Obama Fuel Economy Regs Are Making Cars Way More Expensive

Michael Bastasch | Energy Editor

New car prices fell rapidly during the 2000s until President Barack Obama imposed strict fuel economy standards as part of his global warming agenda. Since then, new car prices have dramatically increased.

A recent report by the conservative Heritage Foundation confirms what economists predicted for years: top-down regulations on fuel economy have only made buying a new car more expensive and hurt the auto industry.

“Federal regulations that force ever-increasing automobile fuel economy standards cost consumers thousands of dollars more than what they save on using less gas,” Heritage economists David Kreutzer and Salim Furth wrote of their study on fuel economy mandates.

“These burdensome regulations also reduce new car purchases and, therefore, auto worker employment,” the economists wrote.

The federal government has had fuel economy standards since the 1970s, but the Obama administration implemented particularly strict standards. This forced automakers to use more expensive technology to meet the fuel economy mandates, raising prices for consumers.

“Vehicle prices, adjusted for quality, had been falling from the 1990s to 2008,” according to the Heritage study. “Since 2009, the price of the average car has risen to $6,200 above the previous trend.”

When compared to other durable goods in the economy — like furniture and home appliances — it’s very apparent prices are on the rise, while other durable goods prices fell since 2009.

BG-CAFE-standards-chart-1

Source: Heritage Foundation chart on new car prices

“High prices are bad for consumers and bad for auto workers,” write Kreutzer and Furth. “At higher prices, consumers demand fewer vehicles, and automakers hire fewer workers.”

Obama has imposed stricter fuel economy and emissions standards for both light- and heavy-duty vehicles in the past few years. The Obama administration now requires cars made in 2025 get 54.5 miles to the gallon.

The Environmental Protection Agency says these rules will save “families more than $1.7 trillion in fuel costs” by 2025 and lessen “America’s dependence on oil by more than 2 million barrels per day,” according to the agency’s website.

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Tags : barack obama energy environmental protection agency salim furth the heritage foundation
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