The Marketplace Report: New SUV Mileage Standards

Madeleine Brand talks to John Dimsdale of Marketplace about new federal fuel economy standards released Tuesday calling for better gas mileage for Sport Utility Vehicles.

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Back now with DAY TO DAY. I'm Madeleine Brand.

Today, the Bush administration proposed raising the minimum fuel economy standards for sport utility vehicles and light trucks. They're the fastest-growing category of new auto sales in the country. And joining us from Washington is "Marketplace's" John Dimsdale.

And, John, so what are these new minimums they're proposing?

JOHN DIMSDALE reporting:

Well, beginning with the 2008 models, the White House wants to raise the current 21 miles per gallon to 23 and a half for light trucks. That's about a 6 percent increase. Making the announcement today, the Transportation secretary said the new minimums would improve air quality and reduce the country's dependence on foreign oil. He said it would save 10 billion gallons of gasoline.

The proposal divides light trucks into six categories, each with its own standard depending on their size. Bigger trucks and SUVs would be held to a lower minimum miles per gallon. That means that large SUVs like Hummers and Expeditions wouldn't have to meet the same mileage standard as smaller light trucks such as a Jeep or Explorer.

BRAND: Well, with rising gas prices, that sounds like good news. What's the reaction so far?

DIMSDALE: Well, carmakers are being kind of tentative so far. They say it's too early to tell whether these higher minimums will require more expensive technology and, therefore, more expensive SUVs and trucks. Charles Territo, with the Alliance of Automobile Manufacturers, says the public already has the choices to move to better fuel economy.

Mr. CHARLES TERRITO (Alliance of Automobile Manufacturers): Currently, there are more than a hundred models that achieve over 30 miles per gallon. And we are currently developing a wide range of advanced technology vehicles, including more hybrids, more diesel engines, hydrogen internal combustion engines and even fuel cells later on down the road.

DIMSDALE: That's Charles Territo with the auto manufacturers.

You know, Madeleine, some car manufacturers say fuel economy standards aren't even necessary because they'll always be trumped by the marketplace. For example, even though SUVs and pickup trucks have been very popular, there's already evidence that the gas prices, as you mentioned, are driving down the demand for larger gas guzzlers and increasing sales for more fuel-efficient cars.

BRAND: And, John, what are environmental groups saying about this new proposal?

DIMSDALE: Well, they call them "woefully inadequate"--that's a quote. With gasoline prices approaching $3 a gallon, they say a 6-percent notch up in fuel economy standards is too little too late. This proposal is out for public comment, with a final standard required by next April. Carmakers then have 18 months to build engines to meet the standards by the 2008 model year.

Coming up later on "Marketplace," we're going to see how some cities are trying to fight high housing prices by requiring affordable housing for the middle class.

BRAND: John Dimsdale of public radio's daily business show "Marketplace." And "Marketplace" is produced by American Public Media.

Thanks a lot, John.

DIMSDALE: You're welcome, Madeleine.

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