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Article in the Financial Times [Edward Luce and Bernard Simon | 27/07/2007]
Carmakers in last-ditch stand against fuel economy rules
Leading carmakers are making an unprecedented last-ditch effort to stave
off tighter fuel economy standards expected to be debated in the US House
of Representatives next week.
The lobbying spree follows the Senate's passage earlier this month of a bill
that would increase US fuel economy standards by almost half to 35 miles
per gallon (56km per 3.8 litres) by 2020.
The corporate average fuel economy (Cafe) standards set targets for the
average fuel consumption of each manufacturer's fleet. In contrast to
current rules, the Senate bill would extend standards used for passenger
cars to SUVs and pick-up trucks.
Supported by John Dingell, the veteran Democratic representative from
Michigan whom environmentalists have dubbed "Dingell-saurus" because of
his alleged opposition to change, the industry contends that tougher
standards would push up car prices and lead to more job losses.
Safety could also be compromised, they argue, if manufacturers use lighter
materials to reduce fuel consumption. Toyota, the Japanese manufacturer,
is supporting the intensive lobbying efforts, even though claims that its
vehicles are more fuel efficient than their American competitors have been
cited as a reason for its growing market share in the US.
The United Auto Workers union, normally at loggerheads with the "big three"
over redundancies, pension plans and healthcare, has also joined the
lobbying drive, in which more than 200 car-dealers have been flown in to
Washington to persuade lawmakers to go for less stringent standards.
The car lobby has taken out extensive print and radio advertisements in the
capital and the districts of wavering lawmakers. The industry cites
Department of Transportation estimates, made in 2003, that an annual 4 per
cent increase in fuel-economy standards would add $2,000 (€1,455 £975) to
the price of each General Motors vehicle by 2017. Toyota's prices would
rise by an estimated $800 for cars and $1,500 for trucks.
Environmentalists and other supporters of stricter rules have their own
ammunition, including a recent study by the University of Michigan's
Transportation Research Institute suggesting that the Detroit carmakers
might benefit from much stricter standards. While tighter rules would push
up prices, the study concludes, they would also significantly improve
carmakers' profits.
"Whenever any new regulation is proposed - whether it's air safety bags,
seat belts, or catalytic converters - Detroit always claims it will damage its
profitability and safety record," says Eli Hopson, who represents the Union
of Concerned Scientists, which lobbies for action on climate change, in
Washington. "And in each instance the new standards actually help them.
They don't appear to learn."
At stake are competing proposals of which one, sponsored by Edward
Markey, a Massachusetts Democrat, would set a target date of 2018 for the
US to achieve a Cafe standard of 35 miles per gallon and reduce America's
daily oil consumption by an estimated 1.6m barrels a day. The US imports
on average about 1.5m bpd from Saudi Arabia.
Another proposal, which is sponsored by Baron Hill, a Democratic
representative from Indiana, and Lee Terry, a Republican from Indiana,
would shave just 500,000 bpd from US oil consumption.
The bill would push the target date back to 2022 and impose a less stringent
target of 32mpg on SUVs and pick-ups.
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