Net Gas Cost Savings for U.S. Motorists Seen Through Combined Impact of Two
Climate-Related Measures
Benefits From Higher MPG Levels Will Outweigh Modest Impact of Cap and Trade
on Gas Prices; New Report Debunks Oil Industry's Attacks on Climate Action.
WASHINGTON, Nov. 3 /PRNewswire-USNewswire/ -- Good news for American
motorists: Despite doomsday prediction from energy-industry-funded interest
groups, U.S. consumers actually will see a net reduction of $13 billion in
2020 and $46 billion in 2030 in their gasoline expenditures ($100 and $326 in
average net savings per household, respectively) if Congress moves ahead to
impose a cap-and-trade system, according to a new report from the American
Council for an Energy-Efficient Economy (ACEEE).
How is that possible? What about the sky-is-falling warnings from energy
companies? A new ACEEE report explains that the lower gasoline expenditures
for U.S. consumers will reflect a combination of two factors - a much lower
cost per gallon of gasoline for the impact of cap and trade than is claimed by
cap-and-trade critics - and major savings made possible through the federal
government's drive for higher vehicle miles per gallon (MPG) performance.
ACEEE Transportation Program Director Therese Langer said: "You can't talk
about gas price implications of cap and trade without also factoring in the
impact of higher MPG standards. The petroleum industry and its allies are
sounding the alarm about skyrocketing gasoline prices in the wake of the
passage of a strong climate bill. We could indeed see high gas prices again
soon due to unrelated market circumstances. But policies to save energy and
reduce emissions are not going to be the cause. In fact, they're our best
protection against that very scenario. The bottom line is that big increases
in car and light truck fuel economy standards and new greenhouse gas emissions
standards recently proposed jointly by the Department of Transportation and
the Environmental Protection Agency will save consumers billions of dollars in
fuel expenditures while reducing emissions."
As the new ACEEE report notes, the petroleum industry and its allies are
claiming that greenhouse gas reduction policies will hurt consumers by causing
transportation fuel prices to soar. This assertion is incorrect on two counts:
-- First, the increase in the cost of a gallon of gasoline due to the
carbon cap-and-trade program established in the climate bill will in
fact be modest. The U.S. Environmental Protection Agency (EPA)
projects
that, under the House bill H.R.2454, the cost of a carbon allowance
will
be $16 per ton CO2 in 2020 and $26 per ton CO2 in 2030. Given that it
takes 110 gallons of gasoline to generate a ton of CO2, consumers
might
expect to pay an additional $0.15 per gallon in 2020 and $0.24 per
gallon in 2030 due to the cap-and-trade program. These increases are
dwarfed by run-ups in the price of gasoline in recent years and
contrast
with the American Petroleum Institute's warnings of over $5-per-gallon
gasoline.
-- Second, while an increase of $0.15 to $0.24 per gallon could represent
a
material amount of money for a household over a year of driving,
implementation of a climate bill will coincide with the phase-in of a
dramatic and money-saving rise in the fuel economy of U.S. vehicles.
The
net effect of the tighter fuel economy (CAFE) standards for vehicles
just proposed by the Department of Transportation and the
cap-and-trade
program in the climate bill will be lower average household
transportation costs in 2020 and 2030 than we would experience under a
business-as-usual scenario.
ACEEE Policy Director Suzanne Watson noted: "This is another example of the
importance of complementing a cap-and-trade program with strong energy
efficiency measures. It keeps the cost of greenhouse gas reductions down and
can in fact lead to sizeable net savings, as our analysis shows to be the case
for vehicles."
The ACEEE report takes into account the following factors: fuel savings due to
more efficient vehicles; lower world oil price due to reduced demand;
increased driving due to lower fuel cost per mile; higher vehicle purchase
costs due to advanced efficiency technologies; and higher price per gallon due
to cap-and-trade.
Assumptions for the ACEEE analysis are drawn from recent Department of
Transportation and Environmental Protection Agency documents.
The report also notes that, to the extent that policies, technological
advances, and market forces yield a sizeable population of electric-drive
vehicles, a cap-and-trade program for greenhouse gases will prove essential to
further reductions in transportation sector emissions. Other efficiency
measures for the transportation sector, notably heavy truck fuel economy
increases and policies to reduce the need for motor vehicle travel, can
provide emissions reductions and fuel savings well beyond those discussed in
this analysis.
ACEEE's white paper on net savings from climate policies for light-duty
vehicles is available on the Web for free download at
http://aceee.org/energy/national/index.htm.
ABOUT ACEEE
The American Council for an Energy-Efficient Economy (http://www.aceee.org) is
an independent and nonprofit organization dedicated to advancing energy
efficiency as a means of promoting economic prosperity, energy security, and
environmental protection. ACEEE was founded in 1980 by leading researchers in
the energy field. Since then the organization has grown to a staff of more
than 30. Projects are carried out by ACEEE staff and collaborators from
government, the private sector, research institutions, and other nonprofit
organizations. For information about ACEEE and its programs, publications, and
conferences, visit http://www.aceee.org.
CONTACT: Ailis Aaron Wolf, (703) 276-3265 and aawolf@hastingsgroup.com.
SOURCE American Council for an Energy-Efficient Economy (ACEEE), Washington,
D.C.
Ailis Aaron Wolf, +1-703-276-3265, aawolf@hastingsgroup.com, for ACEEE
