White House Unveils Rule to Double Fuel Efficiency by 2025

Nov 16, 2011 4:34pm

The White House today formally unveiled a proposed government mandate that automakers double the fuel efficiency of their cars and small trucks by  2025.

If the regulation takes effect, vehicles model year 2017 to 2025 will be required to have a combined city-highway fuel economy of 54.5 miles per gallon.  The current combined standard is 27.3 miles per gallon.

“Just think what this means,” Transportation Secretary Ray LaHood told reporters on a conference call. “It means American families will have to fill up their car every two weeks instead of every week.”

“These standards will also spur growth in clean energy industries,” he added, noting the projected reduction in fossil fuel consumption.

President Obama first announced the tighter fuel efficiency standards for cars and small trucks in July, when he was joined by leaders of 13 major auto companies and labor union leaders .  The 1,600-page rule is now open for public and industry input over the next 60 days before being finalized.

The administration says the new standards will save consumers an average of $4,400, after factoring in the potentially higher price tags manufacturers may place on the more fuel-efficient vehicles.

The Department of Transportation and the Environmental Protection Agency, which jointly drafted the new rule, estimate production changes could cost automakers $157 billion, some of which may be passed on to consumers.

“This regulation gambles that millions of consumers will be able to afford thousands more for generally smaller, more expensive vehicles that may not meet their needs,” the National Automobile Dealers Association said in a statement.

Still, administration officials said the net benefits of the program – estimated to be between $419 and $515 billion — would offset those costs and that any consumer price increases would be “very modest.”

“I don’t think all these CEO’s would have been standing with the president if they didn’t think they could support this,” LaHood said, when asked about the potential cost burden on manufacturers. “You know how these executives are, it’s all about the bottom line.”

Administration officials said the new standards, once enacted, will build on progress under a separate regulation finalized last year that raised fuel efficiency standards for vehicle model years 2012 to 2016 to 35.5 miles per gallon.

Altogether, DOT and EPA estimate the regulations will save drivers more than  $1.7 trillion in fuel costs, trim American oil consumption by 12 billion barrels and reduce greenhouse gas emissions by 6 billion metric tons by 2025.

“This proposal continues the approach of establishing a single national program for fuel economy and greenhouse gas emissions, which is the right overall direction,” Auto Alliance president Mitch Bainwol said in a statement.

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