No Such Thing as Free Ride update from July 2011

A coalition of environmental groups is calling on President Obama to “create long-term relief for drivers at the pump” by enacting new regulations requiring auto makers to hit a fleet fuel-economy average of 62 mpg (3.8 L/100 km) by 2025.

But let's be honest. While reducing the country's dependency on oil is a worthwhile goal, it really has little to do with saving consumers money.

No matter what happens with the next round of U.S. corporate average fuel economy standards, owning and driving an automobile is going to become more expensive for Americans. We'll all have to get used to it.

In lobbying Obama to enact the highest CAFE bogey currently under consideration, the groups say the move would save an average family some $513 over a typical summer of driving, based on $4-per-gallon gasoline.

But at what price? The government estimates it would cost auto makers about $3,500 per vehicle to meet the 62-mpg standard — about seven summers of savings under the environmentalists' modeling. And that's the conservative estimate. Others peg the tab closer to $10,000, suggesting the industry would need to rely heavily on expensive electrification to meet such an extreme mileage goal.

With the rapid run-up in gasoline costs recently, we're already seeing the impact on vehicle prices. Kelley Blue Book reports used hybrid vehicles cost about $2,500 more this year, and used conventionally powered subcompact cars have jumped $2,000, hikes it attributes to tight supplies and higher gasoline costs.

Auto makers also are getting more for each new fuel-efficient vehicle they sell. Small-car inventories are at 36 days' supply and midsized models have just a 42-day stock, according to Ward's data, well below the 60-day target considered ideal. That's squeezed down incentives and allowed transaction prices to rise.

Continuing the push for higher mileage is a noble endeavor. Increasing the fuel efficiency of new vehicles and encouraging people to buy them should be the No.1 goal of any U.S. energy policy.

But don't try to sell tougher CAFE standards as a money saver for consumers — long-term or otherwise.

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Dave Zoia is editorial director for WardsAuto.com and has covered the global auto beat for more than 25 years.