News Column

Obama Administration's New Fuel Economy Rules Draw High-octane Reactions

Aug. 3, 2011

Scott Learn


The Obama administration's deal with automakers last week to double auto and light-duty truck mileage by 2025 has fueled has fueled some high-octane debate, with critics predicting increased car prices and supporters saying the standards will spur badly needed innovation. Also, California is taking credit for the whole thing.

The proposed standards would require vehicles sold in the United States to average 54.5 miles per gallon by 2025, double the current 27 miles.

That upgrade could boost prices, Forbes' Althea Chang points out. Auto analyst Art Spinella, president of CNW Marketing Research, told Chang that technology upgrades to meet the new standards will come on top of increasing prices for aluminum, stainless steel and other metals on rising Asian demand. Automakers will have to spend more on development of all-electric cars and hybrid cars, including diesel-electric cars, Spinella said. He predicted that increased costs will outweigh fuel savings.

USA Today reports that the new standards will put a premium on high technology, a potential boon for engineers and auto parts suppliers.

"Automakers need to take major steps to coax buyers into smaller vehicles, cut fuel use with turbochargers and hybrids, slash vehicle weight and take other measures," the paper says. "But every little step will matter, too, such as how easily speeding cars slip through the air."

Take the Ford Focus: The new version, which went on sale earlier this year, is "7% more slippery than the one it replaced," the paper says. Among the changes: more aerodynamic side mirrors, wheel wind deflectors, a panel underneath the front end, shutters that close behind the grille at higher speeds and molding on the front roof pillars aimed at smoothing out air.

The Christian Science Monitor says the new rules will not mean the death of gasoline engines. But they will reinforce a shift to smaller cars.

The post quotes BorgWarner Inc. Chief Executive Tim Manganello: "The Detroit Three have finally and really discovered fuel economy and it's a real focus for them."

The reaction in California, which led the way on mileage standards, was largely positive. An editorial in The Sacramento Bee says the new rules "might not have come about without California's tough stand on reducing greenhouse gases."

"Gov. Jerry Brown rightly crowed about the agreement last week," the editorial said, "calling California's greenhouse gas emission standard that formed the underpinning of the accord an example of an 'intelligent regulation.' Brown also gave credit to his predecessor, Gov. Arnold Schwarzenegger, who pressed for the tough standard despite former President George W. Bush's opposition."

The Los Angeles Times editorial board liked the new rules, too. Car buyers can make up for higher costs in fuel savings, the paper asserted.

The White House estimates the new rules will save Americans $1.7 trillion dollars in fuel costs and halve imported oil consumption.

"The only losers in Friday's deal are Saudi princes and other oil barons -- but they'll survive," the paper said.

Critics aren't idling. The Hill's energy and environment blog notes that a House Republican leader quickly launched an investigation of negotiations between the administration and automakers.

House Oversight and Government Reform Committee Chairman Darrell Issa sent letters to executives of the country's major automakers Friday alerting them to the investigation.

"I am concerned about the agreement's lack of transparency," the letters say, "the failure to conduct an open rulemaking process, as well as the potential for vehicle cost increases on consumers, and negative impact on American jobs."

Source: Copyright (c) 2011, The Oregonian, Portland, Ore.

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