New Fuel Proposal Fuels Debate

Gov't, Environmentalists Disagree Over New Efficiency Standards

(CBS/AP) 
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.