Obama announces 54.5 mpg gas mileage standard

President Obama is announcing tough fuel-economy standards starting in the 2017 model year, requiring automakers to average 54.5 miles a gallon.

The standard is sure to force dramatic changes in cars, making them smaller, lighter and loaded with higher-tech engines such as hybrids, diesels or other fuel savers. The standard is so tough that relatively few models would meet it.

Because of the way fuel economy is calculated, window sticker labels of estimated fuel economy of individual models will be lower. Those labels will probably show values of about 40 mpg, says Roland Hwang, transportation director for the Natural Resources Defense Council. "Because of the differences between the laboratory certification test cycle and the on-road fuel efficiency, drivers can expect to see the average window fuel economy label to be about 40 mpg, compared to today's average of about 22.5 mpg," Hwang writes.

There are fears that the standard will force automakers to produce small cars that families won't want to buy -- or that cars will become too expensive:

"There is a realistic fear that the trigger for price increases will come from more than the new required technologies, and also by the automakers rationing demand through pricing in order to comply," says Jeremy Anwyl, CEO of Edmunds.com, a car-buying research website.

The new standard is the followup to the 35.5 corporate fuel average being phased in through the 2016 model year. Currently, automakers average less than 30 miles a gallon.

As tough as the new standard would be, it's considered a compromise. The administration sought an average of more than 56 miles a gallon.

As hard as it will make life for them, automakers lined up behind the proposal -- especially those known for small cars.

The negotiations allowed for some concessions to Detroit automakers as well, and Michigan's congressional delegation got behind the agreement.

"The agreement President Obama announced today will now take significant steps to increase vehicle fuel economy and reduce greenhouse gas emissions, and at the same time will protect American jobs, promote American manufacturing of advanced-technology vehicles, and help ensure that American automakers have a level playing field to produce and sell the vehicles consumers want to buy," said Sen. Carl Levin, D-Mich.

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