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Gas Mileage is Better, but Are Consumers Buying It?
By Daniel J. Graeber
President Barack Obama used his weekly address to say the country is ready to take control over its energy future. This is because oil production is at a 15-year high at the same time that imports are at a 20-year low. American commuters, however, still pay what the president said was the equivalent of a new tax by way of higher-than-average retail gasoline prices. The best way to shield consumers from pain at the pump, the president said, was to move away from oil altogether. A look at consumer trends, however, suggests the American economy isn't quite ready for low-carbon prime time.
A series of refinery and market issues this year pushed gasoline prices higher earlier than during past years. In February, some U.S. regional markets saw gasoline prices top $4 per gallon. By mid-March, however, prices pulled back to seasonal lows. Motor group AAA reported that U.S. commuters paid Monday, on average, $3.68 for a gallon of regular unleaded gasoline. That's about 4 percent less than they paid during the same time last year. Last week, the Environmental Protection Agency said the average fuel economy rating for model year 2012 passenger vehicles was 23.8 mpg, the highest on record.
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Obama delivered his weekly address from the Argonne National Laboratory in Illinois, home to some of the most advanced vehicle battery technology in the nation. There, he echoed a pledge made during his State of the Union address last month by speaking of plans to use oil and natural gas money to help fund alternatives to hydrocarbons as the primary source of fuel from passenger vehicles.
Obama's plans could give his Republican a claim to victory by stressing the economic benefits of more domestic oil and gas development. U.S. Rep. Lisa Murkowski, R-Alaska, unveiled a 100-page "Vision for America's Energy Future" that called for more oil and natural gas development. House Budget Committee Chairman Paul Ryan, R-Wisc., unveiled his own 91-page plan that says a balanced budget could become reality within 10 years, thanks in part to the domestic energy achievements.
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"I’m proposing that we take some of our oil and gas revenues from public lands and put it towards research that will benefit the public, so that we can support American ingenuity without adding a dime to our deficit," the president said.
In December, when U.S. consumers paid around $3.30 for a gallon of regular unleaded gasoline, the second-best selling automobile in the United States was the Ford F-150. While smaller models get a respectable 23 mpg, the bigger 6.2-liter V-8 model gets 16 mpg on the highway. A base model Toyota Camry, the top seller for 2012, didn't do much better when compared with the F-150 XL, with 30 mpg on the highway. The Union of Concerned Scientists said the devil is in the details, however. While 2012 mileage was 1.4 mpg better than 2011, consumers don't quite yet have all the options they need to step away from less efficient vehicles. Automotive website Edmonds.com notes that the best selling cars are the ones that get the best gas mileage, but many of those sales came from 16 of the more than 250 models available to everyday consumers.
Obama said the uproar over gasoline prices "happens every year." His administration set the goal post for 2025 at 54.5 mpg. UCS notes, and the EPA report confirms, that trends are starting to move away from oil power to options like natural gas- and battery-powered vehicles. With scandals like battery-supplier LG Chem's $842,000 loan repayment riding on the back of the Solyndra debacle, however, any significant move away from conventional gasoline probably won't come from this administration given the "drill-baby-drill" policies of the GOP. Trends may be moving in the right direction, however, but they are doing so slowly. A full shift may be something even the president can't control.