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Cost Effectiveness of Future Fuel Economy Improvements

Carmen Difglio, K.G. Duleep, and David L. Green

Year: 1990
Volume: Volume 11
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-7
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Abstract:
U.S. petroleum use today is 2 million barrels per day lower than it would have been if automobile fuel economy had not improved since 1975. This paper explores the potential for and cost of further increases in domestic passenger car fuel economy using market-ready technologies and sales mix shifts. Using technology already included in manufacturers' production plans and based on consumers' willingness to pay for increased fuel economy, domestic auto mpg could be increased from the 1987 level of 27 mpg to 31.6 mpg in 1995 without reducing vehicle size or performance from 1987 levels. By2000, 34.3 mpg can be justifed on the same basis. A higher level, 36.4 mpg, is cost-effective, based on fuel cost savings over the entire expected vehicle life. The maximum level achievable with the technology included in this analysis is 39.4 mpg, but this level would not be cost-effective. Sales mix shifts stimulated by price subsidies for efficient cars and surcharges on inefficient models can cause about I or 2 mpg of higher fuel economy before becoming too costly.



CAFE OR PRICE?: An Analysis of the Effects of Federal Fuel Economy Regulations and Gasoline Price on New Car MPG, 1978-89

David L. Greene

Year: 1990
Volume: Volume 11
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No3-2
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Abstract:
Following a tripling of world oil prices in 1973-74, the U.S. Congress passed the Energy Policy and Conservation Act of 1975 establishing mandatory fuel economy standards for automobiles and light trucks. Beginning at 18 MPG in 1978, the passenger car standards increased to 27.5 MPG by 1985. There has been considerable debate about the influence of the standards, as opposed to the gasoline price increases in 1973-74 and 1979-80, on new car fuel economy.





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