07/26/2011 08:10 pm ET Updated Sep 25, 2011

Obama, Automakers Close To Deal On Fuel Efficiency Standards

President Obama is close to a deal with automakers on proposed plans to introduce new fuel efficiency standards for cars and light trucks from 2017-2025, reports the Detroit Free Press.

Since talks kicked off with automakers last Friday, the Obama Administration agreed to lower the overall fleet target to an average of 54.5 miles per gallon by 2025, down from the original 56.2 mpg, reports Bloomberg. Another change in the negotiations also included a smaller increase in miles per gallon for light trucks by 3.5% annually from 2017 to 2021.

Current fuel standards are 30.2 mpg for passenger vehicles and 24.1 for light trucks.

The proposal hasn't gone unnoticed by environment and consumer lobbies. From Washington to Ohio and Detroit, fierce radio campaigns issued by various interest groups have hit the airways in a push to inform the public and put pressure on Washington, reports the Detroit Free Press.

With Americans spending increasingly more filling up at the tank, it's no wonder why the Consumer Federation of America and Consumers Union are clamoring for the Obama administration to strengthen fuel efficiency up to 60 miles per gallon (mpg) by 2025.

The proposed new standards won't just impact consumers. They could also please environmentalists, like Go60MPG, by forcing the car industry to reduce carbon pollution by six percent per year between 2017 and 2025.

But Detroit is worried about what Obama's initiative will cost the auto industry, and fears it could limit the type of cars they can design for consumers, reports Bloomberg.

Limited choice coupled with investing in expensive technology to meet the proposed standards won't come cheap.

According to a Bloomberg report, "It is a life-or-death issue" for the automakers, said James Burley, a former U.S. transportation secretary.

Although Obama doesn't need approval from the car industry for the fuel standards, he is reportedly in talks with the auto industry in order to come to a workable agreement.

Last month, the CFA released a study saying that Obama's original proposal was cost- effective with savings of $6,000 per car each year.

Environmental groups further argue Obama's new standards could deliver 700,000 new jobs and save $650 billion at the pump.

Obama is close to a deal with automakers this week, and is planning a late September public rollout of the fuel efficiency standards. Once a formal proposal is accepted, Obama will send it to the Office of Budget Management for review. The new standards are set to become a rule in summer 2012.