Over the past several years, government regulations have sought to limit gas emissions. Since the 1970s, the government has sought ways to reduce emissions from cars and trucks while increasing fuel efficiency. The Energy Crisis of 1973 emphasized this point.
This month, the Trump administration opened EPA emissions standards for comment. This signals that the Trump administration might consider the emissions standards to be too strenuous for the auto industry. The Trump administration, as previous administrations, finds it difficult to strike the balance between proper environmental protection and ensuring the automobile market remains viable.
Clean Air Act
Section 202(a) of the Clean Air Act mandates that the Administrator of the EPA conduct yearly reviews of emissions standards, in cooperation with the National Academy of Sciences, and report those findings to Congress. These findings are influential in forming energy policy.
The Energy Crisis
In the aftermath of the Yom Kippur War, in which the United States supported Israel, Arab oil-producing countries initiated an embargo against the US. This resulted in a limited oil/fuel supply despite a growing automobile market. Prices at the pump jumped from an average of 12 cents a gallon to 59 cents a gallon. The government regulated when people could fill their tanks based on their license plates. Lines for gas pumps often stretched for miles, with people waiting hours to fill up on gas.
The situation was a wakeup call to Americans and American automakers. At the time of the Energy Crisis, the average car’s fuel efficiency was six to eight miles per gallon, with the most efficient at 17 miles per gallon and large trucks often only getting two miles per gallon. Contrast these numbers with today’s fuel efficiency numbers, where on average cars get 33-35 miles per gallon with the most efficient claiming to get 76 and the least efficient trucks getting 17-19. Moreover, the use of natural gas in public buses and hybrid cars signals that Americans have moved forward to better fuel efficiency.
American Presidents showed their commitment to not overburdening the auto industry. During the Great Recession, the US government used TARP funds to bail out the auto industry. The government even provided funding for the GM and Chrysler bankruptcies. This demonstrates a willingness and resolve for the government to maintain the auto industry.
The EPA administrator provided a midterm report in 2017 regarding emission standards. Based on the Clean Air act of 2012, the EPA conducts yearly reviews to test environmental safety. The report stated that the auto industry was on target to hit goals set for 2022-2025 with respect to fuel efficiency. At the same time, automakers complained that these standards hampered their ability to be profitable. Instead, automakers stated that the open market should determine fuel efficiency, not standards that choke the auto industry. In fact, Honda and Toyota affirmed their commitment to building cars that are fuel efficient.
The Trump administration is currently reviewing the EPA report. It remains to be seen what direction the administration will go. Does this signal that the President is undermining the EPA? Or has the EPA been too hard on the auto industry? Time will tell.