Energy Bill Extends Oil-Wasting Fuel Economy Loophole

The Center for Auto Safety is the nation’s premier independent, member driven, non-profit consumer advocacy organization dedicated to improving vehicle safety, quality, and fuel economy on behalf of all drivers, passengers, and pedestrians.

Center for Auto Safety
Natural Resources Defense Council
Public Citizen


Aug. 11, 2005

Energy Bill Extends Oil-Wasting Fuel Economy Loophole

Legislation Shields Automakers From Legal Challenge, Will Increase Oil Consumption

WASHINGTON, D.C. “ A little-noticed provision in the energy bill signed Monday allots automakers bogus fuel economy credits for building cars capable of running on alternative fuel such as ethanol even if the cars almost always use gasoline. The provision nullifies a lawsuit filed by public interest groups against the Department of Transportation.

The "dual fuel" loophole allows automakers to claim credit for producing "dual fuel" vehicles, boosting their fuel economy numbers on paper by as much as 1.2 miles per gallon. The loophole would increase U.S. gas consumption by 15 billion gallons over the life of its 10-year extension.

The loophole was originally extended by the Department of Transportation and was challenged in 2004 in a lawsuit by Public Citizen, the Natural Resources Defense Council and the Center for Auto Safety. That lawsuit was dropped Wednesday after the "dual fuel" provision was signed into law.

Originally intended to reduce oil consumption, the loophole was created to promote production of vehicles that can operate on 85 percent ethanol (E85) in addition to gasoline. But with few gas stations supplying E85 “ only 221 of 176,000 in the United States “ and with most dual fuel vehicle owners unaware that their vehicles take alternative fuel, nearly all drivers fill their dual fuel cars with gasoline only. A March 2002 Department of Transportation report found that dual fuel vehicles run on gasoline more than 99 percent of the time.

Daimler/Chrysler has taken the greatest advantage of these phony mileage credits, boosting the fortunes of the oil-producing countries Dubai and Kuwait, which became the company’s first and third largest private investors earlier this year. Ford and GM also have increasingly used these credits to avoid having to increase the fuel efficiency of pickup trucks and SUVs.

"Despite the rhetoric, the energy bill just moves the nation toward more oil use, not less," said Dan Lashof, science director for NRDC’s Climate Center. "Instead of helping Detroit catch up in the technology race, the bill gives automakers an accounting gimmick."

"Knowing that they couldn’t defend the "dual fuel" loophole in court, the Big Three ran to Congress," said Joan Claybrook, president of Public Citizen. "Once again, Detroit is substituting lobbying clout for innovative engineering."

Unable to continue their court challenge, Public Citizen, NRDC and the Center for Auto Safety will ask Congress to reform the "dual fuel" program so that any fuel economy credits reflect actual use of alternative fuel.

"The ‘dual fuel’ loophole can’t withstand public scrutiny," said Clarence Ditlow, director of the Center for Auto Safety. "The auto industry’s friends in Congress hid the extension of this counterproductive program in a 1,700-page energy bill. This cries out for a correction."