Obama Announces New Tighter Fuel-Efficiency Standards

More efficient cars cost more -- will you make it back at the pump?

ByABC News
May 19, 2009, 7:46 AM

WASHINGTON, May 19, 2009 -- President Obama today issued the toughest emission and mileage standards in history for new cars sold in the United States, a move environmentalists hail as the first step ever by the U.S. government to curb global warming.

Obama said new standards mark "not only a change in policy in Washington, but the harbinger of a change in the ways business is done in Washington."

"At a time of historic crisis in our auto industry, when domestic auto manufacturers are making painful choices and restructuring their businesses to be viable in the future, this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century," the president said today in the Rose Garden, flanked by members of Congress and his Cabinet, representatives of the auto industry, the auto workers union and environmentalists.

The White House ordered automakers to significantly increase the gas mileage of the cars they make and significantly reduce the amount of pollution they emit. Car companies will be forced to cut the amount of greenhouse gas emissions in new cars by about 25 percent.

The average current fuel-efficiency standard for cars and light trucks is 25 miles per gallon. With the president's announcement today, that standard will go up to 35.5 miles per gallon by 2016.

This is four years earlier than what the current law requires, and is an average 5 percent per year increase in fuel efficiency from 2012 through 2016.

The changes will likely mean higher price tags on new cars for consumers -- on average about $1,300 more per car by 2016 -- which the president acknowledged today. But he said the increase in mileage standards will negate that initial expense by lowering fuel costs. Americans will make that money back over three years in fewer trips to the pump, he said.

"[T]he cost of driving these vehicles will go down as drivers save money at the pump," Obama said. "If you buy a car, your investment in a more fuel-efficient vehicle, as a result of this standard, will pay off in just three years."

The president said the average American driver will save about $2,800 over the life of a vehicle by getting better gas mileage.

Experts compare the new cars to energy-efficient lightbulbs. A regular bulb costs $2.99, and the energy-efficient one is $12.99. But in the long run, the product that is more energy efficient will not just save energy but save money in the long run.

"Citizens in the United States will get better mileage on their cars. They will spend less on gasoline each year," said Paul R. Portney, dean of the Eller College of Management at the University of Arizona.

White House energy and climate director Carol Browner said U.S. automakers expressed their desire to the administration to make more fuel-efficient cars and wanted the government to give them the predictability and certainty of a national standard so they could make investments toward cleaner vehicles.

Browner refused to comment on whether the Obama administration may consider a tax on gasoline, which some say could also reduce the United States' dependency on foreign oil.

"We work, obviously, within the laws on the books," Browner said on "Good Morning America" today. "And what we're using is the president's executive authority to propose these standards, and it is the first-ever time that EPA [Environmental Protection Agency] and DOT [Department of Transportation] have taken their existing individual authorities and woven them together so that we can give the American public and the car companies what they want."