Discuss as:

Obama raising fuel standard to average 54.5 mpg by 2025

Fuel efficiency of U.S. cars and light trucks will nearly double by 2025 under a standard finalized by the Obama administration Tuesday.

New American vehicles will need to get an average 54.5 miles per gallon under the updated Corporate Average Fuel Economy, or CAFE, standards that aim to save consumers money at the fuel pump and cut dependency on foreign oil imports.

The rule, strongly opposed by Republicans and some automakers, builds on the standard for vehicles for model years 2011-2016, which requires automakers to raise average fuel efficiency to 35.5 mpg. For decades, the standard was about 21 mpg for cars and light trucks combined.

The new standard is the result of over a year of negotiations among the administration, automakers and environmental groups.

"These fuel standards represent the single most important step we've ever taken to reduce our dependence on foreign oil," President Barack Obama said in a statement.

The new fuel efficiency standards will save consumers $1.7 trillion in gasoline costs and reduce U.S. oil consumption by 12 billion barrels over the period, according to the White House.

Obama initially proposed the standard in July 2011 with the support of automakers, including Ford, General Motors, Chrysler, BMW and Honda, as well as the United Auto Workers union.

Republican presidential candidate Mitt Romney has opposed the standards, and his campaign Tuesday called them extreme and said they would drive up the price of new cars. Any savings at the pump would be wiped out by rising costs of cars, the campaign said.

"Governor Romney opposes the extreme standards that President Obama has imposed, which will limit the choices available to American families," said Romney spokeswoman Andrea Saul in a statement to NBC News.

"The president tells voters that his regulations will save them thousands of dollars at the pump, but always forgets to mention that the savings will be wiped out by having to pay thousands of dollars more upfront for unproven technology that they may not even want," she added.

The standard is based on one set by California, which played an "integral" role in developing the national program, according to the White House.

Republicans on the House Oversight and Government Reform Committee have been critical of the administration's tactics in developing the rule and of California's role in shaping the standards.

They released a report this month that said the fuel economy standards were based on an "overly optimistic" view that Americans were willing to buy hybrid or electric cars.

The Obama administration has made fuel efficiency a signature environmental and energy priority since cars and trucks account for 20 percent of carbon emissions and more than 40 percent of U.S. oil consumption.

The implementation of the new standard is one of the biggest actions ever taken to reduce U.S. oil use and a huge step on the path toward halving the country’s projected consumption within 20 years, the Union of Concerned Scientists said.

“This is truly a watershed moment. Twenty years from now we’ll be looking back on this as the day we chose innovation over stagnation,” said Michelle Robinson, director of the group's clean vehicles program. “These standards will protect consumers from high gas prices, curb global warming pollution, cut our oil use, and create new jobs in the American auto industry and around the nation.”

A recent poll from the Consumer Federation of America found that 74 percent of Americans support the new standards. Most respondents also said they want higher fuel economy in their next vehicle purchase.

“If you are against these common-sense standards, you are against saving consumers money, against consumer choice, and for leaving our economy open to being crippled yet again by our expensive oil use,” said Robinson. 

Automakers are already producing cleaner, more efficient vehicles that meet the standards. 

“Everybody is a winner today," said Frances Beinecke, president of the Natural Resources Defense Council, an environmental group.

“Motorists win because they will have much more fuel-efficient cars to drive, thus saving thousands of dollars at the gas pump every year," Beinecke said. "The auto industry — and its workers -- win because these standards will spur the creation of thousands of new jobs as well as state-of-the-art vehicles that go nearly twice as far on the same gallon of gasoline."

Under the complex CAFE regulations, automakers can have get credit for selling natural gas-powered and electric vehicles, changing to more environmentally safe air conditioning fluid and even for placing louvers on car grilles to improve aerodynamics. They won't have to improve pickup truck mileage much for the first few years, but big improvements will be required after 2020.

Automakers have been adding technology to boost gas mileage, mainly because people want to spend less on gasoline, which currently averages about $3.75 per gallon. Research firm J.D. Power and Associates says fuel economy is the top factor people consider when buying a car in the U.S.

CAFE requirements were first imposed in the 1970s in response to foreign oil embargoes, and the administration says this is the first update in decades.  

Reuters and the Associated Press contributed to this report.  

More money and business news: