Obama’s Proposed Increased Fuel Efficiency Will Cost Extra $1,300 Per Vehicle

May 19, 2009 - 3:09 PM
President Barack Obama outlined Tuesday the nation's first comprehensive effort to curb vehicle emissions while cutting dependence on imported oil, calling the plan an historic turning point toward a "clean-energy economy."

President Barack Obama shakes hands with Michigan Gov. Jennifer Granholm as California Gov. Arnold Schwarzenegger, right, and Massachusetts Gov. Deval Patrick, left, look on, Tuesday, May 19, 2009, in the Rose Garden of the White House in Washington, during an event announcing new fuel and emission standards for cars and trucks. (AP Photo/Charles Dharapak)

Washington (AP) - President Barack Obama outlined Tuesday the nation's first comprehensive effort to curb vehicle emissions while cutting dependence on imported oil, calling the plan an historic turning point toward a "clean-energy economy."
 
Joined in the White House Rose Garden by leaders of the auto industry, labor, government officials and key national and state political leaders, Obama said the agreement that once would have been "considered impossible" was what he termed a "harbinger of a change in the way business is done in Washington."
 
The two-pronged approach to problems that compound threats to the global environment marks the latest in a series of shifts by the Obama administration away from the policies of his conservative predecessor, former President George W. Bush.
 
"As a result of this agreement," Obama said, "we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years. And at a time of historic crisis in our auto industry, 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."
 
He said the new rules amounted to removing 177 million cars from the roads over the next 6 1/2 years.
 
In that period, the savings in oil burned to fuel American cars, trucks and buses would amount to last year's combined U.S. imports from Saudi Arabia, Venezuela, Libya and Nigeria.
 
While the new fuel and emission standards for cars and trucks will save billions of barrels of oil, they are expected to cost consumers an extra $1,300 per vehicle by the time the plan is complete in 2016. Obama said the fuel cost savings would offset the higher price of vehicles in three years.
 
While requiring that vehicle carbon dioxide emissions be reduced by about one-third by the target date, the plan requires the auto industry to be building vehicles that average 35.5 miles per gallon.
 
The plan also would effectively end a feud between automakers and statehouses over emission standards - with the states coming out on top but the automakers getting the single national standard they've been seeking and more time to make the changes.
 
The plan, to be proposed in the Federal Register of pending rules and regulations, must still clear procedural hurdles at the Environmental Protection Agency and the Transportation Department. Automakers expressed their support for the plan. "We're all agreeing to work together on a national program," said Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers.
 
Administration officials said consumers were going to pay an extra $700, anyway, for mileage standards that had already been approved. The Obama plan adds another $600 to the price of a vehicle, a senior administration official said, bringing the total cost to $1,300 by 2016.
 
Under the changes, the overall fleet average would have to be 35.5 mpg by 2016, with passenger cars reaching 39 mpg and light trucks hitting 30 mpg under a system that develops standards for each vehicle class size. Manufacturers would also be required to hit individual mileage targets.
 
In a battle over emission standards, California, 13 other states and the District of Columbia have urged the federal government to let them enact more stringent standards than the federal government's requirements. The states' regulations would cut greenhouse gas emissions by 30 percent in new cars and trucks by 2016 - the benchmark Obama planned to unveil for vehicles built in model years 2012 and beyond.
 
The Obama plan gives the states essentially what they sought and more, although the buildup is slower than the states sought. In exchange, though, cash-strapped states such as California would not have to develop their own standards and enforcement plan. Instead, they can rely on federal tax dollars to monitor the environment.
 
The auto industry will be required to ramp up production of more fuel-efficient vehicles on a much tighter timeline than originally envisioned. It will be costly; the Transportation Department last year estimated that requiring the industry to meet 31.6 mpg by 2015 would cost nearly $47 billion.
 
But industry officials - many of whom are running companies on emergency taxpayer dollars - said Obama's plan would help them because they would not face multiple emissions requirements and would have more certainty as they develop their vehicles for the next decade.
 
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Associated Press writers Ben Feller, Ken Thomas and Dina Cappiello contributed to this report.