Obama Administration, Automakers Agree to Raise Fuel Efficiency

A drawn-out debate over how efficient cars and light trucks in the US will be by model year 2025 may be coming to a close, as the Obama administration struck a deal Thursday with major automakers that satisfies both parties on most counts.  By 2025, vehicle fleets will be required to average 54.5 miles per gallon, saving consumers money on gasoline while reducing US oil dependence and protecting environmental health.

While the new standard isn’t as high as environmental groups had pushed for, it represents a major step toward more efficient, greener personal transportation in the US.  Under the new agreement, cars in 2025 are expected to emit roughly half as many greenhouse gases and consume 40% less fuel on average than the cars of today.

“This agreement on fuel standards represents the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil,” said President Obama in a statement from the White House.

This latest development on car efficiency standards builds on an earlier agreement reached between automakers and the Obama administration in the spring of 2009, which will raise fuel economy standards to 35.5 miles per gallon by 2016, up from a fleet-wide average of about 28.3 mpg today. 

During the last few months, administration officials have been finalizing a proposal to further raise average fuel economy between the years 2017 and 2025.  Environmental groups like the Sierra Club pushed for a 60 mpg standard, with unions and labor groups also supporting strong efficiency requirements.  Meanwhile the auto industry fought for weak standards, arguing a dramatic increase in efficiency would be hard to achieve.

Complicating matters further, officials from California warned the state might set its own, stricter standards if the national proposal was too weak.  This would have created a conundrum for auto makers, who essentially would have had to manufacture one set of cars for California, and another for the rest of the country.  Earlier measures taken by California and other states to ramp up fuel efficiency on their own helped pave the way for the 2009 agreement that raises fuel economy across the nation uniformly. 

“These standards will help spur economic growth, protect the environment, and strengthen our national security by reducing America’s dependence on foreign oil,” said U.S. Transportation Secretary Ray LaHood, speaking about the new agreement. “Working together, we are setting the stage for a new generation of clean vehicles.”

In the years to come, as automakers are required to make more efficient cars and trucks, the prices consumers pay for vehicles are expected to increase at least slightly.  However at the same time Americans will of course pay less for gasoline at the pump.  According to the Environmental Protection Agency, the effect of the new rule will be to save car owners $8,000 per vehicle in fuel costs. 

A few more steps remain before the 54.5 mile per gallon standard becomes the rule for automakers.  Later this year the Obama administration will officially announce new vehicle efficiency standards to be codified into law, which are expected to mirror the terms agreed to with automakers this month.  If all goes according to plan, the rule will become enforceable sometime next year. 

“This is another important step toward saving money for drivers, breaking our dependence on imported oil and cleaning up the air we breathe,” said EPA Administrator Lisa P. Jackson in the White House statement. “American consumers are calling for cleaner cars that won’t pollute their air or break their budgets at the gas pump, and our innovative American automakers are responding with plans for some of the most fuel efficient vehicles in our history.”

Photo credit: flickr.com/photos/elsie/4259133722/sizes/m/in/photostream/

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