SUV Nirvana?

As Lesley Stahl reports for 60 Minutes, here is your typical American car buyer, when it comes to mileage:

"I'm not gonna interrupt my lifestyle because of a few extra bucks on gas mileage ... I understand the oil situation and everything like that. But we're America, I guess, you know? And this is the way we live."

At the Smith-Cairns Ford dealership in the suburbs of New York City, SUVs are by far the biggest sellers, and manager Tony Forcelli can't remember the last time he was even asked about mileage.

So what is the issue?

Says Forcelli, "I think comfort and the amenities, you know? The availability of, in a truck, to have power windows, DVD players, power seats, power door locks, a lot of comfort features, leather interior, moon roof."

But what if America could have it all: the thrill of driving our big cars and the satisfaction of cutting down on gas consumption? What if there was a way to double the mileage of SUVs? Of course, it would add to the sticker price, and mean that SUVs would be a little less powerful.

Interested? Well, studies done by the Massachusetts Institute of Technology (MIT), the National Academy of Sciences, and several environmental groups say it could be done with some high-tech fixes.

John De Cicco, an automotive engineer with the group Environmental Defense, is the author of one of those studies. He used computer modeling to re-design the Ford Explorer, the nation's most popular SUV.

Says De Cicco, "You could take that vehicle and put a better engine in it, an engine that cuts the energy waste that's going on in today's engines. You could put a better transmission in it, take weight out of the vehicle, without making it any smaller. If you do that, you could improve that 20-mile-per-gallon vehicle today to 35 miles per gallon."

And he is not talking about hybrids or fuel cells. He is talking about the engine as it is now.

He says there is new technology that turns the engine off while the car is waiting at a stoplight and restarts it seamlessly. He proposes better aerodynamics and the latest in lightweight materials for a package that, by his estimate, would add only $1,400 to the sticker price, but save $600 a year in gas.

And to do what he is suggesting, everything is already in place.

"Those are theoretical studies on paper," says Neil Schilke, who has been a director of engineering at General Motors since 1996. "We're not talking about theoretical stuff here. We're talking about designing vehicles to put in customers' hands."

Is he saying it can't be done?

"I'm saying it can't be done without compromising the requirements that are realistic in the marketplace, yes."

Such as?

"Such as the climbing hills, acceleration performance, overall safety requirements, and, and, and..."

But environmentalists say it could be done if the automakers froze the size of SUVs where they are today, and put the brakes on the horsepower race.

The new Cadillac goes from zero to 60 mph in less than four seconds. American cars have nearly twice the horsepower they had just 20 years ago, and as power grows, so does the number of gallons of gas used.

Why do automakers have to make heavier vehicles and larger vehicles?

Says Schilke, "Well, the market demands it."

Yes but who creates the market?

Schilke: "The customer."

Yes, but the ads are always talking about horsepower. The automakers are pumping it up.

Schilke: "Well, you know, if you think that we control the customer by virtue of what we advertise – boy, if it was only so."

Here is what critics of Detroit say: that it has made improvements. That it has done things with the engine and with materials. But instead of taking that and applying it to fuel economy, they've put it all toward horsepower, and they've let fuel economy go by the wayside.

Schilke: "Well, that's not really true, like there's a really good comparison between our 1990 pickup trucks and our 2000 pickup trucks. And over that 10-year span, there's been a performance improvement in terms of acceleration of the order of 10 to 15 percent. And there's been a fuel economy improvement of the order of 15 percent, too."

But a closer look at the statistics shows that his dates were carefully chosen. Since 2000, the fuel economy of GM's pickups has fallen back down below where it was in 1990. Nearly all the automakers, including the Japanese, are losing ground on gas mileage, which they all know hurts their image.

To deal with that, GM says its cars of the future will include models with better mileage, though not the mileage the critics would like to see.

With Schilke at her side, Stahl took a GMC Sierra full-sized pickup truck for a spin around Dodger Stadium, accelerating up a hill and finally reaching cruising speed. Under the Sierra's hood was one of the gas-saving technologies the environmentalists are talking about. It's called "displacement on demand."

As Schilke explains it, "You would want full engine power when you're climbing a hill. And you'd have that. But then when you get to a steady cruising speed on the highway, you would go from operating on eight cylinders to operating on only four cylinders."

He says the only indication you have that the engine is cutting back to half-power is when a dashboard light turns green. When it happened during Stahl's test drive, indeed, she reports, she did not feel it at all.

