BREAKING NEWS

Cheap gas spurs SUV sales and puts US climate goals at risk

By REUTERS

DECEMBER 16, 2015 08:21

WASHINGTON/DETROIT - Surging demand for trucks and SUVs fueled by cheap gasoline is holding back improvements in US fuel economy and greenhouse gas emissions, a government report due out on Wednesday is expected to show.

The disconnect between consumer demand for larger, less efficient vehicles and the Obama administration's climate goals sets up a clash between the auto industry and federal regulators.

Mark Rosekind, who heads the National Highway Traffic Safety Administration, said in a Reuters interview last week the administration will consider automakers' arguments that the shift away from cars makes it harder to hit the 2025 fleet average fuel economy target of 54.5 miles (87.7 km) per gallon.

But the landmark agreement announced in France over the weekend, to transform the world's fossil fuel-driven economy in bid to arrest global warming, could make a cut in the target difficult for the US government to accept.

"Unfortunately there have been too many decisions that are made - 'Oh, prices went down, it's OK again,'" said Rosekind. said. "No, it's not."

Consumers are responding to signals from gas pumps, where a combination of relatively low taxes - federal gasoline taxes have not gone up since 1993 - and oil unleashed by hydraulic fracturing or fracking have pushed US gasoline prices to an average of just over $2 a gallon - the lowest level in six years.

In November, fuel efficiency of vehicles purchased fell sharply to 25 mpg - down 0.8 mpg from a peak in August 2014, said University of Michigan researcher Michael Sivak, who tracks fuel efficiency.

Nearly 59 percent of US vehicle sales this year have been of sport-utility vehicles, pickup trucks or other larger vehicles, up from 54 percent last year, according to industry consultant Autodata Corp.

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