Tag: oil price

“The move to regulate fuel economy came about a few years earlier, following the 1973–74 Arab embargo that suddenly ended the flow of oil from OPEC nations. In the face of skyrocketing oil prices, Congress froze gasoline prices to protect American consumers from pocketbook shock. Then came the hard part. Elected officials sought to require U.S. automakers to build the smaller, more economical cars that unquestionably would have been built had gasoline prices been allowed to rise freely. Yet the fuel economy standards hit passenger sedans hard while leaving light trucks, which were not seen as passenger vehicles, almost untouched.
As the fuel economy standards began to bite consumers, they found that trucks provided comfort and safety no longer available in the downsized sedans. Truck sales surged, and in 1990, Ford placed a four-door body on a Ranger truck frame and introduced the Ford Explorer, a passenger vehicle that satisfied the government’s truck definition. This inspired an explosion of similar SUV production across the industry. Trucks became beautiful, expensive, and highly desirable.”

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“All the while, the fuel economy standard for trucks remained less strict than for sedans. To make things even better for U.S. producers, almost-prohibitive tariffs on European light trucks were extended to the rest of the world. Many foreign producers eventually jumped the tariff wall and built trucks and cars here, but the home-grown industry enjoyed an early advantage.”