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New Fuel Economy Standards Favor U.S. Automakers

By Joe Benton
ConsumerAffairs.com

March 29, 2006
The Bush administration plans to raise the average fuel-economy standard for light trucks and sport utility vehicles to 24 miles per gallon by 2011. The new rules provide a big break for General Motors, Ford Motor Co. and the Chrysler group, which rely on larger trucks for sales and profits.

Critics were quick to respond. Joan Claybrook, president of Public Citizen, said the new rule is "exactly the opposite of what is needed to make a significant dent in U.S. oil consumption."

The U.S. automakers that produce the least efficient models of popular SUVs and pickups had been concerned the standard might be higher and they lobbied strenuously against tougher rules.

The fuel efficiency standard for cars remains at 27.5 mpg. Environmental groups argued that much tougher standards are needed.

The newly announced regulations include a provision to vary the standards according to the sizes of vehicles. Bigger trucks will have less stringent standards. Smaller trucks will have tougher standards.

The size provision is the single largest change in the 30-year-old corporate average fuel economy program known as the CAFE standards. The change means that each car company will have its own fuel economy standard based on its product mix by 2011.

Transportation Secretary Norman Mineta announced the adoption of the CAFE rules at the Baltimore Ravens football stadium that overlooks busy Interstate 395.

The administration claims the new fuel economy standards for light trucks will save 10.7 billion of gallons of fuel.

But Claybrook said the new standards failed in several important ways:

• "The sliding scale system creates an incentive for manufacturers to make more large and aggressive gas-guzzlers;

• "It allows automakers to choose between two compliance options from now to 2010, undermining the administration’s claims that there will be oil savings because automakers will choose the less costly, and less fuel efficient, option; and

• "Starting in 2011, it includes some SUVs above 8,500 pounds, but excludes pickup trucks greater than 8,500 pounds, which are the biggest gas-guzzlers on the road."

The changes to the fuel economy standards represent the second time the Bush Administration has increased the mileage standards for light trucks and the first complete reform of the CAFE program for pickup trucks, sport utility vehicles and minivans since its inception in 1979.

"The new standards represent the most ambitious fuel economy goals for light trucks ever developed in the program’s twenty-seven year history," Transportation Secretary Mineta said. "And more importantly, they close loopholes that have long plagued the current system".

Mineta said the new rules save two billion more gallons of fuel than an earlier proposal released in August, 2005 by including the largest SUVs and strengthening the final miles per gallon target.

The new standards also set individual miles-per-gallon goals for all passenger trucks sold in the United States, requiring manufacturers to install fuel saving technology on all passenger trucks.

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