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New fuel economy rules issued to auto industry

The Bush administration issued new rules Wednesday ratcheting up gas mileage requirements for pickup trucks, sport utility vehicles and vans, for the first time covering the largest SUVs on the road like the Hummer H2 and Chevrolet Suburban.
/ Source: The Associated Press

The government set tighter gas mileage rules Wednesday for pickups and sport utility vehicles, including bulky SUVs like the Hummer H2 and Chevrolet Suburban, responding to rising concern about the supply and cost of energy from abroad.

The new fuel economy rules, covering 2008 through 2011, would save 10.7 billion gallons of fuel over the lifetime of the vehicles sold during that period and take a more aggressive stance than a Bush administration proposal issued last summer, officials said.

“The new standards represent the most ambitious fuel economy goals for light trucks ever developed in the program’s 27-year history,” said Transportation Secretary Norman Y. Mineta, announcing the plan from a Baltimore football stadium that overlooked traffic near an Interstate 95 interchange.

The new regulations followed President Bush’s declaration in January that the U.S. is “addicted to oil,” and his call for a 75 percent reduction in Mideast oil imports by 2025. Manufacturers will begin implementing the rules as average gas prices exceed $2.50 a gallon and many consumers are seeking more fuel-efficient vehicles such as hybrids and flexible-fuel pickups and SUVs.

U.S. automakers, notably General Motors Corp. and Ford Motor Co., have struggled in recent months, outlining plans to reduce their work force as they deal with shrinking market share, higher costs for labor and raw materials and intense competition from Asian competitors.

Mineta said the plan was “pragmatic” and devised with jobs and costs in mind, along with the benefits of conserving fuel. Automakers will need to closely scrutinize their product lineup to meet the standards, which are the most sweeping to the Corporate Average Fuel Economy (CAFE) system in three decades.

“This is challenging and it won’t be easy to meet these standards but manufacturers are committed to being a part of the solution,” said Charles Territo, a spokesman for the Alliance of Automobile Manufacturers.

Transportation officials estimated the plan would add about $200 to the cost of each vehicle, but consumers likely would recoup that cost in fuel savings in four years, they said.

The rule would include SUVs weighing 8,500 to 10,000 pounds for the first time starting in 2011, but it would not include large pickup trucks in the weight class. Vehicles likely to be affected include the Hummer H2, Chevrolet Suburban, GMC Yukon XL, and the Ford Expedition EL, scheduled to be released this summer. DOT officials said they would require manufacturers to install fuel saving technology on all passenger trucks.

Environmental groups found the plan disappointing after lobbying for months for higher gas mileage requirements and the inclusion of the largest pickup trucks and SUVs. Eric Haxthausen, an economist with Environmental Defense, compared it to “slowing down the Titanic as it steams ahead toward the iceberg.”

“After the Bush administration acknowledged our oil addiction, one might have expected a slam dunk, but this is an air ball,” said David Friedman, research director for the Clean Vehicles Program at the Union of Concerned Scientists. His group estimated it would only save two weeks of gasoline a year over the next two decades.

The new rules do not apply to passenger cars, which must meet a 27.5 mile per gallon average.

Under the CAFE system, automakers now must meet an average of 21.6 mpg for their 2006 model year light trucks. That average will rise to 22.2 mpg for 2007 vehicles.

Under the new rules, the fleetwide average would reach 24 mpg by 2011, when the largest SUVs will be included in the calculation. The program will be phased in through 2010, with automakers having the option of complying under the old system or using new system.

If automakers use the old system, the targets would be 22.5 mpg in 2008, 23.1 mpg in 2009 and 23.5 mpg in 2010. All manufacturers would need to use the new system in 2011.

The new rule would call for specific fuel economy standards for all light trucks based on the vehicle’s wheelbase and track width.

Mineta said the new rules would help close loopholes automakers used in the past to meet the standards and level the playing field for automakers.

Automakers have noted that the final plan will likely mean seven straight years of higher fuel economy requirements for light trucks. The industry has fought previous attempts to raise the standards but has expressed support for the proposal’s direction.

Ford spokesman Ed Lewis said it would be “technically challenging” but would “move automakers toward a more level playing field because it recognizes the differences between full-line manufacturers and those who only produce small trucks.”

GM spokeswoman Sherrie Childers-Arb said her company looked forward to “carefully reviewing” the new rules.

Reaction in Congress was mixed.

Sen. Dianne Feinstein, D-Calif., said it “missed an opportunity to break our nation’s addiction to oil, reduce our greenhouse gases, and decrease the price of gas at the pump.”

Rep. John Dingell, D-Mich., a longtime advocate of the auto industry, said, “At first glance it appears to be a challenging standard for the industry that I hope it will be able to achieve.”