Schilke says displacement on demand will be put in millions of GM vehicles and should improve fuel efficiency by 2 to 4 miles per gallon. But GM plans to make even more radical changes in its lineup over the next decade -- with hybrids, and eventually cars that are powered by hydrogen fuel cells.

"We have 600 engineers and scientists around the world that are developing fuel cells," Schilke explains.

But hydrogen technology is still iffy, and hybrids may never catch on with the consumer because of their added cost -- about $3,000 to $4,000 a car.

In the midst of all this, there is the Hummer.

Stahl: "As you try to bring out this line right here today to show us how you're gonna save fuel, you're also bringing out this other thing, this monster, that's eating fuel. How does the Hummer figure into that commitment?"

Schilke: "Well, I think...it's part of the...company's attempt to satisfy our - our customer profile."

Stahl: "Satisfying customers?"

Schilke: "Right."

Stahl: "That's the end-all and be-all?"

Schilke: "It's gotta be."

Without the huge profits from Hummers, Durangos and Expeditions, Detroit's financial picture would be even more grim than it already is. Ford and Chrysler are barely making a profit, and GM makes more money selling mortgages than cars.

Stahl: "I guess it would be a business suicidal act to go out and make a whole line of cars that you know the consumer doesn't want."

Schilke: "Yeah, we've actually done that a couple times... Not on purpose, but..."

Stahl: "Learned your lesson."

Schilke: "Learned our lesson."

"The auto industry has been hiding behind this issue of consumer demand for decades," says Michelle Robinson, policy director for the Union of Concerned Scientists, a Washington-based environmental group.

"If consumers knew that they could purchase the same SUV they are driving today that got significantly farther on a gallon of gas, we think they'd make that choice," she continues. "They are not given that choice today. And without government action, there's no incentive for the industry to give consumers that choice."

She says that, without government pressure on the auto industry, we would not have gotten seat belts, air bags, emission controls or the gas mileage we have in cars today.

"Our proposal to increase fuel efficiency hasn't been that popular in Detroit. I admit it. But we thought it was the right thing to do," says U.S. Secretary of Energy Spencer Abraham, who also says the administration is putting $1 billion into research on hydrogen cars.

Stahl: "But I'm told that we won't even begin to see those cars till 2020 if we're lucky. I mean, isn't that just kicking this thing down the road?"

Abraham: "Quite the contrary. If we didn't do this, then it would always be 30 years away."

Stahl: "But between now and then, I've seen an estimate: 150 million cars will be sold in this country."

Abraham: "Right."

Stahl: "With the gas engine. And so that just spins out; we'll be driving gas cars forever and ever. What about now?"

Abraham: "Well, there are a lot of things we need to do in the next 20 years to try to improve our situation so that we're ready when we get to the time of hydrogen vehicles.

For now, the energy department is finacning research on hybrid technology and cleaner diesel engines.

Says Abraham, "We're also, of course, supporting the introduction of more tax credits to try to provide more incentives for people to buy hybrids as well as fuel-cell vehicles."

The administration is supporting tax credits of up to $8,000 for so-called "green" cars. But at the same time, President Bush has expanded a tax break for the purchase of the biggest of the big SUVs, which are classified as trucks.

Says Robinson, of the Union of Concerned Scientists, "In the '80s, this benefit was created that would give an individual $25,000 in a tax break if they purchased a truck."

Everybody who buys an SUV gets a tax break?

"If they can say to the IRS that they are using that vehicle 50 percent of the time for work purposes," Robinson confirms.

The tax break applies to vehicles over 6,000 pounds, which in the past meant things like delivery trucks. But today, it includes luxury mega-SUVs such as the Toyota Land Cruiser and Ford Excursion. What began as a $25,000 tax break grew to $100,000 when Congress passed the president's economic stimulus package last spring.

Abraham: "We think small businesses need to have support at this time to keep them afloat, to keep the economy moving ahead."

Stahl: "But there's an encouragement for the small businessperson, not just to stay afloat, but to go buy the biggest gas guzzler there is, the 6,000-pound car, the biggest. Does that make sense?"

Abraham: "I don't think we can ... dictate what vehicles people buy. I think the goal here is..."

Stahl: "This is encouraging them. I mean, you can almost buy the whole car for the tax break."

Abraham: "Well, I'm not gonna concede that that would be the way these would be used or that..."

Stahl: "Well, there's some evidence that is how they're being used."

Abraham: "Well, I don't know. We'll have to wait and see what - what happens."

Well, people are being encouraged. Web sites that give tax advice are running headlines like this: "Why it may pay for your next business car to be a heavy SUV." And it's no surprise that auto dealers are also alerting customers to the new loophole.