At a speech outlining his energy policies last week at a Freightliner plant in North Carolina, President Obama said that the new CAFE standards would save the average American family $8,000 a year in fuel costs. The only problem with that is $8,000 is many times what a typical family pays for gasoline in a year today. Either the president’s math is fuzzy, he’s confused, or he’s anticipating a mammoth increase in the cost of gasoline.
When I ran for office, I went to Detroit and I gave a speech to automakers where I promised that I was going to raise fuel standards on our cars, so that they’d go further on a gallon of gas. I said we should do the same thing on trucks. I have to tell you, when I said it, I didn’t get a lot of applause in the room, because there was a time when automakers were resisting higher fuel standards — because change isn’t easy. But you know what, after three decades of not doing anything, we got together with the oil companies, we got together with the unions, we got together with folks who usually do not see eye to eye, and we negotiated new fuel economy standards that are going to make sure our cars average nearly 55 miles per gallon by the middle of the next decade. That’s nearly double what they get today — nearly double. (Applause.)
Now, because of these new standards for cars and trucks, they’re going to — all going to be able to go further and use less fuel every year. And that means pretty soon you’ll be able to fill up your car every two weeks instead of every week -– and, over time, that saves you, a typical family, about $8,000 a year.
The only problem is that gasoline would have to cost almost $40 per gallon for President Obama’s math to work out. The new CAFE standards mandate 55mpg by 2025. Using the president’s math, the average car today gets 55/2=27.5mpg. The average driver drives about 12,000 miles per year, which works out to 436 gallons @ 27.5 mpg. Even at $4/gallon, that’s still only $1745/year. Cutting that gasoline bill in half will save $872.72 a year, not $8,000. The only way Pres. Obama’s math works out is if gasoline will cost $37/gal in 2025
Now I happen to think the president just made a math error, or more likely, confused annual saving with savings over the life of the vehicle. The new regulations should save about $8,200 over the life of the car. On the other hand, Obama did say that under his policies energy costs would “skyrocket”.