The high cost of Trump’s backward fuel policy

Five decades ago, when the United States faced unusually high fuel prices and energy-security concerns from the slowdown of Middle East exports, President Ford successfully urged Congress to pass the Energy Policy and Conservation Act. This bipartisan legislation gave the national highway authority the ability to promulgate fuel efficiency standards, which have reduced Americans’ fuel costs while also producing significant environmental and climate change benefits ever since.

Now, the United States faces similar concerns with fuel prices and energy security, self-inflicted as a result of President Trump’s decision to attack Iran . But this time, the administration has eviscerated Congress’s solution.

Last month, the National Highway Traffic Safety Administration significantly weakened the existing Corporate Average Fuel Economy (CAFE) standards, even ones that had already been met. Possibly attempting to offset some of the resulting cost increases, Trump has now announced that the United States will buy diesel from Russia, breaking a blockade and assisting one of our principal foreign adversaries.

But the fuel-economy rollback will have a far larger effect on consumers.

The administration’s justifications for weakening fuel economy do not withstand even cursory scrutiny. Its principal explanation is that lowering the CAFE standards will lower the average sticker price of new cars, by about $1,300. It turns out, however, that car owners would pay more than this amount in additional fuel costs over the course of five years.

Trump brushes aside this inconvenient fact by arguing that higher prices would stand in the way of Americans’ ability to purchase new cars. This assertion is also highly misleading: the higher fuel costs resulting from this policy would exceed the lower monthly payments on the loans over that same five-year period. Every month, the approximately 85 percent of Americans who finance the purchase of a new car would be worse off as a direct result of the Trump administration’s decision-making.

The administration also states that that because lenders “base financing decisions on loan-to-value ratios and will not extend more credit to account for future fuel savings” related to CAFE standards, the rollback will enable Americans to buy new cars that they otherwise would not be able to afford. But this argument is specious.

The average price of a new car is around $50,000. So, the scenario that the Trump administration highlights applies only to purchasers who would not qualify for a $50,000 loan but would qualify for a $48,700 loan — likely a very small group. And those purchasers, like all other borrowers, would be worse off as a result of the CAFE standards rollback, because their combined loan and fuel payments each month will be higher than they otherwise would have been.

Purchasers of new cars are not the only car owners hurt by this rollback, however. The increased demand for fuel increases prices for all consumers, including ones who are not contemplating buying new cars. Like many other policies out of the Trump administration, this one hurts many working-class Americans, for whom buying a new car is not a short-term option and who will now be continuously burdened by higher prices at the pump.

Perhaps sensing that it should try to take action to counteract the negative effects resulting from its CAFE standards rollback, the administration announced last week that the United States would purchase diesel from Russia, thereby attempting to reduce the price of this fuel. The move was sharply criticized by a bipartisan group of prominent senators, who decried it as a violation of a congressionally imposed ban on energy imports from Russia and a “financial lifeline” for Vladimir Putin’s war aims. Despite the serious geopolitical consequences of the action, the amount of diesel purchased from Russia is far less than the additional fuel consumption that will result from the rollback of the CAFE standards.

In erasing fuel economy standards, the Trump administration is doing precisely the opposite of what Congress intended when it enacted the Energy Policy and Conservation Act to address a past fuel crisis. This move will saddle Americans with higher costs that cannot be fixed with a highly troubling deal for Russian diesel.

Richard L. Revesz, the AnBryce Professor of Law and dean emeritus at New York University School of Law, served as the administrator of the White House Office of Information and Regulatory Affairs from Jan. 3, 2023, to Jan. 20, 2025.