What drives gas prices? Understanding the complex factors
Gas prices are very sensitive to changes in supply and demand. Natural disasters such as hurricanes that disrupt oil production or refining, or sudden increases in demand, can cause prices to spike.
- The Trump administration is trying to roll back federal fuel efficiency regulations to make cars more affordable.
- Supporters say the changes will lower sticker prices and allow more Americans to buy newer, safer cars.
- Opponents say the cuts will increase fuel costs for consumers and worsen air quality.
U.S. Transportation Secretary Sean Duffy said President Trump’s administration is seeking to roll back federal fuel efficiency regulations to make cars more affordable for Americans.
Duffy, speaking on a panel at the Washington DC Auto Show on January 22, said the Trump administration’s goal is to reduce the Department of Transportation’s fleet-wide average fuel economy requirements for automobiles to around 35 miles per gallon by 2031, from the current requirement of more than 50 miles per gallon.
Duffy said that would lower sticker prices and give Americans more choice in dealer showrooms.
“We think we’re giving manufacturers the freedom to make the cars that people want to buy,” Duffy said. “We believe that the market should decide what is produced and what is made.”
“The president has been very thoughtful about how to control vehicle prices,” Duffy added.
“Through the years of COVID-19, they’ve become very expensive,” he says. “This is part of what we are doing to relieve some of the pricing pressure on vehicles.”
What do reduced federal fuel efficiency regulations mean for car buyers?
In announcing the Trump administration’s proposal to roll back fuel economy regulations, the U.S. Department of Transportation said the plan “is projected to save Americans $109 billion over the next five years and save families $1,000 off the average price of a new car.”
Last year, the average price of a new car in the U.S. soared to record levels, nearly $50,000.
The agency also said cheaper cars would encourage Americans to buy newer models with more safety features, benefiting drivers by reducing the number of crashes and fatalities on U.S. roads.
“By helping more Americans purchase newer, safer vehicles, NHTSA estimates that more than 1,500 lives will be saved and nearly 250,000 serious injuries will be prevented by 2050,” NHTSA said in a December press release.
Opinions of those who oppose lowering federal economic rules
Critics of the Trump administration’s proposal to roll back federal economic rules say it would make cars less efficient and worsen U.S. air quality.
Sierra Club Clean Transportation for All director Katherine Garcia said in a statement that the Trump administration’s proposed fuel efficiency cuts “will set back the auto industry, keep polluting cars on our roads for years to come, and threaten the health of millions of Americans, especially children and seniors.”
Kathy Harris, director of clean vehicles at the Natural Resources Defense Council, agreed, saying in a statement that “the Trump administration is forcing drivers to pump at higher costs to benefit the oil industry.”
“That’s all cash-strapped consumers can afford right now,” Harris said. “With these rules in place, motorists could end up paying hundreds of dollars more each year at the pump.”
What are the current federal fuel economy regulations?
Under fuel economy rules finalized by the Biden administration in June 2024, automakers will be required to produce vehicles that average more than 50 miles per gallon by 2031.
The Department of Transportation under the Biden administration said the 50-mpg average for all vehicles would save car and light truck owners more than $600 in fuel savings over the life of their vehicles.
The Biden administration said at the time that the rule would save about 70 billion gallons of gasoline by 2050 and prevent more than 710 million tons of carbon dioxide emissions by 2050.
