New SUV, Pickup Fuel Use Regulations

WASHINGTON, March 28, 2006; John Crawley writing for Reuters reported that the Bush administration is expected to announce on Wednesday a modest rise in fuel economy standards for light trucks that industry experts say will not hurt struggling U.S. automakers that produce the least efficient models of popular sport utilities and pickups.

Transportation planners believe changes to the Corporate Average Fuel Economy (CAFE) standards through 2011 will save billions of gallons of gasoline and address U.S. President George W. Bush's call for consumers to be more energy efficient.

Bush said in January that America was "addicted to oil" and needed to reduce its dependence on petroleum imports. Gasoline use is expected to account for about 44 percent of total U.S. petroleum demand in 2006, according to the Energy Department.

Federal transportation officials, who would not comment on the final regulation ahead of its release, have previously said the initiative would not compromise safety.

But consumer and environmental groups say the plan they expect will not go far enough and could penalize foreign manufacturers who have long invested in fuel-saving technology and have regularly outpaced their U.S. rivals in producing vehicles that go further on a gallon of gas.

General Motors Corp. and Ford Motor Co. are battling shrinking market share and substantial losses -- $10.6 billion for GM alone last year. But the new fuel rule, while boosting standards for their bread-and-butter products, will not by itself hurt production plans.

In fact, the change could simplify options for leading light truck makers, which would no longer have to build smaller vehicles simply to comply with federal fuel economy standards as is the practice now.

"It means these vehicles (light trucks) are permanently on the highway unless the public doesn't want to buy them," said Joan Claybrook, president of Public Citizen, a public-interest watchdog organization.

Sales of pickups and SUVs -- the most popular selling models made by U.S. manufacturers -- slipped in 2005 largely because of higher gas prices. But these still account for more than half of all vehicles on U.S. roads.

The Chevy Silverado and GMC Sierra pickups made by GM are among the least fuel efficient light vehicles while the Ford Escape Hybrid tops the list, according to Motor Trend. The Toyota Motor Corp. RAV4 is the best among non-hybrids.

The administration's plan was revised since proposed last summer, according to industry and environmental group sources familiar with parts of the plan.

The light truck standard was last updated three years ago and required 22.5 mpg for the current model year.

The National Highway Traffic Safety Administration plans to phase out its practice of averaging fuel economy over an automaker's entire light truck fleet by 2011. Instead, the government will create up to six categories that require different standards based on vehicle size.

Under the proposal small light vehicles would have to achieve 28.4 mpg by 2011 and bigger models, 21.3 mpg by 2011. But those numbers will likely go up in the final rule because current fuel prices are running at $2.50 per gallon, about $1 higher than what the administration projected when it devised the new standard last August.

Another likely change from the earlier proposal would require the largest light trucks to meet fuel standards for the first time, industry and other sources confirmed. This will have little impact on big manufacturers because the market share of these vehicles is small.

The heaviest pickups are expected to remain exempt from fuel targets because they are considered work trucks, not everyday vehicles.