Bush signs law to increase auto fuel-efficiency, but consumers will pay more

President Bush has signed into law the first increase in fuel-efficiency standards in 32 years for American automakers. The law also mandates increases in the production and sale of renewable fuels. But Detroit is already warning consumers to expect price increases.

Charles Griffith, director of the Auto Project for the Ecology Center, a nonprofit environmental organization based in Ann Arbor, told Michigan Messenger that “the good note for states like Michigan is that the final deal that got issued included some provisions that should allow for additional flexibility and assurances for job protection and potentially financial support for the industry to help it invest in these new technologies.”

The current mileage standard for vehicles is 27.5 mpg for passenger cars and 22.2 for light trucks. The Los Angeles Times reports, “The legislation calls for a 40 percent increase in fuel-efficiency for new cars and light trucks by 2020, for a fleet-wide average of 35 miles per gallon. It also requires a fivefold increase — to 36 billion gallons — in the amount of alternative home-grown fuels, such as ethanol, that must be added to the nation’s gasoline supply by 2022.”

Continued -As the auto industry became more competitive, domestic automakers traditionally balked at higher fuel-efficiency, citing “either a lack of need for dramatic action or arguing for less-onerous requirements to be placed on the industry,” according to Griffith.

However, Gregory Martin, director of policy and Washington communications for General Motors, told Michigan Messenger, “We were in support of increasing the fuel-economy standards; we wanted some clearer reforms in the regulation that recognized the inherent distinction between cars and light trucks and also to continue incentives to produce alternative-fuel vehicles. We were able to get those reforms in the legislation.”

While domestic automakers may be satisfied with the new law, signed late in December, the increased costs will be passed on to consumers who might not be so happy. “The requirements do come with a price tag to us, and consumers can expect to pay more for this technology to meet the standards,” Martin said.

It remains to be seen how much of the new costs will be passed on to the public, but Bloomberg News reported  that in June, GM Vice Chairman Frank Lutz said “meeting higher mileage standards would cost $6,000 per vehicle and force the automaker to add gasoline-electric hybrid systems to most new models.”

Of particular concern to Griffith of the Ecology Center was the $36 billion dedicated to increasing the production and sale of renewable fuels. Griffith said: 

  “While many environmental groups like ours do support renewable fuels as a direction we should be moving in, we also caution that you have to do that very carefully in order to limit potential negative environmental consequences. We need to build those policies into the final law because ultimately the bill that was passed had minimal, shall we say, environmental requirements. So that is a piece that we need to go back and make some changes to that policy.”

When asked what the biggest challenge was in meeting the new standards, Martin said it was “making sure the technology improvements keep pace with the requirements — but you can’t legislate breakthroughs.”