Top executives from major automakers joined President Obama this morning in Washington, D.C., for a ceremony to officially announce higher fuel-efficiency standards for car and light trucks.
The plan will raise the average gas mileage for passenger vehicles sold in the United States to 54.5 miles per gallon by the year 2025.
The proposal is not quite as high as the 56.2-mpg standard that the White House was reportedly considering, but it is significantly higher than the 27.3-mpg standard that exists today.
Under the new standards, fuel economy for cars would have to increase by 5 percent a year from 2017-2025, while SUVs and pickups would be allowed to increase by a less-stringent 3.5 percent a year through 2021, before rising more sharply to 5 percent a year fro 2021 to 2025.
"This agreement on fuel economy we're announcing today represents the most important step we've ever taken to reduce our dependence on foreign oil," President Obama said.
"For decades, we've left our economy vulnerable to the price of oil. And with demand increasing in China and India, the demand for oil is inexorably rising. And that means the price of oil will keep going up unless we do something about our own dependence on oil."
He estimated that the new standards will save American families $8,000 in fuel bills over the life of the cars produced, and will reduce U.S. oil consumption by 2.2 billion barrels per day, reduce oil imports by a third, and save the country upwards of $2 trillion between now and 2025.
Estimates for the cost of adding new fuel-efficient technologies to cars have ranged from the government's $2,100, to more than $7,000 from some automaker lobbying groups.
To earn automakers' endorsement, the Obama administration also had to win over regulators in California, which has the right under the Clean Air Act to set its own emissions rules. The California Air Resources Board reportedly also endorsed the deal this morning.
In a statement, Consumers Union, the publisher of Consumer Reports, applauded the plan, saying it would help consumers save money, cut pollution, and reduce the nation’s dependence on foreign oil.
Ellen Bloom, CU’s director of federal policy, said “The new standards will lead to cars that consume less fuel at an affordable price. These fuel economy targets mean consumers will be able to save money on gas over the life of their vehicles, while we reduce national oil consumption.”
Automakers are expected to sign memorandums of understanding on the proposal today. A formal proposal will be issued by the federal government this fall, and a final rule is expected by July 2012.
Bloom noted, “The goals set out in this plan are sound and reasonable, but there are still details that have to be ironed out in this process. We’re going to keep working to make sure the standards stay strong, because you don’t want any loopholes that a gas-guzzling truck could drive through.”
In a recent Consumer Reports poll of car owners, 62 percent said when they buy their next car, they expect to choose a model with better gas mileage than their current vehicle. Eighty-seven percent said the number-one reason for choosing a more fuel-efficient car was lower fuel costs. Seventy-three percent of those planning to buy a vehicle said they were considering an alternative power train, such as hybrid, electric, or flex fuel.
Mark Cooper, the research director for Consumer Federation of America, said, “Hard, good faith bargaining has produced a program that is very good for consumers and the auto industry. We believe the economics of fuel economy will get better and better over time, as costs come down and gasoline prices rise, so that by the time the program reaches the ‘mid-course’ review in 10 years, the case for accelerating improvement will be compelling,” Cooper said.
Updated: 7/29/11 12 p.m.
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