• by Karl Greenberg , December 20, 2007

On Wednesday, President George W. Bush signed the energy bill, which had been batted around Congress for weeks. It includes the first big boost in fuel-efficiency standards in over 30 years. Automakers have issued releases approving of the law.

The bill, which includes provisions for expanded used of so-called biofuels like ethanol, compels automakers to raise the corporate average fuel economy (CAFE) from the current standard of 27.5 mpg for cars and 22.2 for trucks to 35 mpg for cars, small trucks and SUVs by 2020--a 40% increase.

Automakers routinely opposed higher CAFE. The Big Three, even a recently as June, urged lawmakers to kill the proposal because, they argued, the cost of adhering to higher CAFE would hurt the industry.

The gasoline crunch made that point moot, as consumers have begun favoring smaller, more efficient vehicles anyway.

Ford, in a statement this week, said it "has worked with lawmakers to enact nationwide requirements that provide a significant increase in fuel economy while protecting consumers' choices of cars, SUVs and light trucks," arguing that the new bill will, in fact, allow it to continue product development.

For its part, Chrysler, which also applauded the bill, said this year it fielded six vehicles that get 28 miles per gallon or better "and more are on the way."

Rick Wagoner, chairman/CEO, General Motors, said the company will "dramatically intensify its efforts to displace petroleum fuels with bio-fuel alternatives such as ethanol--the best, near-term solution to actually reduce gasoline consumption."

The company says it is rolling out a new hybrid model every three months for the next two years, including the Saturn Vue and Aura Green Line, and Chevrolet Malibu. "This year, we've introduced the Chevrolet Tahoe and GMC Yukon two-mode hybrid. For next year, we'll be launching three additional two-mode hybrid versions of the Cadillac Escalade, and Chevrolet Silverado and GMC Sierra full-size pick-ups," said Wagoner, in a release.

Dan Gorrell, president of Tustin, Calif.-based Gorrell Group, says the change will be difficult for the domestics because of their product weight in trucks and truck-based SUVs. But, he says, they are already moving toward that standard in cars.

"It will be a different world, both for consumers and companies--but for the domestics, it could ruin their product plans because it's a completely different scenario than what they can do and sell now," he says. "What it means is cars will cost more and consumers will pay for it."