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Obama's fuel efficiency standards may be too high

Jeremy Hobson: Today the Alliance of Automobile Manufacturers is expected to start airing radio ads protesting higher fuel efficiency standards. The car industry accepted an earlier increase in standards, but the latest proposal from the Obama administration seems to be a step too far.

Sally Herships reports.


Sally Herships: Two years ago, the administration and carmakers agreed to new CAFE standards, which regulate fuel efficiency in cars. The goal: slightly more than 35 miles per gallon.

Bill Visnic: That standard has been agreed to. Everyone's in agreement, that is on the books, so to speak.

Bill Visnic is an analyst at Edmunds.com. But the Obama administration is reportedly working on a new standard: 56 miles per gallon. And that's got carmakers warning about job losses across seven states.

Visnic: The carmakers are upset on a variety of fronts. First of all, we don't know how doable that is.

Jay Baron is president of the Center for Automotive Research. He says cars that get 56 miles per gallon would run consumers an extra $7,000 per car.

Jay Baron: And if cars are priced higher than they are now, you will lower demand.

But supporters of the higher standard say car manufacturers should invest in fuel-efficient technology now to offset higher gas prices in the future.

I'm Sally Herships for Marketplace.

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Sally Herships is a regular contributor to Marketplace.

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