra Stojkovski, president of See More Systems consulting firm.Myth: “This is going to bring down the costs for transporting — for transporting goods, serving businesses and consumers alike.”

FACT: In order for FES to reduce transporting costs, the money saved from increased fuel efficiency would have to offset the inflated vehicle sticker price necessary to comply with new FES. If this were true, federal law would be wholly unnecessary as trucking companies would make the switch to more profitable trucks on their own.

Myth: “And that’s why, when we fashioned the Recovery Act to get our economy moving again, we emphasized clean energy… It’s estimated that through these investments, we’ll create or save more than 700,000 jobs.”

FACT: Quite the opposite. Governments that tilt the markets by mandating green energy actually stunt job growth by reducing overall economic productivity. European countries whose governments subsidized renewable forms of energy found this out the hard way. It is estimated that for every government mandated “green-energy job” created, 2.2 jobs in the private sector were prevented from being created.

Myth: “Auto companies will have the clear incentive to develop more efficient vehicles.”

FACT: It is no longer an incentive if it is mandated. Furthermore, car makers are worried that new mandates will force them to create vehicles people don’t want, “We’ll have to force a lot of hybrids, which people may or may not pay for,” said Bob Lutz, Vice Chairman of GM. Evidence of this problem can be seen in specific car markets where consumers are yet to embrace hybrid vehicles. “Performance hybrids and mild hybrids haven’t gained any traction in the market,” said Jake Fisher, senior automotive engineer at Consumer Reports.