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Automakers Resist Higher Fuel Economy Mandates

By Joe Benton
ConsumerAffairs.com

March 14, 2007

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Auto industry executives went to Capitol Hill to tell members of Congress that mandating higher fuel economy standards alone will not produce a substantial decrease in oil consumption in the U.S.

Chrysler group CEO Tom LaSorda told the House Energy and Commerce Committee, "If all the new vehicles sold in the United States 10 years from now were hybrids or diesels fuel economy would improve by only 25 to 30 percent."

LaSorda and the heads of General Motors, Ford Motor Co. and Toyota Motor Corp. all opposed calls to boost annual fuel economy standards by 4 percent, climbing to at least 34 miles per gallon by 2016.

Taking a harder line, General Motors Corp. chief Rick Wagoner charged that the corporate average fuel economy program has failed.

"CAFE has been particularly damaging to the domestic, full line manufacturers," Wagoner told the committee. "Many of the recent legislative proposals to increase CAFE requirements by 4 percent per year or more would be extraordinarily expensive and technically challenging to implement with little to show for actually reducing oil consumption or emissions," he said.

The executives are fighting efforts by the Democratic-led Congress to single out automakers as the only industry responsible for reducing carbon emissions to cut global warming. Nevertheless, gasoline demand accounts for nearly half of the average daily U.S. consumption of 20.9 million barrels of oil.

Presently an automaker's fleet of passenger cars must average 27.5 mpg. The mileage figure has not changed in 17 years. Other vehicles, including SUVs, pickups and light trucks must get 24.1 mpg by 2011 under changes imposed by regulators at the National Highway Traffic Safety Administration last year.

Automakers prefer that any increase in fuel economy standards be administered by NHTSA regulators and not imposed by Congress as law.

The White House has proposed reducing domestic gasoline usage by 8.5 billion gallons or 5 percent by 2017. The plan calls for raising fuel economy standards by an average of 4 percent yearly beginning in September 2009 for passenger cars and September 2011 for light trucks.

The administration predicts that the changes would cost the auto industry $114 billion between 2010 and 2017. Domestic automakers would pay $85 billion of the expense because domestic vehicles trail imports in mileage performance.

Ford Motor Co. President and CEO Alan Mulally said the standards are not a silver bullet. “We need government to be our partners not our adversaries," Mulally's told the committee. "Ford has long acknowledged the importance of climate change. Yes, we need more fuel efficient vehicles, but we also need lower carbon fuels and consumer incentives to adopt these fuels."

"The truth is that we must all accept that these are long-term challenges and that we are all part of the solution," Mulally said. "For too long each sector has wanted someone else to be the solution in order to pass the buck. This piecemeal approach will not work if we are serious about change."

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