(Bloomberg) -- Just as the world’s biggest gasoline consumer started to show shrinking demand growth, the U.S. Environmental Protection Agency swooped in to slow the decline.
The EPA plans to revise rules requiring automakers to gradually reduce polluting emissions and ramp up fuel efficiency. The mandate to produce cars and light-duty trucks that run 55 miles per gallon by 2025 are expected to hold at the 2020 level of 42.5 miles per gallon, according to Roger Read, senior analyst at Wells Fargo. Premium gasoline prices have been surging amid the tighter restrictions, and adoption of more efficient vehicles has lagged under so-called CAFE standards.
“The EPA is to some extent bowing to reality on the CAFE standards,” Read said in a research note. Gasoline demand in 2025 is likely to be lower than it is today, “but the pace of that decline should be more modest.”
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