Energy bill would raise mpg standards about 40% by 2020

WASHINGTON — As motorists face near-record gasoline prices, the Senate took up an energy bill Tuesday that would raise vehicle fuel-economy standards for the first time in nearly 20 years and make oil-industry price gouging a federal crime.

Democratic leaders in both the Senate and House said they want broad energy legislation passed before the Fourth of July congressional recess, hoping to dampen growing voter anger over paying well above $3 a gallon at gasoline pumps across the country.

The Senate bill would require automakers to boost their fuel economy to a fleet average of 35 mpg by 2020, about a 40 percent increase over what new cars and the less fuel-efficient SUVs and pickup trucks are required to attain today. The auto standard of 27.5 mpg was last increased 18 years ago. SUVS and small trucks must achieve a fleet average of 22.2 mpg.

Majority Leader Harry Reid, D-Nev., said the bill would help reduce the country's reliance on oil.

The White House issued a statement opposing many of the bill's most critical parts, including the mandatory increase in automobile fuel economy. It also said President Bush would be urged to veto the legislation if it contained the price-gouging language.

Reid has called the auto fuel-efficiency measure, known as CAFE, the energy package's most contentious issue.

Executives of General Motors, Ford and Chrysler told Senate leaders last week that the bill's requirements may not be achievable. Sen. Carl Levin, D-Mich., is working on a more modest fuel-economy proposal that he says automakers think they can meet.

Sen. Dianne Feinstein, D-Calif., a longtime advocate of more-stringent auto fuel-economy requirements, said numerous studies have shown manufacturers can meet CAFE increases more stringent than those the Senate is considering.

The bill, which faces numerous hurdles over the next two weeks, also would sharply ramp up the use of ethanol as a substitute for gasoline, requiring production of 36 billion gallons of ethanol a year by 2022, five times today's production.

While the additional ethanol initially would come from corn, eventually nearly two-thirds of it is expected to be produced from prairie grasses, wood chips and other cellulosic sources.

Many of the bill's provisions have bipartisan support, but Republicans want more, especially more domestic production of oil, natural gas and coal as well as expansion of nuclear power.

The Democratic bill "doesn't do anything to address expanding domestic [energy] production, and it won't do a single solitary thing to reduce gas prices," said Minority Leader Mitch McConnell, R-Ky.

But Sen. Maria Cantwell, D-Wash., said a price-gouging provision she is advocating may reduce the prospects of future price spikes.

It would give the Federal Trade Commission broader authority to investigate possible wholesale oil-market manipulation — from the legitimacy of refinery shutdowns to whether gasoline is being exported to limit domestic supplies.

For the first time, it would be a federal crime to charge "unconscionably excessive" prices for petroleum products at the wholesale or retail level.

Critics of the provisions, including the Bush administration, said the measure amounts to price regulation and could lead to supply shortages.

"The federal government has all the legal tools necessary to address price gouging," the White House said.