Fuel Efficiency Plan Aims for Big Savings

The White House's proposal exceeds what Congress required, but gives new flexibility to automakers.

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Gas pumps sit idle at a CFN service station in San Francisco, California.

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In a move that it says will save drivers more than $100 billion in fuel costs, the Bush administration today unveiled its plan for boosting the mileage of the nation's passenger cars, minivans, and sport utility vehicles to an average 35 miles per gallon by 2020, up from about 25 mpg today.

Congress mandated the move in the big energy bill passed in December, the first overall improvement in U.S. fuel economy in nearly 30 years. The Department of Transportation's National Traffic Highway Safety Administration projects that under its plan, passenger cars would average 31.2 miles per gallon and light trucks, including minivans and sport utility vehicles, would average 25 mpg in model year 2011—the first goalpost in the program.

But the proposal would give auto manufacturers flexibility, and would introduce a new program in which carmakers who do better than required could "trade" credits to automakers who turn out vehicles that don't meet the standards.

The Bush administration projects that this approach would result in an annual increase of 4.5 percent, with cars reaching a 35.7 mpg average, and light trucks a 28.6 mpg average, by 2015, in the so-called Corporate Average Fuel Economy program. Noting that the plan would surpass the 3.3 percent annual increase mandated by Congress, Transportation Secretary Mary Peters said, "This proposal will also help us all breathe a little easier by reducing carbon dioxide emissions from tailpipes, cutting fuel consumption, and making driving a little more affordable."

NHTSA estimates that the proposal, which is now open for public comment before being finalized, will cost automakers $16 billion, which they will pass along to consumers in the form of higher vehicle prices. NHTSA estimates it will take consumers on average 56 months to see enough gasoline savings to offset the higher price of the cars and light trucks. But NHTSA did that calculation under the assumption that gasoline will be a lot cheaper than it is today; the agency estimated a range of $2.26 per gallon in 2016 to $2.51 per gallon in 2030.

The price of gasoline ratcheted up 12 cents in the last week to an all-time high of $3.51 per gallon.

For a discussion of the disputed cost of improving fuel efficiency: How the Energy Bill Will Change the Car You Drive and How They Can Squeeze More Miles From the Gallon.

U.S. News also looked at how the political momentum for fuel efficiency improvement became unstoppable in A New Front in the Fuel Fight.