Bush Plans Rules to Boost Auto Fuel-Economy Standards (Update1)

By John Hughes and Roger Runningen

May 14 (Bloomberg) -- The U.S. government plans to set new fuel-economy standards for cars by the end of 2008 and force increased use of alternative fuels such as ethanol to reduce greenhouse gases linked to global warming.

``We're taking action,'' President George W. Bush said today in the White House Rose Garden. The rules ``will make our economy stronger, our environment cleaner and our nation more secure for generations to come,'' he said.

Bush already asked Congress to enact legislation to accomplish his fuel-standard and alternative-energy goals. Today's action gives the administration another option for writing the provisions into law should Congress fail to act. The announcement comes as gasoline prices are at a record high.

The administration didn't say how much it would raise the 27.5 miles-per-gallon car standard that must be met by automakers such as General Motors Corp. and Ford Motor Co. The standard, and extension of the current light-truck rule, would cut gasoline use 5 percent by 2017, the White House said in a statement.

The regulation also would require 35 billion gallons of alternative fuels in 2017, almost five times the 2012 target now in law, the White House said.

Representative Edward Markey, a Massachusetts Democrat, said Bush won't meet his fuel-standard goal unless Congress enacts it into law.

`Half Measures'

``The president asked his agency heads to share ideas and come up with a plan that is due three weeks before he leaves office,'' Markey, chairman of a select committee on global warming, said in a statement. ``Our oil dependence is too high, and the threat of global warming is too great, to allow half measures and delay to take the place of action any longer.''

Representative John Dingell, a Michigan Democrat who chairs the House Energy and Commerce Committee, said the U.S. needs to come up with options beyond pressing automakers for higher fuel economy as a way to reduce oil consumption and greenhouse gases.

Dingell, whose district includes Ford's Dearborn, Michigfan, headquarters, said policy makers shouldn't be ``engaging in a sterile debate'' about U.S. mileage rules. He made the comments in remarks at the Detroit Economic Club.

Bush's announcement was prompted by the Supreme Court's April 2 order to U.S. environmental officials to reconsider their refusal to regulate greenhouse-gas emissions. The justices, voting 5-4, said the Environmental Protection Agency didn't follow requirements of the Clean Air Act in 2003 when it opted not to order cuts in carbon emissions from new cars and trucks.

`Dual Track'

EPA Administrator Stephen Johnson said in a conference call with reporters that his preference is to enact legislation, which would provide more certainty and protect against lengthy lawsuits. The rulemaking gives the administration a ``dual track'' for success, he said.

Automakers support giving Bush authority to set fuel-economy standards ``consistent with the need to preserve jobs and consumer choice,'' Dave McCurdy, president of the Alliance of Automobile Manufacturers, said in a statement. The trade group represents U.S. and overseas companies including GM, Ford and Toyota Motor Corp.

McCurdy on May 8 called a Senate proposal to raise standards to 35 mpg for cars and light trucks by 2020 ``unrealistic.''

The Senate Commerce, Science and Transportation Committee voted that day to set a standard and sent the legislation to the full Senate.

Bush's plan would require a standard of 34 mpg for cars and light trucks by 2017, according to the Union of Concerned Scientists. The group's estimate is based on his stated goal in January to increase standards 4 percent a year starting with 2010 models for cars and 2012 models for light trucks.

`20 in 10'

Bush calls his proposals now pending in Congress, first made in January, ``20 in 10,'' because he aims to reduce U.S. gasoline consumption by 20 percent in 10 years.

The need for energy independence has intensified as crude oil soared to a record $78.40 a barrel last year. Today, crude for June delivery rose 9 cents to $62.46 a barrel at 2:57 p.m. on the New York Mercantile Exchange.

Regular gasoline at the pump, averaged nationwide, rose 0.9 cent to a record $3.073 a gallon yesterday, according to AAA, the nation's largest motorist organization. Gasoline prices have increased 5.9 percent from a year earlier.

Consumers shouldn't expect lower gasoline prices as a result of today's announcements, spokesman Tony Snow said. ``It's not going to have an immediate effect'' on fuel prices, he said before the president's statement.

To contact the reporter on this story: John Hughes in Washington at Jhughes5@bloomberg.net ; Roger Runningen in Washington at rrunningen@bloomberg.net

Last Updated: May 14, 2007 16:23 EDT

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