Updated at 9:40 a.m.

Following nearly a year of haggling, House Democratic negotiators reached agreement Friday night on a massive energy package, handing a political victory to Speaker Nancy Pelosi (D-Calif.). Pelosi and Energy and Commerce Chairman John Dingell (D-Mich.) finally struck a deal after working out their differences on a fuel economy standard for cars and trucks as well as higher mandates for using ethanol and other renewable fuels. “We are confident that this final product will win the support of the environmental, labor and manufacturing communities,” Pelosi said in a statement Friday. “This landmark energy legislation will offer the automobile industry the certainty it needs, while offering flexibility to automakers and ensuring we keep American manufacturing jobs and continued domestic production of smaller vehicles.” The deal calls for U.S. automakers to produce cars that can achieve an average of 35 miles per gallon by 2020, a 40 percent increase over current fuel economy standards. Dingell had worked to maintain separate standards for cars and trucks and mileage credits for flex-fuel vehicles, as well as other measures aimed at easing the burden of stiffer regulations on the domestic auto industry. “I have supported raising CAFE standards in a sensible and effective way, and I believe the agreement reached today prescribes standards that are both aggressive and attainable,” Dingell said. “After weeks of productive discussion and negotiation, we have achieved consensus on several provisions that provide critical environmental safeguards without jeopardizing American jobs.” The deal is a major accomplishment for Pelosi in particular, as she has made it her signature domestic issue and invested enormous time and personal capital in getting the bill done all year. And with oil hitting record highs and nearing the $100-a-barrel mark, the stakes are high for both parties. There also has been consideration of splitting up the energy bill into two packages; one, which would include CAFE standards and renewable fuels, would likely unite Democrats if Dingell is on board while dividing Republicans. Some Democrats and Republicans think Bush would probably sign such a bill because he has called for higher CAFE standards and renewable fuels himself. A possible second package, which would include a tax package targeted at oil companies and a renewable electricity mandate, would presumably be veto bait. However, Democratic aides cautioned that a decision had not yet been made on whether to go forward with one bill or two, with Pelosi still pushing for the entire package. “She really wants one bill,” said a Democratic leadership aide. “We’re completely focused on getting the best bill possible and we’re thinking we can do that with a broad, bipartisan vote in both chambers,” the aide said. Democrats think Bush would be under pressure to sign any energy package that reaches his desk. “He’s had a lot of talk about doing something on energy over the years in the State of the Union address and elsewhere, and we’ll be giving him a strong bill that the vast majority of the American people will support,” the aide added. Democrats believe Bush, at a time of record oil prices, will either sign the bill and hand them a major achievement on an issue of huge importance, or hand them an equally potent campaign issue with a veto that they can use to torch Republicans next November. The bill has had a tortured history this year, with Pelosi at one point stomping all over a draft package Dingell’s committee had circulated. Under the current plan, the energy industry would also have to increase its use of ethanol and other renewable fuels by tens of billions of gallons a year. The renewable fuel mandate has been a source of lobbying on multiple sides, with corn interests strongly backing the mandate and corn consumers like livestock producers and others warning of higher food prices. Groups such as the National Association of Manufacturers also were lobbying hard against the bill, arguing that it would raise energy prices and cost jobs. House Republican leaders, meanwhile, kept up a drumbeat of opposition to the Democratic energy package, which they have repeatedly criticized for failing to promote more oil and gas drilling in particular. “For the millions of Americans looking to Congress to free up affordable energy supplies this winter, the anti-energy package being crafted by Democrats behind closed doors right now just won’t cut it,” said House Minority Whip Roy Blunt (R-Mo.). With oil at record prices, both parties have been trying to blame each other. Democrats argue that Republicans put billions into the pockets of oil companies while leaving consumers with the bill, while Republicans point out Democrats said they would do something about rising gas prices but haven’t delivered. Democrats also face complaints from their left flank. Environmental and consumer groups are opposed to splitting up the package and dislike loopholes that could weaken the expected 35 miles per gallon vehicle standard. Joan Claybrook, president of Public Citizen, urged leaders to support a strong standard and not a “toothless target,” arguing that even 35 mpg is too low a goal and that auto companies would exploit language allowing them exceptions to the standard.