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New MPG standard saves gas money

By Tara Baukus Mello ·
Wednesday, October 12, 2011
Posted: 4 pm ET

Drivers can save hundreds of dollars annually on their car costs when the new fuel economy standards announced by the Obama administration go into effect. Overall, Americans will save $44.3 billion at the gas pump according to analysis by the Natural Resources Defense Council, or NRDC, and the Union of Concerned Scientists, or UCS, with the new standard that requires automakers to have a 54.5 mpg fuel economy average for their fleets by 2025.

As one might expect, the states that will see the biggest savings overall are some of the largest states in the country: Texas ($5.024 billion), California ($4.954 billion) and Florida ($4.223 billion). But in terms of per household savings, the NRDC/UCS study shows the savings in the hundreds of dollars for drivers in many states. The top 10 states for per-household savings due to spending less on gasoline are:

1. Texas ($425 per household)

2. Louisiana ($415 per household)

3. Tennessee ($396 per household)

4. Arizona ($387 per household)

5. North Carolina ($372 per household)

6. Florida ($371 per household)

7. Colorado ($370 per household)

8. (tie) Maryland ($365 per household)

8. (tie) Virginia ($365 per household)

10. Georgia ($364 per household)

In case you are thinking that 54.5 mpg sounds like a huge leap over the next 13 years, it is a big jump, but it's not quite as big as you may think. The 54.5 mpg number is an average for an entire automaker's line-up of cars. This means that some cars would be higher, while other vehicles would be lower. In addition, fuel economy tests that arrive at official EPA estimates are based on lab tests, not real-world driving conditions. According to the NRDC/UCS, cars and trucks in 2025 will actually average about 40 mpg in real-world driving. Still, this is a vast improvement over the 22 mpg on-road average we see in cars today.

Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.

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End the Ponzi Scheme
October 14, 2011 at 8:40 am

Take as an example the Smart Pure. Just about as small a car you can make, paired with an anemic 3 cylinder engine, and it still only can get to 41MPG highway. Combined cycle will be less, and it costs $12k. It's a quirky little car, but safe.

So, let's go to the hypebrids. The third gen Prius gets 51MPG, and also costs $23k. So, we have to make up $11k in fuel savings from those 10MPG. Being generous at $3.50 a gallon, we're driving 670,000 miles to make up just the initial cost differential, and it's a miserable drive in that car (yes I've been in one).

And finally Government Motors Volt. So long as you never let the gas engine turn on, you get 95MPGe. But you dropped $40 on it to start, or you got the rest of us to foot $7.5k, and you only put in $32.5k (thanks for enjoying my money). Ok, back to the payoff, you only have to go 283,000 miles to reach a payoff.

It's nice that we save $425 here in Texas, but when we have to put in $10k+ to save that $425, I'm missing how we really saved anything.

October 13, 2011 at 5:36 pm

Joe: Not sure where you got those numbers.

In general, the more small cars on the road - the safer the road is in terms of auto fatality. Full implemenation of existing technology can meet that standard and have an ROI that makes sense given today's gas prices -- where the government comes in is making people respect that 5 year ROI rather than just doing whatever is cheapest right now (at the expense of the future) all the time.

Tom: Probably not - but in any case, they would get more value for their dollar.

Tara Baukus Mello
October 13, 2011 at 2:38 pm

Actually, Tom & Joe, you are both correct that in the past a large portion of fuel economy standards have been achieved by making cars smaller, but not so in recent years, nor in the future. However, you are incorrect about the future. Automakers recognize that consumers want the variety of sizes and shapes of cars we have today and know they'd be shooting themselves in the foot if they dramatically changed their fleets. This next set of standards will primarily be achieved through the use of various engine technologies that improve fuel efficiency, the use of lighter, but stronger materials for components and hybrid/alternative fuel cars.

October 13, 2011 at 2:06 pm

Joe is exactly correct. Ms. Baukus Mello, the author, fails to explain that better mpg doesn't just happen because the government mandates that it happen. It happens largely due to a decrease in the size and weight of vehicles and yes, this means a higher degree of vulnerability of passengers to serious injury and death due to collision. The way the author writes the article, one might conclude that the government mandate is so good for everyone that they might as well stipulate 100 mpg instead of a a mere 54.5.

October 13, 2011 at 1:40 pm

The article is hypothetical. People drive more when they get more miles per gallon, therefore they don't save money at all.

October 13, 2011 at 12:51 pm

all sounds great until you realize that they achieved a lot of the increase in mpg by decreasing the size and weight of the vehicles. Then when you get in a small accident it costs 10 times as much to fix the vehicle with more damage or when you get in a larger accident, you're in the hospital and your medical bills are 100 times the amount you would have saved on gas (if you survive).