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Senate Passes Fuel Standards Increase, Ethanol Plan

June 22, 2007 at 6:10 PM EDT

KWAME HOLMAN: It’s been more than 20 years since the federal government raised gasoline mileage standards for cars. Intense opposition from automakers squelched past legislative attempts, but that changed last evening on the floor of the Senate.

North Dakota Democrat Byron Dorgan.

SEN. BYRON DORGAN (D), North Dakota: This industry will succeed, in my judgment, if they are under the gun and under some pressure to produce more efficient vehicles. Other companies in other countries are doing it and so, too, should ours.

KWAME HOLMAN: As part of the energy bill passed yesterday, Senate Democrats and Republicans together approved increasing the combined average fuel efficiency for new cars and light trucks — CAFE standards, as they’re called — to 35 miles per gallon by 2020.

Idaho Republican Larry Craig said the nation’s dependence on foreign oil and growing concerns about global warming caused him to rethink his previous opposition. He referenced a recent conversation with auto industry representatives.

SEN. LARRY CRAIG (R), Idaho: I said, “You haven’t changed in 27 years, and I haven’t changed in the 27 years I’ve been in Congress. I’m changing, and it’s time for you to change.”

Environmental, industry reaction

KWAME HOLMAN: Environmentalists, such as Karen Wayland of the Natural Resources Defense Council, said the public's influence on the Senate should not be underestimated.

KAREN WAYLAND, Natural Resources Defense Council: When you see a big shift like this, what it means is that the senators have heard the public speak. They've also seen the evidence that the previous policies just aren't working and haven't been good for the country.

KWAME HOLMAN: On the other hand, oil and auto industry lobbyists, who swarmed the Capitol all week hoping to fend off the change, were disappointed. Rayola Dougher of the American Petroleum Institute said better mileage is just going to encourage people to drive more.

RAYOLA DOUGHER, American Petroleum Institute: If you make it cheaper to drive, they actually drive more, so I'm not sure how much you end up saving in that regard or not. It's surprising to me. We have had record demand so far this year for gasoline, even in the face of the higher gasoline prices.

Consumers have a lot of choices right now in terms of fuel-efficient vehicles, and I think they're going to them, and they're buying more and more all the time. So they've always had that choice, and I think Congress has to be careful in looking at what consumers want, as well.

Ethanol proposal

KWAME HOLMAN: The bill also has an ethanol proposal that calls for half of all new cars manufactured by 2015 to be able to run on 85 percent biodiesel fuel. Ethanol production, using corn and prairie grass, would rise to 36 billion gallons annually by 2022, a seven-fold increase over last year's production.

The oil industry did win a key battle, when Senate Republicans blocked an effort to pour $32 billion into alternative energy projects, almost all of it raised by taxing oil and gas companies. New Mexico Republican Pete Domenici.

SEN. PETE DOMENICI (R), New Mexico, Senate Energy Committee Chairman: It makes absolutely no sense to advocate our independence from foreign oil and then turn right around and raise taxes on our domestic companies who are producing America's oil and natural gas. It will mean higher prices for consumers.

KWAME HOLMAN: Oregon Democrat Ron Wyden was on the losing end of the vote.

SEN. RON WYDEN (D), Oregon: The fact of the matter is: Our people and our country have now experienced the results of past policies based on the idea that we ought to just send billions and billions of dollars in subsidies to major companies. It's time to end those subsidies; it's time to stop the major oil companies from fleecing taxpayers.

KWAME HOLMAN: Action on the energy bill now moves to the House, where debate could begin as early as next week.