AUGUST 19, 2005
10:02 AM

CONTACT: Union of Concerned Scientists
Eric Young 202-331-5420
Don MacKenzie 202-223-6133

Closing Fuel Economy Loopholes Can Save Consumers Billions
New Bush Administration Rules Must Plug Leaks in America's Oil Security Plan
WASHINGTON - August 19 - Closing three loopholes in national fuel economy standards can reduce U.S. oil dependence by nearly 1 million barrels per day and save consumers $14 billion per year within a decade, according to a report released today by the Union of Concerned Scientists (UCS). The report, "Fuel Economy Fraud: Closing the Loopholes That Increase U.S. Oil Dependence," tackles loopholes in fuel economy standards and investigates problems in the tax system that encourage automakers to produce gas-guzzlers.

"It takes considerable imagination to say that the PT Cruiser, Subaru Outback wagon and sedan, Ford Freestyle or Dodge Magnum shouldn't be treated the same as other cars," said Don MacKenzie, lead author of "Fuel Economy Fraud" and vehicles engineer for UCS. "And that is only the tip of the iceberg: exemptions, credits, and tax breaks let automakers shirk their responsibility to address energy security, global warming, and the high costs of driving."

The new report provides a yardstick for evaluating a proposal from the National Highway Traffic Safety Administration (NHTSA) that is expected later this month. Fuel economy standards are the nation's chief tool for reducing America's oil dependence. The forthcoming NHTSA proposal would be the first radical change to the fuel economy program since its inception 30 years ago. The proposal is expected to alter the way sport utility vehicles, minivans, and pickups are regulated. These changes could alleviate consumers' pain at the pump if they address regulatory loopholes, or they could add fuel to the fire of rising gasoline prices by creating new ones.

The six loopholes discussed in the report are as follows:

. Non-Passenger or "Truck" Definition - allows automakers to classify minivans, SUVs, station wagons and even some cars (e.g., PT Cruiser, Subaru Outback) as if they were designed to primarily operate off road and carry cargo (not people) so that they can meet a lower fuel economy standard.

. Vehicles Exceeding 8,500 pounds - exempts the largest passenger vehicles on the road (e.g., GM's Hummer H2, Ford Excursion) from any fuel economy standards and denies consumers fuel economy information on these vehicles.

. Dual-Fuel Vehicles - recently extended in the 2005 energy bill, artificially boosts an automaker's average fuel economy in exchange for manufacturing vehicles (e.g., Chevy Tahoe, Chrysler Sebring, Ford Explorer, Nissan Titan) that can run on alternative fuel, but almost never do.

. Luxury SUV Tax Breaks - provides small businesses significantly higher tax breaks for purchasing large luxury trucks than for buying smaller trucks or cars, regardless of their business vehicle needs.

. Gas Guzzler Tax Exemption - excludes all SUVs, minivans and pickups from paying a tax on excessive fuel use. The gas guzzler tax, currently applied to cars, has proven effective at reducing the number of gas guzzling cars.

. The Next Loophole? - NHTSA could implement a new system of fuel economy standards based on vehicle size or weight without including an oil savings backstop requirement. This would create a new family of loopholes that reward automakers for supersizing their trucks.

After peaking at 26 miles per gallon in 1987, the fuel economy of the new U.S. car and truck fleet today is hovering around 24 mpg, a 20 year low. With standards stagnant for decades and loopholes increasingly exploited by automakers (with DaimlerChrysler, Ford and GM leading the pack), it is no surprise that our nation's oil dependence is at an all time high. The implications for energy security and consumer costs are severe. Fortunately, ample technology exists to deliver more fuel-efficient vehicles that save consumers money, reduce oil dependence, and lower global warming pollution.

"America's main safeguard against oil dependence and skyrocketing fuel costs is full of holes," said David Friedman, Research Director for UCS's Clean Vehicles Program. "The Bush administration must exercise its authority to close fuel economy loopholes and push automakers to deliver off-the-shelf technologies that can relieve our pain at the pump."

A copy of Fuel Economy Fraud: Closing the Loopholes That Increase U.S. Oil Dependence can be found on the web at

Founded in 1969, the Union of Concerned Scientists is a nonprofit partnership of scientists and citizens combining rigorous scientific analysis, innovative policy development and effective citizen advocacy to achieve practical environmental solutions. UCS's Clean Vehicles Program develops and promotes strategies to reduce the adverse environmental impacts of the U.S. transportation system.