Impacts of Title Xi of the Energy Independence and Security Act of 2007 on Transportation Companies, Shippers and Consumers

The increase of the combined corporate average fuel economy standards to 35 mpg by 2020 has favorable effects to transport companies. The act of the House to upscale the efficiency of engines in their fuel consumption is great because it means more leverage for the transport companies’ money. If a passenger’s car can travel 35 miles per gallon, then that means traveling more distances with lesser fuel consumption. Probably, it may even be because some fare rollback to the benefit and right-of-way of the riding public.

We understand that such move might, on the other hand, cause some operational losses for transport companies too. Few weeks from now, since 2011 is fast approaching, their fleet must be able to comply with at least 92 percent with the new standard. By 2020, all their fleets must be 100 percent compliant; otherwise, they will get a penalty. Where will they damp their old models? Some if not most of these models are slightly used and with such, their costs are not yet offsetting with revenues. Here’s another trouble: acquisition of heavy-duty hybrid car models might be more expensive because any improvement in machine efficiency would mean added engineering cost. These cars are co-powered by lithium-acid batteries, which are also of prohibitive costs. Many transportation companies will be debt ridden making it difficult for them to compete for lower fares and maintain operational budgets. Should this happen, more will be added to the already overflowing array of bystanders because of widespread retrenchments, layoffs, and forced retirements? Such ugly scenario might also hamper the economy in general because workers have to wait long hours for scarce public transport, creating a domino effect on business productivity and timeliness. When business is sluggish, cash flow becomes difficult and all the more the recession will be cemented to its current state.

The Increase in the renewable fuel standard to 36 billion gallons by 2022 is a...