The Obama administration has approved new, tougher fuel-economy standards for cars and light trucks that Transportation Secretary Ray LaHood said will save motorists more than $1.7 trillion in fuel costs and trim U.S. fuel consumption by 12 billion barrels by 2025.
But construction industry officials worry that the projected fuel saving from the new Corporate Average Fuel Economy (CAFE) standards also will translate to a deep cut in projected gasoline and diesel tax revenue flowing to the Highway Trust Fund. The fund has been the prime federal financing source for highway construction since the 1950s.
One way to offset that predicted revenue loss would be to hike the federal gas tax, but the administration and many in Congress have opposed such an increase. The gas tax has stood at 18.4¢ per gallon since 1993.
The new final rule, which LaHood and Environmental Protection Agency Administrator Lisa Jackson signed on Aug. 28, calls for a significant boost in the fuel-economy level. It would raise the combined standard for autos and light trucks to as much as 49.7 miles per gallon in the 2025 model year, from the 2012 level of 29.7 mpg.
The increase would occur in two phases. The first stage covers the five model years from 2017 to 2021 and is mandatory under the rule. It would raise the combined car-truck standard to a range of 40.3 to 41.0 mpg in 2021. (An earlier Obama administration rule set the mpg levels through 2016.)
By statute, the Dept. of Transportation can only set CAFE standards for a maximum of five model years. So the CAFE levels for the 2022-2025 period are not set in stone by the regulation.
But an EPA official said in a background briefing for reporters that the numbers for those later years represent “a final decision,” in the administration’s view. They would result in a combined standard of 48.7 to 49.7 mpg in 2025.
Those increases will cut motor fuel use, DOT and EPA say, but construction industry officials say they will harm the Highway Trust Fund.
A July 2011 American Road & Transportation Builders Association study estimated that a 5% annual increase in the CAFE standard would cost the trust fund a total of $65.9 billion over the 2017-2025 period.