New CAFE Fuel Economy Standards Raise Car Mileage to 55 MPG by 2025

New fuel economy rules that will increase the average fuel economy of the U.S. automotive fleet to 54.5 mpg by model year 2025 were finalized by President Obama Tuesday.

The new Corporate Average Fuel Economy (CAFE) rules seek to reduce U.S. oil consumption by 12 billion barrels by boosting the fuel efficiency of cars. The new standard will substantially improve the fleet's fuel efficiency by 2025 and save drivers about $1.7 trillion on gasoline. The CAFE standards are created and enforced through the U.S. Department of Transportation and Environmental Protection Agency.

"Simply put, this groundbreaking program will result in vehicles that use less gas, travel farther, and provide more efficiency for consumers than ever before -- all while protecting the air we breathe and giving automakers the regulatory certainty to build the cars of the future here in America," Transportation Secretary Ray LaHood said.

In the short term, though, carmakers are more worried about hitting the 2016 CAFE standard of 35.5 mpg. The original 2011 CAFE standard was supported by all of the major domestic and international automakers as well as the United Auto Workers and various other stakeholders like the state of California.

"Having spent a record $2,850 on gasoline last year, the average America household today simply cannot afford to invest in a gas-guzzler," Director of Public Policy for the Consumer Federation of America said Tuesday, after the CAFE announcement. The number of car models getting 30 mph or better has increased from just 12 five years ago to 52 today.