New Fuel Proposal Fuels Debate

With gas prices continuing to rise, the Bush administration on Tuesday proposed new rules to compel auto manufacturers to make pickup trucks, minivans and some sport utility vehicles more fuel efficient. Environmentalists said the plan would do little to wean the nation from its dependence on foreign oil.

The plan, announced by the Department of Transportation in Atlanta, CBS News Correspondent Mark Strassmann reports, demanded that by 2008 manufacturers boost fuel efficiency on SUVs and light trucks by six percent. All automakers would have to comply fully by 2011.

"This is a plan that will save gas and result in less pain at the pump for motorists without sacrificing safety," Transportation Secretary Norman Y. Mineta said.

CBS News Correspondent Jim Axelrod reports that soaring gas prices are changing the way some are doing business. An Ohio amusement park

Mineta, speaking at news conferences in Atlanta and Los Angeles, said the program was expected to save about 10 billion gallons of gasoline over the life of vehicles built from 2008 through 2011.

Strassmann adds that environmentalists were not impressed, saying American drivers now use 11 billion gallons a month.

The U.S. currently consumes about 140 billion gallons of gasoline per year, according to Energy Department statistics.

But the plan would not apply to the largest SUVs, such as the Hummer H2. Passenger cars, already required to maintain an average of 27.5 miles per gallon, also would not be covered by the changes.

Environmental advocates said the plan failed to go far enough to reduce the nation's dependence on imported oil while creating new loopholes that would weaken the requirements. Passenger cars and light trucks, a vehicle category that includes pickups, minivans and SUVs, account for about 40 percent of the nation's oil use.

"At a time when Americans are paying record prices for gas, the Bush administration has sided with its cronies in the auto industry and rejected real solutions," said Dan Becker, director of the Sierra Club's global warming program.

Sen. John Kerry, D-Mass., called it "backward looking" and "another lost opportunity to help our security, economy and environment."

John D. Graham, director of the Office of Management and Budget's office of information and regulatory affairs, countered that the plan was projected to save more fuel than any previous rulemaking in the history of the light-truck CAFE program.

Under the current system, automakers must maintain an average of 21 mpg for light trucks and will have to meet 22.2 mpg for the 2007 model year. It represents an average of manufacturers' entire fleet of light trucks.

The new system would divide light trucks into six categories based on size. Smaller vehicles would have to get better gas mileage than larger trucks.

Automakers could opt to comply with the old system through 2010 or to meet the standards in the six categories. If they stayed with the old system, they would have to meet a 22.5 mpg average by 2008, 23.1 mpg in 2009 and 23.5 mpg by 2010.

Under the new attribute-based system, the standards would range from as high as 26.8 mpg in 2008 for smaller vehicles such as the Chrysler PT Cruiser and the Toyota RAV 4 to 20.4 mpg for large vehicles such as the Chevrolet Silverado and the Dodge Ram.

By 2010, the range would increase to 27.8 mpg for smaller vehicles to 20.8 mpg for the largest. The system provides flexibility: automakers could earn credits for exceeding the minimum in certain categories and apply them to a category where they don't meet the standard.

American automakers have cited a disadvantage against foreign competitors because sales of large SUVs, a major source of profits in recent years, must be offset by the sale of smaller models to comply with fuel economy standards.

Honda Motor Co. and Hyundai Motor Corp. primarily sell smaller SUVs and minivans, allowing them to collect credits to use in the sale of larger vehicles.

Under the new plan, "they aren't going to have to necessarily sell smaller vehicles that are called trucks to offset their low fuel economy in the big vehicles," said Walter McManus, a fuel economy expert at the University of Michigan Transportation Research Institute.

Chris Preuss, a spokesman for General Motors Corp., the world's largest automaker, said it might provide more equity in the marketplace but stressed, "The devil will be in the details."

The Alliance of Automobile Manufacturers, a trade group representing nine automakers, said the "higher fuel economy standards will be a challenge, even with all of the new fuel-efficient technologies that are offered for sale today."

With gas prices soaring this summer to an average of $2.55 a gallon nationally, the new requirements are expected to generate a debate on the nation's dependence on foreign oil. Mineta, however, said the timing of the announcement "was not related to the price of gas at all."

The spike in prices has affected more than just motorists. As CBS News Correspondent Jim Axelrod reports from his cross-country car journey, summer vacation plans have been altered and some destinations are even offering discounts to lure vacationers, despite the cost of gas.

Environmentalists said the requirements were disappointing because automakers who used the old system through 2010 would only have to boost fuel economy an average of 1.3 mpg, less than the requirements from 2004 through 2007.

Eric Haxthausen, an economist with Environmental Defense, said it was "emblematic of the fact that they're not asking enough."

The proposal will be evaluated by the auto industry and interest groups during the next three months and must be finalized by April 2006 to take effect for the 2008 model year vehicles.