Automakers Fight Calls to Boost US Fuel Efficiency

US: March 16, 2007

WASHINGTON - A sharp increase in auto fuel efficiency standards will not result in a meaningful drop in US oil consumption and would add billions in costs, chief executives of the world's top car companies said Wednesday.

The officials from Chrysler Group , General Motors Corp., Ford Motor Co. and Japan's Toyota Motor Corp. agreed that significant efficiency improvements and reduced carbon emissions will come mainly from alternative fuels, hybrids and other technology -- not tougher fuel mandates.

"We need government to be our partners, not our adversaries," Ford chief executive Alan Mulally told an Energy and Commerce subcommittee hearing in the House of Representatives.

The automakers' position is squarely at odds with a proposal from President Bush and a growing number of lawmakers who favor an increase in fuel economy of 4 percent annually to quickly and dramatically cut oil use.

"It's not going to fix the problems that are relevant," GM chief executive Rick Wagoner said after the hearing about whether the proposals were workable.

Wagoner said a 4 percent increase -- to roughly 34 miles per gallon for all vehicles -- over the next decade could cost his company more than US$40 billion. Other executives did not challenge the estimate of billions more in cost, and did not give a figure during the hearing or when pressed by reporters.

Wagoner and his counterparts back a modest increase in fuel standards if the government changes the way they are calculated and only if engineering experts at the Transportation Department, not Congress, decide what is feasible.

"We urge Congress to resist the temptation to set some arbitrary level," Wagoner said.

The auto executives say the 30-year-old government fuel efficiency program has not quelled the appetite for imported oil. Even sharp increases in efficiency would not reduce consumption with more cars on the road, they said.

"If all the new vehicles sold in the US 10 years from now were hybrids or diesels -- something that no one really believes is feasible -- fuel economy would improve by only 25 to 30 percent," said Chrysler's Tom LaSorda.

Auto companies have long resisted raising the standard, which has been updated incrementally in the past two decades.

Gasoline demand accounts for nearly half of the average daily US consumption of 20.9 million barrels of oil.

An automaker's fleet of passenger cars must average 27.5 miles per gallons, a figure that has not changed in 17 years. Sport utility vehicles, pickups and other light trucks must get 24.1 mpg by 2011, under changes imposed by regulators last year.

Any fuel legislation, which would also feature provisions to reduce carbon or "greenhouse gas" emissions, probably would not be finalized until next year at the earliest.

At the hearing, the auto chiefs agreed that a cap in tail pipe emissions might be feasible, but only if fuel and other industries rein in their emissions and carbon production, too.

A new fuel efficiency standard of 34 mpg would cut roughly 230 million metric tons of air pollution -- the equivalent of taking 30 million cars off the road, said David Friedman, research director at Union of Concerned Scientists.

Friedman said the automakers' openness for a cap on emissions produced by their vehicles was diluted by their condition that other industries further up the production chain also pay a price.

Story by John Crawley

REUTERS NEWS SERVICE