The Energy Department has backed down at the last minute from supporting new legislation that would require automakers to increase substantially the mile-per-gallon performance of cars in the 1990s, government sources said yesterday.
Deputy Energy Secretary John C. Sawhill was prepared to testify before a Senate subcommittee today in support of a bill sponsored by Sen. Henry M. Jackson (D-Wash.) setting a new auto fleet standard of 40 miles a gallon by 1995. Auto companies now are required to attain an average fuel economy standard of 27.5 mgp by 1985.
But the Energy Department's president ran into opposition from the Transportation Department and the Office of Management and Budget. Government sources said that the DOE was obliged to change its prepared testimony and back off from an endorsement of the Jackson legislation.
There was no argument within the administration that a tougher fuel-economy standard is technologically possible, sources said.
The administration, however, didn't want to support tougher regulation of the auto industry at this point, with Chrysler Corp. in critical financial condition and awaiting $1.5 billion in government-guaranteed loans, and the other U.S. automakers also suffering from a collapse in new-car sales, government officials said.
The Carter administration has become increasingly sensitive to complaints that government is overregulating American business, and contributing to inflation and poor productivity.
"There is a substantial debate over whether new standards are the way to go," said one administration source.
A series of studies is under way within the DOE and the DOT to assess how much it would cost automakers to raise the miles-per-gallon standard significantly, and how these costs would affect the capital markets in the United States and consumer prices for new cars in the 1980s and 1990s. The prevailing view is that new regulations shouldn't be endorsed until these studies are completed, a source said.
Moreover, there are a wide range of strategies for achieving improved fuel-economy performance, including further reductions in vehicle size, substitution of diesel engines and computerized ignition systems, and introduction of small "city cars" for commuting.
However, many of these options require further study, administration officials said.
The automakers have lobbied hard in Congress to prevent new fuel-economy standards.
At the same time, Jackson and other members of Congress have favored new, tougher goals because of the importance of improved auto fuel economy in meeting the nation's energy challenge.
The counterargument within the administration is that after a late start Detroit now is convinced of the necessity of improving auto mileage, and doesn't need new mandatory standards.