May 3, 2006

US says car fuel standard change a long-term fix

By John Crawley

WASHINGTON (Reuters) - The Bush administration acknowledged
on Wednesday that overhauling fuel economy standards for
compacts, sedans and other passenger cars would take years to
meaningfully reduce oil consumption and would impose new costs
on financially struggling U.S. automakers.

But Transportation Secretary Norman Mineta told the House
of Representatives Energy and Commerce Committee at a hearing
that raising Corporate Average Fuel Economy standards for the
first time in 16 years was still a worthy goal to cut American
dependence on imported oil. He promised to move carefully if
granted the authority by Congress to do so.

Mineta offered no definitive timetable for changing the
CAFE regulations or set new efficiency targets for cars, which
the Transportation Department estimates account for about 25
percent of domestic oil use.

Although pressed by lawmakers, Mineta also would not guess
how much oil could be saved by boosting the car standard and
said just getting a new rule in place could take more than two

"It will take time. It will be like President John F.
Kennedy's call to get to the Moon. It still took 10 years to
get to the Moon, but the urgency was to start. We're in the
same position."

Under political and public pressure to respond to gasoline
prices exceeding $3 in many parts of the country and underscore
his call to reduce energy dependence, President George W. Bush
surprised even his own aides by asking Congress last week for
authority to raise the long-standing CAFE standards.

"It is the single most important step that Congress can
take to what the president has correctly identified as the U.S.
addiction to oil," said Rep. Sherwood Boehlert, a New York
Republican and chairman of the House Science Committee.

But Boehlert is at odds with the administration on how to
proceed. He said allowing regulators to determine a new
standard would be "tepid" and "symbolic" and urged lawmakers to
back his bill that would require all vehicles -- including
sport utilities, minivans and pickups -- to achieve 33 miles
per gallon by 2015.

Each manufacturer's fleet of passenger cars -- compacts,
sedans and wagons -- currently must average 27.5 miles per
gallon under the CAFE law. The administration in March raised
the fuel standard for SUVs, pickups and vans -- the light truck
class - by 1.9 mpg to 24.1 mpg between the 2008 and 2011 model
years. It estimates overall savings at more than 10 billion
gallons of fuel.

The Transportation Department also changed the way fuel
efficiency is calculated for light trucks, moving away from a
weight-based formula to one based on size. Mineta said
overhauling the fuel calculation for cars is also a priority.

Legislation proposed by the House Energy and Commerce panel
would give Mineta the authority to boost standards and change
the savings calculation for cars. He said the administration
would accept nothing short of that and urged Congress to simply
let him proceed with regulation.

Mineta said he would proceed carefully if allowed to do so
and with special regard to U.S. automakers. "I remind members
that CAFE will not be without cost. And I am aware that certain
automakers are having a rough time financially."

The industry, represented by the lobbying group Alliance of
Automobile Manufacturers, said overhauling standards for cars
may be premature and should not be viewed as a "panacea" for
countering high fuel costs.

Auto companies also noted that more than 100 models for
sale today get more than 30 mpg.

"The Alliance also believes that (regulators) should very
carefully weigh the timing of any increases in passenger car
standards in view of the current economic health of the
industry," the group said in a statement.

General Motors Corp. and Ford Motor Co. have given up
significant market share to foreign rivals in recent years and
have posted huge losses.