Obama brokers deal with car giants

President Barack Obama and car manufacturers ushered in what could be the largest cut in fuel consumption since the 1970s on Friday with a deal that would save drivers money at the pump and dramatically cut heat-trapping gases coming from exhausts. The agreement pledges to double overall fuel economy to 54.5mpg by 2025, bringing even greater under-the-bonnet changes to the nation's cars starting in model year 2017 and introduce more electric and hybrid technology to pick-up trucks. Cars and trucks on the road today average 27mpg. "This agreement on fuel standards represents the single most important step we have taken as a nation to reduce our dependence on foreign oil," Obama said, sharing the stage with top executives of 11 major car manufacturers and a top car workers union official, before a back-drop of some of the most cutting-edge cars and pick-up trucks on the road. "Just as cars will go further on a gallon of gas, our economy will go further on a barrel of oil," Obama said. When achieved, the 54.5mpg target would reduce US oil consumption from vehicles by 40 per cent and halve the amount of greenhouse gas pollution coming out of exhausts. It builds on a 2009 deal between the Obama administration and car manufacturers, which committed cars and trucks to averaging 35.5mpg by model year 2016. For American families, the president said the agreement which will be subject to a mid-course review means filling up the car every two weeks, instead of every week. That would save $8,000 (Dh29,383) in fuel costs over the life of a vehicle purchased in 2025, compared with a 2010 model, a White House analysis said. The changes are also likely to push up the cost of a new vehicle, but just how much is unclear because the regulation still has to be written. That process will get started in September. The mileage target announced Friday isn't exactly what consumers will see in their future cars. A formula that gives credits to manufacturers for electric cars, the use of low-emission air conditioning refrigerant and technology that shuts down engines at traffic lights means the actual fuel economy is likely to come in closer to about 40mpg. Stickers on future cars and trucks will also display different numbers because they'll be based on real-world mileage tests. The deal was less than what environmentalists and public health advocates wanted but more than desired by the Detroit Three General Motors, Ford and Chrysler. In a letter to the president last week, Michigan lawmakers called the White House's initial proposal of 56.2mpg "overly aggressive", after car manufacturers had said they'd work to get vehicles averaging 42.6 to 46.7mpg. Green groups, meanwhile, had pushed for a 62mpg target by 2025. For Obama, who watched his campaign promise to limit global warming pollution die when Republicans retook control of the House, the compromise provides a way around political road-blocks and a down payment on climate change. The deal also provides an answer to critics who say the president has not done enough to address high petrol prices. It promises to reduce demand at a time when Republicans in Congress have criticised Obama for being too slow to drill and not opening up more areas to oil and gas exploration after the massive Gulf oil spill last year. And at a time when a consensus in Congress is elusive on the debt ceiling and curbing the federal deficit, the president said the fuel economy deal was a valuable lesson to Washington. "You are all demonstrating what can happen when people put aside differences," Obama said. "These folks are competitors, you've got labour and business. But they said we are going to work together to achieve something important and lasting for the country." But by Friday evening, the Republican chairman of the House Committee on Oversight and Government Reform, Darrell Issa of California, had sent letters to the 13 car manufacturers that agreed to the deal saying they should preserve all records because he was launching an investigation. Issa alleges that the new mandate was decided without the input of consumers and Congress and could harm consumers. "It appears that these actions will have the effect of determining the types of vehicles available to consumers, their use, and other factors otherwise best left to consumer choice," Issa said in the letter. For car manufacturers, particularly the Detroit Three, the deal signalled a turnaround from the days when they resisted boosting fuel economy targets, arguing that consumers would not buy smaller and more efficient cars and that the technology to reduce fuel consumption was too expensive. That stance has been challenged in recent years by a 2007 energy law that mandated the government evaluate and set new fuel economy targets, by a Supreme Court decision that said the Environmental Protection Agency had the authority to control global warming pollution from vehicles, and by a state — California that has set stricter emissions standards than the rest of the country. Mary Nichols, chairman of the California Air Resources Board, said car companies wanted "one set of cars they could sell anywhere in the US" and the changes the deal would bring would meet state targets. "We will accept standards that were announced today as being compliant with California standards through 2025 unless and until there is a change," she said. A $62 billion taxpayer-funded bailout for GM and Chrysler added to the White House's leverage. Some environmentalists lauded the agreement Friday but said that manufacturers owed taxpayers a bigger deal after bailing them out. From/ Gulf News