Obama nears decision on boosting auto fuel-efficiency standards

One White House proposal calls for the U.S. car and truck fleet to average 56 mpg by 2025, but automakers are lobbying Obama for concessions to reduce energy savings and for a review that could reopen bargaining in several years.

President Obama is nearing a decision to sharply increase vehicle fuel-efficiency requirements. But automakers — emboldened by a return to profitability two years after an industry bailout — are pushing hard for concessions that would reduce energy savings in the next generation of cars and trucks.

The companies are also calling for a review several years down the road that would potentially reopen the bargaining, which environmentalists say could enable the industry to drag its feet and eventually meet lower standards.

The most ambitious proposal on the table calls for the American car and truck fleet to average 56 miles per gallon by 2025. Although the industry has not publicly offered a counterproposal, it is believed to be seeking average mpg standards in the low- to mid-40s.

To increase pressure on Obama, a radio advertising blitz in seven politically important states is scheduled to start Thursday featuring warnings against overzealous government regulation and the threat of worker layoffs. The Alliance of Automobile Manufacturers will begin airing 60-second radio ads in the District of Columbia, Michigan, Ohio, Indiana, Illinois, Pennsylvania, North Carolina and Missouri.

"Families would be hit with higher car prices," the ads say. "Small businesses dependent on vans, SUVs or pickups would face limited vehicle choice."

At issue in the negotiations between the White House and automakers, led by Detroit's Big Three — General Motors, Ford and Chrysler — are fuel-efficiency standards for cars and light trucks to be built starting in 2017. In addition to arguing that Obama wants to increase standards too much, manufacturers reportedly want to continue to have less demanding standards for light trucks, SUVs, minivans and full-size trucks.

Federal standards apply to a manufacturer's entire output, not to each individual vehicle. Makers can continue to produce less efficient vehicles but must ensure they sell enough of the more efficient units to make the total fleet average meet the overall fuel standard.

Industry resistance comes after a period of relative accord. In May 2009, chief executives of the nation's car companies stood with Obama in the White House Rose Garden in an unprecedented show of unity over raising fuel efficiency to about 34 miles per gallon by 2016.

What's changed is part politics and part economics.

Automakers are worried about being saddled with tough efficiency standards that might leave them out of step with consumer preferences. Despite the increasing popularity of fuel-efficient cars, the top-selling vehicles in America remain gas-hungry trucks. The industry says sharply higher standards could lead to layoffs, price increases of up to $10,000 per vehicle, diminished safety and the demise of some vehicle lines.

"You get into trouble when consumers want to buy one thing and what the fuel-efficiency standard said is to make another thing," said Jeremy Anwyl, chief executive of auto information company Edmunds.com.

But some industry analysts said the long lead time of the proposed new standards would give carmakers plenty of time to comply, that innovative new vehicles could boost their profits and savings on gas would help offset higher car prices for consumers. The United Auto Workers union, which for years echoed car companies' assertions that tough mileage standards would destroy jobs, now sees fuel-efficient vehicles as a way to keep factories open.

"President Obama saved the auto industry. He doesn't want to jeopardize that," UAW President Bob King said. "To direct this kind of criticism at the administration after what they've done is irresponsible."

The White House declined to comment on the negotiations, which include car companies, the state of California and other stakeholders, saying only that they are "constructive."

Source http://www.latimes.com/business/la-fi-fuel-economy-20110721,0,6325891.story