President Obama announced today new fuel efficiency and emissions rules for auto companies. The proposed plan creates a national fuel economy standard of 35 1/2 miles per gallon for passenger cars and light trucks.
All auto makers would need to reach that standard by the year 2016, four years sooner than under the current law. The administration says the new rules will amount to removing 177 million cars from the road over the next 6 1/2 years and saving nearly two billion barrels of oil.
Flanked by state and Federal law makers and top executives from American and international auto companies, the president said the new rules will help the industry move forward.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: At a time of historic crisis in our auto industry, when domestic auto manufacturers are making painful choices and restructuring their businesses to be viable in the future, this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century.
DARREN GERSH: Transportation Secretary Ray LaHood was a key player in creating today's new fuel efficiency standards. I spoke with him earlier in the day and I began by asking him if the new plan differs from other efforts to save fuel.
RAY LAHOOD, TRANSPORTATION SECRETARY: I think the reason it happened today is because of the president. He basically told us at DOT and he told the folks at EPA set aside your agendas, set aside your egos. We need to do this for the American people. We need to get to a standard. I just think the leadership of the president and I think really the American people are Fed up with high gasoline prices. And they do want cars that get better mileage.
GERSH: Right, but they also like to drive cars that they can afford and there is a question that this policy over the course of its implementation is going to cost about $1300 more per car as (INAUDIBLE) that the administration has put out. That seems like a lot of money.
LAHOOD: The price of a car is going to go up any way. But I just think people think enough of the environment and they're sick and tired of foreign oil and they're sick and tired of high gasoline prices and I think the American people get it, too.
GERSH: One of the problems we seem to have in our CAFE policy, in our fuel efficiency policies has been that the auto makers are forced to make more fuel efficient cars, but consumers don't buy them. They don't buy smaller lighter cars and unless you push the consumer to do it, they don't buy it. So I'm wondering if this policy really changes very much.
LAHOOD: I think when gasoline prices got over $4 a gallon people were rushing out to buy Prius. And the reason that they were, was because it was getting 40 to 50 miles per gallon. Now, when gas prices have come down, then people kind of go back to their old ways. Gasoline prices are going to go up, there's no dispute about that. At some point in the future, they're going to be $3, $4 a gallon and people are going to be looking for cars that get much better mileage than the ones that are being manufactured today.
GERSH: One of the concerns though about smaller cars is that when you force manufacturers to make smaller cars people have the safety concern. So they don't buy the very smallest cars. Can you address the safety problems there? I'm wondering, are there ways to make smaller cars safer, that could be part of this policy that might overcome that?
LAHOOD: There are ways to do it and that's frankly what our role really has been here at DOT through our safety mode is to make sure that we don't compromise safety with a car that's lighter weight. And our people here believe that it's certainly possible to do it and more importantly, the car manufacturers believe that today, as demonstrated by the fact that every one of them was at the announcement because they believe they can get to the standard and manufacture safe cars.
GERSH: Why does the administration do what European and other nations have done and basically push consumers to buy smaller more fuel efficient cars by either raising gas prices or giving them much larger incentives?
LAHOOD: Well, raising gasoline prices in a lousy economy when so many people are out of work is a very bad idea. People are hurting in America and the last thing they want is an increase in the gasoline tax.
GERSH: You could give them incentives, more incentives.
LAHOOD: Well, I think the car manufacturers over time, as they begin to manufacture these cars, will probably build in some incentives for people, the way that they tried to do now when car sales are way down.
GERSH: All right, Mr. Secretary, thank you very much for your time. I appreciate it.
LAHOOD: Thank you.
