Feds Propose Tough New Fuel Standards, Automakers Gasp

The Obama Administration today unveiled a proposed rule that would require automakers to double the average fuel economy of their vehicles to 54.5 miles per gallon by 2025, estimating that the change would add $2,000 to the average price of a car.

The proposal brought howls of protest from automakers who warned the changes would price millions of Americans out of the new-car market, keeping older, less fuel-efficient cars on the road longer. The Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) estimated the changes would cost $157 billion while returning benefits of up to $515 billion. 

In a joint statement, the EPA and NHTSA said the Obama Administration is acting “to strengthen the economy and move the country forward because we can't wait for Congressional Republicans to act.”

Big costs, bigger savings?

The agencies said that, combined with other steps the Administration has taken to increase energy efficiency, the proposal will save Americans over $1.7 trillion at the pump, more than $8,000 per vehicle by 2025.

“These combined actions also will reduce America's dependence on oil by an estimated 12 billion barrels, and, by 2025, reduce oil consumption by 2.2 million barrels per day – enough to offset almost a quarter of the current level of our foreign oil imports. Taken together, these actions will also slash 6 billion metric tons in greenhouse gas emissions over the life of the programs,” the statement continued.

Representative Ed Markey, a Massachusetts Democrat, and 107 other U.S. House members yesterday sent a letter to Obama supporting the rule.

"We believe that these standards to reduce petroleum use in cars and light trucks represent an opportunity to increase our national and economic security in an unprecedented way by dramatically decreasing our dependence on foreign sources of petroleum," they wrote.

Representative Darrell Issa, a California Republican, opened an investigation into how it was written, saying it was rushed and may jeopardize safety by reducing the weight of vehicles on the road.

A proposed rule had been due Sept. 30 before regulators said they needed more time. The final rule is scheduled to be published next year.

"Steady improvements"

"By setting a course for steady improvements in fuel economy over the long term, the Obama administration is ensuring that American car buyers have their choice of the most efficient vehicles ever produced in our country. That will save them money, reduce our nation's oil consumption and cut harmful emissions in the air we breathe," said EPA Administrator Lisa P. Jackson. "This is an important addition to the landmark clean cars program that President Obama initiated to establish fuel economy standards more than two years ago.”

The Obama Administration had earlier reached agreement with Ford, Honda, Toyota and General Motors to achieve annual fuel-economy increases of 5 percent for cars. Volkswagen and Daimler AG were among automakers that didn't sign on to that agreement.

Dealers object

Today's proposal landed with a thud at the offices of the National Automobile Dealers Association.

"America's auto dealers support continuous improvement in the fuel economy of the fleet of vehicles that drive on the nation's roads," the association said in a statement. "To this end, we are concerned that adding about $3,000 to the average cost of a car will price millions of Americans out of the market, which could reduce fleet turnover and delay environmental gains."

EPA and NHTSA insisted the new standards will “rely on innovative technologies that are expected to spur economic growth and create high-quality jobs across the country.”

“The standards should also spur manufacturers to increasingly explore electric technologies such as start/stop, hybrids, plug-in hybrids, and electric vehicles. The MY 2017-2025 proposal includes a number of incentive programs to encourage early adoption and introduction of 'game changing' advanced technologies, such as hybridization for pickup trucks.