“Ending our dependence on fossil fuels is the most difficult challenge we have ever faced,” said President Obama yesterday, announcing new national standards for carbon dioxide emissions that will raise fuel economy requirements to 35.5 mpg, combined average for cars and trucks, by 2016. “We have known about the costs of this oil dependence since the gas shortages of the 1970s, and all too little has been done.”

Now the administration has brought together a coalition of automakers, environmentalists, state governors, autoworkers, and federal agencies to sign on to the new agreement.

The new standards, however, are expected to raise prices by $1,300 per car by 2016, according to an analysis by the Obama administration.

That seems like a lot to ask of consumers in such a deep recession. But a new analysis by the Consumer Federation of America (CFA) shows that the proposal will actually save the average new-car buyer $500 a year in fuel costs, assuming gas prices return to $3 a gallon. Overall, the savings could amount to $2,500 over the lifetime of the car.

At that rate, they say it would take less than three years for consumers to break even, even with the extra up-front cost of the cars. If gas went to $4 a gallon, consumers would save $650 a year.

The Administration also estimates that the new standards will save 1.8 billion barrels of oil over the lifetime of the cars produced in those years, equivalent to the amount of oil the U.S. imports annually from Saudi Arabia, Venezuela, Libya, and Nigeria combined.

The agreement promises to reduce greenhouse gas emissions by nine million metric tons a year. While the fuel economy standards are slightly lower than those proposed under a California bill that was awaiting federal approval, the potential CO2 savings are far greater because the standard is applied to all cars nationwide.

Ten automakers signed on to the agreement, and the executives of those companies stood behind the President as he made the announcement today at a Rose Garden ceremony.

The President wryly noted that, “It’s no secret that these are folks who have occasionally been at odds for decades, and embroiled in lawsuits against one another.” Now, he said, “What everyone believes is that status quo is unacceptable.”

On the agreement, Senior Director of the Consumer Reports Auto Test Center David Champion said, "The U.S. is taking a major step forward in producing greener, more fuel-efficient vehicles. This decision provides a clear path for a national standard after years of uncertainty, which is a relief for the auto industry and consumers alike. These standards strike a good balance between fuel economy and maintaining safe cars. In the long run, the fuel savings should help offset the higher costs of building greener vehicles. This is a good step for consumers' pocketbooks, auto safety groups, and the environment."

To learn more, read "EPA introduces first CO2 limits for cars."

—Eric Evarts

Learn about driving green in the Consumer Reports special fuel economy section.