Overturning the Endangerment Finding Could Lead to Rising Gas Prices

The revocation of the EPA's Endangerment Finding, which serves as the legal basis for regulating greenhouse gas emissions under the Clean Air Act, would have complex and far-reaching economic consequences, including the potential for higher gas prices. While proponents of the revocation argue it will lower costs by removing “burdensome” regulations, a deeper analysis reveals several ways in which this action could lead to increased prices at the pump.

First, overturning the Endangerment Finding would eliminate the legal justification for federal fuel efficiency standards for new motor vehicles. The EPA has used the Endangerment Finding to set greenhouse gas emission standards for light-duty, medium-duty, and heavy-duty vehicles, which in turn have driven improvements in fuel economy.

These standards require automakers to produce more efficient vehicles, including hybrids and electric vehicles (EVs), which helps reduce overall fuel consumption. A rollback of these standards would remove the penalty for missing this requirement, potentially leading to a market flooded with less fuel-efficient vehicles.

As a result, the average American driver would be consuming more gasoline to travel the same distance, directly translating to higher fuel costs for households. The analysis by the EPA suggests that repealing these standards could increase gas prices by nearly 75 cents a gallon.

The revocation would also create significant uncertainty for the US auto industry.

For years, manufacturers have been retooling their operations and supply chains to comply with the existing regulations, investing heavily in the research and development of more fuel-efficient and electric vehicles. Suddenly changing the regulatory landscape in such a dramatic and contradictory manner would disrupt these long-term plans, potentially leading to wasted investments and supply chain inefficiencies due to the increasing regulatory uncertainty.

This disruption could lead to higher manufacturing costs, which would then be passed on to consumers in the form of higher new car prices. Additionally, by ceding leadership in the global clean transportation market, US automakers may lose their ability to compete with foreign manufacturers that are continuing to innovate in this space. This could further reduce consumer choice and drive up the cost of vehicles.

Again, the EPA itself has stated that revoking these standards could lead to higher prices for consumers.

The move could also create economic instability in the energy sector.

The Endangerment Finding has provided a clear regulatory framework for the energy industry, guiding long-term planning for power plants and other sources of emissions. Repealing the finding and the regulations that flow from it would upend years of costly planning and investment, creating a climate of confusion and uncertainty.

While some argue that this would “unleash” American energy production and lower costs, a shift away from a grid with expanded renewable generation towards one that emphasizes fossil fuel build-out could lead to greater uncertainty and volatility in electricity prices. This is particularly relevant as the economy becomes increasingly electrified. Moreover, the revocation of these regulations would encourage a continued reliance on fossil fuels, which are subject to global market fluctuations and geopolitical instability, making the country more vulnerable to price shocks.

Finally, the long-term effects of increased greenhouse gas emissions on public health and the economy could directly and indirectly contribute to higher household energy burdens.

The Endangerment Finding was predicated on the scientific consensus that these gases threaten public health and welfare. Increased pollution from less-efficient vehicles would lead to a rise in respiratory illnesses, cardiovascular diseases, and premature deaths, placing a greater burden on the healthcare system not to mention the very people that the regulations were meant to protect.

The economic costs of these health impacts, along with the growing damages from climate change-related disasters like extreme weather events, are enormous. These costs, which are borne by society as a whole, can manifest in various ways, including higher insurance premiums and taxes, ultimately eating into household budgets and leaving less money for other goods and services, including gasoline.

While the link isn't entirely direct, the economic burden of inaction on climate change could make gas price increases feel more acute. And, of course, higher energy bills will directly hurt American household’s ability to pay their bills.

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