Automakers urged the Bush Administration on Tuesday to loosen proposed fuel economy rules requiring new vehicles to achieve higher levels of fuel efficiency.
The Alliance of Automobile Manufacturers, representing General Motors (NYSE: GM) Ford (NYSE: F), Toyota (NYSE: TM) and seven other car makers, said the proposal set forth by the National Highway Traffic Safety Administration (NHTSA) in April is too aggressive.
That proposal would require manufacturers to make vehicles 4.5% more fuel efficient each year, beginning in 2011 and continuing through 2015.
"This goes beyond what is technologically feasible and economically practical," the Alliance said.
If implemented, the new rules would result in a fleetwide average of 31.6 miles per gallon (mpg), a level that is too low in the opinions of many environmental groups.
The Union of Concerned Scientists said in a recent report the NHTSA could set cost-effective fleet average fuel economy standards approaching 40 mpg by 2020, a target achievable even without hybrid technology. With a modest 25% hybrid market share in 2020, a fleet average fuel economy of 42 mpg could be achieved, while increased sales of fuel-efficient hybrids could push the average even higher.
One of UCS’s objections to the NHTSA draft rule is that is uses an extremely low estimate for the cost of gas, approximately $2.50 a gallon or less between 2011 and 2030 (in 2007 dollars). The cost of gasoline has blew past that price mark months ago.
The head of the Energy Information Administration, Guy Caruso, also objected to the use of the $2.50 price in testimony to Congress.
If NHTSA assumed gas prices of $4 or more a gallon, the agency would be forced to make the proposal tougher, a move that has been called for not only by Democratic legislators like Rep. Ed Markey, but also by Republican presidential hopeful, Senator John McCain.
According to UCS calculations, achieving just the minimum 35 miles-per-gallon (mpg) fleet-wide average by 2020 would bolster the auto industry and the economy. The standards would cut oil use by 1.1 million barrels a day. For consumers, that is akin to cutting the cost of gasoline at today’s prices by more than a dollar per gallon.
When it passed an energy bill last year, Congress required the NHTSA to set fuel economy standards at the "maximum feasible," level with a minimum industry fleetwide average of 35 mpg by 2020. Automakers supported the bill at that time.
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