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Fuel Economy Rebound Effect for U.S. Household Vehicles

Abstract:
This paper presents an econometric estimation of the "rebound effect" for household vehicle travel in the United States based on analysis of survey data collected by the Energy Information Administration (ELA) at approximately threeyear intervals over a 15-year period. The rebound effect measures the tendency to "take back" potential energy savings from fuel economy improvements as increased travel. Vehicle use models were estimated for one-, two-, three-, four-, and five-vehicle households. The results confirm recent estimates based on national or state-level data: a long-run "take back" of about 20 percent of potential energy savings. Consumer responses to changes in fuel economy or fuel price per gallon appear to be equal and opposite in sign. Recognizing the interdependencies among miles of travel, fuel economy and price is key to obtaining meaningful results.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation; Energy Efficiency

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q55 - Environmental Economics: Technological Innovation

Keywords: Rebound effect, Rebound evaluation, energy efficiency, Fuel economy

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No3-1


Published in Volume20, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.