Will Cheap Gas Kill EV Sales and Obama's Climate Plan?

Jan 28, 2015 03:12 PM EST | Jordan Ecarma

Green Energy

Automakers may not be able to meet the fuel economy standards they agreed to in 2012.
(Photo : Flickr Creative Commons)

Cheap gas prices continue to relieve everyday Americans, but the falling cost of crude oil isn't necessarily welcome news for automakers who want to promote green vehicles or for the Obama administration's push for clean energy.

As of this writing, the national gas average was at a mere $2.03 per gallon, according to the AAA's Daily Fuel Gauge Report. While consumers have been gravitating to sport utility vehicles and other fuel-needy options, President Obama has already warned Americans that cheap gas prices won't be around for long.

Demand for gas will grow in the long term to leave consumers with gas-guzzling vehicles in the lurch, the president said earlier this month.

"I would strongly advise American consumers to continue to think about how you save money at the pump because it is good for the environment, it's good for family pocketbooks and if you go back to old habits and suddenly gas is back at $3.50, you are going to not be real happy," Obama told the Detroit News by phone in early January.

The price of fuel dropped a whopping 33 percent in 2014, affecting sales of the electric and hybrid models that automakers have been pushing.

Gas prices in the United States finished last year at their lowest levels since May 2009, according to the U.S. Energy Information Administration

When American car companies in 2012 agreed to a fleet fuel economy standard of 54.5 miles per gallon by 2025, gas was at an average of $3.97 per gallon, according to Bloomberg.

As the president finishes his last two years in office, the green energy plan that was a vital part of both of Obama's successful campaigns may be in danger.

"We are awash in cheap fossil fuels in a way that was unimaginable five years ago," Michael Greenstone, a former chief economist for Obama's Council of Economic Advisers who is now an economics professor at the University of Chicago, told Bloomberg. "That's going to make the president's climate plan--and anyone's climate plan--more difficult to achieve."

© 2017 Auto World News, All rights reserved. Do not reproduce without permission.
Get the Most Popular Autoworld Stories in a Weekly Newsletter

Join the Conversation

Real Time Analytics