EPA Helps Drivers Save $790 Billion By Valuing Their Fuel Savings At 23 Cents On The Dollar

WASHINGTON—The Environmental Protection Agency concluded that eliminating vehicle greenhouse gas standards could save Americans as much as $790 billion after assigning drivers 23 cents of benefit for each dollar they would save on fuel under the standards.

A group of economists reviewing the agency’s analysis found that correcting its assumptions about fuel savings, technology costs, and driving would reduce the claimed benefit by about $1.46 trillion. At a 3 percent discount rate, the $790 billion benefit becomes a $670 billion cost. That reversal does not include another $1.8 trillion in climate and public health benefits that the EPA excluded from its calculation.

The analysis also uses fuel-efficient vehicles differently depending on which column requires assistance. To estimate manufacturing costs, it assumes automakers preserve a vehicle’s weight, power, and comfort while improving efficiency. To explain why buyers do not fully value future fuel savings, it assumes those same efficient vehicles sacrifice weight, power, or comfort. The economists noted that both conditions cannot describe the same car at once.

The EPA also counted money saved when higher fuel costs cause drivers to cancel trips, without subtracting the value of the trips they no longer take. The agency said it stands by its established models and updated assumptions. Its February announcement credited the repeal with more than $1.3 trillion in total savings and more than $2,400 per vehicle.

Consumer choice now covers the entire transaction. Drivers may buy the cheaper car, spend more to fuel it, drive less because fuel costs more, and have the abandoned travel entered on the government’s side of the ledger.