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Sources say that the Obama administration is ready to unveil a new fuel-efficiency policy that will resolve a dispute between California and the U.S. government over emissions.

The new proposal will run from 2012 to 2015 and will maintain a single national standard for fuel-economy. It will also give automakers flexibility for meeting the new standards.

Sources familiar with the plan say that the strategy calls for raising the fuel-economy standards of cars and trucks to 35 mpg by 2016.

Two months ago, the government said fuel-economy standards for U.S. light vehicles would increase 8 percent to an average of 27.3 mpg by 2011, costing the auto industry $1.45 billion to make the necessary changes.

- By: Omar Rana

Source: Reuters 
Image Credit: Pete Souza

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