Big Oil cheers quietly as Trump moves to ease auto standards

The Trump administration’s plan to relax fuel-economy and vehicle pollution standards could be a boon to US oil producers who’ve quietly lobbied for the measure. The proposal, released on Thursday, would translate into an additional 500,000 barrels of US oil demand per day by the early 2030s, about 2% to 3% of projected consumption, according to government calculations. “It’s a meaningful increase in US oil consumption” and one of the biggest steps the Trump administration could take to boost crude demand, said Trevor Houser, a partner with the Rhodium Group, a research firm that’s analysed the proposal. “In terms of policy interventions that the US government has taken or could take, this is certainly the most significant.”

The Environmental Protection Agency and National Highway Traffic Safety Administration proposed locking in US fuel-economy and tailpipe greenhouse gas emissions requirements at 2020 levels of 37 miles per gallon. The existing standards the Trump administration wants to replace call for a steady increase to roughly 47mpg by 2025. Oil industry leaders have been supporting the move behind the scenes, and a handful of companies disclosed lobbying on the issue this year, including Marathon Petroleum Co, Koch Companies Public Sector, and the refiner Andeavor.

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Vehicles travel during rush hour on the US 101 freeway in this aerial photograph taken over the Sherman Oaks neighbourhood of Los Angeles, California (file). It’s now less important to conserve energy and to curb oil demand given the dramatic rise in US crude production, the Trump administration said.

The industry’s chief argument, mirrored by administration officials on Thursday, is that the Obama-era standards are a relic of a different time, when the US was deeply reliant on foreign oil and gasoline to fuel its vehicles. US exports of crude oil and petroleum products have more than doubled since then, and the US is now on track to become the world’s biggest oil producer, surging ahead of both Saudi Arabia and Russia, according to government analysts. It’s now less important to conserve energy and to curb oil demand given the dramatic rise in US crude production, the Trump administration said in its proposal.

“The US is currently producing enough oil to satisfy nearly all of its energy needs and is projected to continue to do so, or become a net energy exporter,” the administration wrote. “This has added new stable supply to the global oil market and reduced the urgency of the US to conserve energy.” Representatives of the American Fuel and Petrochemical Manufacturers refining trade group and member companies urged White House officials to ease the standards during a June meeting. The refining industry trade group told White House officials that changes were needed to drive down the cost of cars, and to give consumers more choice over the vehicles they drive.

Sources and photo-credits: Bloomberg, Gulf Times