Fuel Economy Efficiency Standards Raised

One of the major issues of the last six months has been the world wide economic problems. It is apparent that actions taken in the United States have material impacts to the rest of the world. U.S. Federal Reserve Chairman Ben Bernanke last week announced that the U.S. Federal Reserve was going to purchase U.S. Treasuries and toxic mortgages. That is great news for the banks!

Bernanke is well qualified for his position, graduating summa cum laude from Harvard with a bachelor of arts degreee. He received a PhD in economics from the Massachusetts Insitute of Technology in 1979. He has written a number of papers on the great depression and the methods for handling such an event. Basically, he is an intelligent well educated economist.

Apparently, Bernanke is prepared to throw everything at this crisis that he can! The net result over the long term will be that the dollar will go down in value versus other currencies. Inflation will be back, possibly even hyper inflation. That will also increase the price of oil since oil is purchased with dollars.

Meanwhile, the Obama administration plans to raise fuel economy standards for the new cars and trucks for the 2011 year. The increase is two miles per gallon which raises the standard to 27.3 mpg.

The new fuel efficiency standards should increase the average fuel economy for passenger cars to 30 mpg and 24 mpg for light trucks. The new standards will also cost the automakers an estimated $1.5 billion to implement.

China first implemented fuel efficiency standards in 2005, with more stringent standards in which started 2008. China is moving to control soaring oil consumption meanwhile requiring foreign automakers to share their latest fuel saving technologies.

The bottom line is that these actions in the long term will increase the price of fuel. So anyone purchasing a car should take into account that fuel prices will probably increase materially over the next several years.