Forbes: US Energy Independence Might Change Fuel Economy Standards

Thursday, 15 Nov 2012 07:49 AM

By Peter Moses

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A recent report by the International Energy Agency that shows America will be the world’s largest oil and natural gas producer in 2020 might impact how Washington looks at the tougher fuel economy standards the Obama administration has outlined, Forbes reported.

The administration has said cars have to achieve 35.5 miles per gallon, on average, by 2016. But by 2025, that number jumps up to a whopping 54.5 miles per gallon, which has forced manufacturers to scramble and create new technologies to achieve those levels.

The ripple effect on the economy, some studies have warned, could be catastrophic, driving up new car costs to consumers by thousands of dollars, pricing up to 7 million Americans out of the new car market, according to Forbes. That, in turn, could hurt car manufacturers and put auto workers out of work.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

The new law does have a review period written into it for 2017, when both the government and car manufacturers will review the 54.5 mandate. By then President Barack Obama will be out of office and the new president might have a different agenda on gas consumption.

Technologies already in the pipeline could also play a role in whether these fuel savings will be necessary. Some trucks are using natural gas as the fuel of choice and electric car usage is on the rise.

Still, energy independence does not mean prices will come down at the fuel pump, so manufacturers will still need to create technologies to lower fuel consumption.

Ford, General Motors, Toyota, Honda and Nissan have all squeezed better fuel economy by building more efficient engines and making cars lighter in weight. Smaller engines, low-friction tires, lightweight steel and other materials have led to many cars already average 30 miles per gallon on the road.

According to an analysis by the U.K.-based Telegraph, the United States could become the world’s biggest energy producer in 2014.

“We receive fresh evidence by the day that swathes of American industry have acquired a massive and lasting advantage in energy costs over global rivals, demolishing assumptions about U.S. economic decline,” the newspaper reported.

The Telegraph cited 50 new projects in the U.S. petrochemical industry, including $30 billion of fresh expenditures in ethylene and fertilizer plants alone, attributable to shale gas utilization.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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