What the New SUV Gas Mileage Rules Really Mean

March 30, 2006 — -- The new sport utility vehicle mileage standards are the most ambitious fuel economy measures in U.S. history, the Bush administration has said.

This year, the average SUV gas mileage must be at least 21.6 miles per gallon, gradually increasing to 24 mpg by 2011.

Whether this really helps break America of what the president calls an "addiction" to foreign oil remains to be seen, but most people agree that the Bush administration is starting in the right place. Gasoline accounts for nearly half -- 44 percent -- of U.S. demand for petroleum, so it makes sense that the Bush administration starts here. The new rules are targeted at the vehicles -- SUVs and light trucks like pickups -- that are the least fuel efficient. Also, SUVs make up 31 percent of U.S. vehicles.

Critics say this doesn't go far enough to get America to use less gas because it's estimated that this measure will only save the equivalent of between two weeks and four weeks of gas consumption a year.

Changing the SUVs to conform to this new rule will cost the automakers, and they will pass the expense along to the buyers.

Prices for SUVs will increase by $200. That $200 will be easily recouped by savings in gas -- especially if gas prices continue to rise -- because the vehicles will get better mileage. The national average price for regular, unleaded gas is now $2.50 per gallon, compared with $2.24 a month ago and $2.15 a year ago. Prices will likely go up in the coming months, possibly as high as $3 a gallon this summer. The average SUV owner who drives about 15,000 miles a year will save about $110 a year with these new mileage rules.

The U.S. auto industry is already in big trouble -- losing jobs and market share -- but these new SUV rules shouldn't be a net negative for them. SUV sales had already been dropping sharply because of the perception that the vehicles were gas guzzlers. So, these new regulations, by making SUVs more attractive, may be good for the auto industry.